Bill seeks to prevent debt deal health cuts

Will Congress stick to their deficit-reduction plan?

Topics: Health Policy, Market Trends, Strategy, Recession/Downturn, Medicaid, Reimbursement, Finance, Medicare

December 2, 2011

Rep. Edolphus Towns (D-N.Y.) this week introduced a bill (H.R. 3519) that would exempt Medicare providers from automatic spending cuts through sequestration under this year's debt deal.

The Budget Control Act called for the congressional "Super Committee" to develop and pass at least $1.2 trillion in federal spending cuts over 10 years. However, since the 12-member panel failed to reach a deal, the BCA triggered billions of dollars in automatic cuts starting in 2013, including a 2% reduction—or $123 billion—in Medicare spending.

According to Towns, hospitals would struggle to cope with sequestration cuts. He notes that New York hospitals already are slated to see $15 billion in Medicare and Medicaid cuts across the next decade under the federal health reform law. "If sequestration occurs, hospitals will lose another $2.6 billion—or over $116 million in my district alone," Towns stated.

Towns says such cuts "will severely harm patient access to care and undermine an employment base" that supports thousands of jobs. "We simply cannot balance the nation's budget on the backs of seniors, while simultaneously harming jobs."

Towns' bill—which already has six Democratic co-sponsors—is the first formal proposal that attempts to circumvent sequestration cuts, raising the question about whether Congress will uphold the BCA's intent, The Hill's "Floor Action Blog" reports.

  • Regardless of whether automatic spending cuts actually go into effect in 2013, maintaining financial viability over the long term will require hospitals and other health care providers to take strategic action beyond cutting costs. The Health Care Advisory Board's Medicare Breakeven Project offers best practices and resources for helping members achieve the new performance standard.

Meanwhile, another group of Democrats is drafting a letter to urge President Obama to ensure that sequestration cuts occur. "With the failure of the Super Committee to reach a deficit reduction agreement, we write in full support of your view that the sequester scheduled to take effect on January 2, 2013, should not be repealed absent an agreement to reduce deficits that exceeds the amount to be sequestered," the letter says. "The failure of Congress to act must have consequences" (Kasperowicz, "Floor Action Blog," The Hill, 12/1; Condon, CBS News, 12/1; Rep. Towns release, 11/30; AHA News, 11/30).

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