House votes to override planned cuts, shift them to entitlement programs

Budget bill would override automatic cuts triggered by last year's debt supercommittee

Topics: Medicare, Reimbursement, Finance, Recession/Downturn, Market Trends, Strategy, Payer and Regulatory Policy

May 11, 2012

The House on Thursday voted to override automatic cuts to defense spending triggered by last year's failure to reach a debt deal and instead cut funding for entitlement programs.

As part of last summer's negotiations, lawmakers agreed to $1.2 trillion in automatic cuts equally divided between defense and domestic programs. As part of those cuts, which are slated to take effect next year, Medicare providers would see funding fall by 2%.

However, the new budget reconciliation bill would repeal the automatic cuts and instead targets a range of domestic initiatives, such as the food-stamp program. The legislation passed the House 218-199 on a mostly party-line vote, with 16 Republicans and all 183 Democrats voting against it.

The House-approved bill also would:

  • Repeal the federal health reform law's Prevention and Public Health Trust Fund;
  • Reduce the federal Medicaid match to states; and
  • Impose stricter eligibility standards for Medicaid.

The budget bill is not likely to advance in the Democrat-controlled Senate, where Senate Majority Leader Harry Reid (D-Nev.) already has said he will not bring it up for debate. In addition, the White House has said President Obama likely would veto the bill if it reached his desk.

Report shows impact of automatic cuts on health agencies

Federal health agencies would face millions of dollars in cuts if lawmakers do not pass legislation to block the automatic cuts, according to a report by Research America (RA).

According to RA, which lobbies for medical research funding, sequestration in fiscal year 2013 would:

  • Cut $2.39 billion from NIH;
  • Cut $445 million from CDC;
  • Cut $191 million from FDA; and
  • Cut $29 million from the Agency for Healthcare Research and Quality.

The report is based on Congressional Budget Office projections estimating that the cuts would reduce each of the health agencies' budgets by 7.8% (Dinan, Washington Times, 5/10; Newhauser, Roll Call, 5/10; Wasson/Kasperowicz, "On the Money," The Hill, 5/10; Reichard, CQ HealthBeat, 5/10 [subscription required]).

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