House passes debt agreement; hospitals renounce plan

The House on Monday voted 269-161 to approve the fiscal year 2012 budget and deficit reduction agreement (S 365), sending the measure to the Senate for a final vote at noon on Tuesday, the New York Times reports.

Under the new framework agreement, federal discretionary spending would be cut by a total of about $2.4 trillion across the next decade, while the debt ceiling would be raised in two stages. The plan would enact an immediate debt-limit increase of $900 billion, followed by an increase of between $1.2 trillion and $1.5 trillion at a later time, at the president's request.

In addition, the deal requires a new 12-member bipartisan congressional panel to develop another deficit-reduction package with $1.5 trillion in cuts, which Congress would have to approve by late December of this year. If the panel does not come to an agreement, or Congress rejects its recommendations, the plan automatically triggers $1.2 trillion in automatic spending cuts, which would be evenly distributed between defense and non-defense purposes.

The automatic spending cuts would apply to Medicare, but not Medicaid, other entitlement programs or civil or military spending, according to a summary issued by House Speaker John Boehner (R-Ohio), The Hill reports. A White Housefact sheet indicated that the cuts to Medicare would be limited to 2% of the program's cost.

According to the AP/San Francisco Chronicle, the legislation is "virtually assured" to pass in the Senate, and the White House has promised that Obama will sign it into law.

Hospitals criticize debt deal

Although the potential cuts to Medicare providers are limited, any cuts under the debt deal would come on top of a 6% cut enacted to offset the cost of the federal health reform law, the AP/Herald reports. According to the AP/Herald, the hospital industry—which agreed to $150 billion in spending cuts to help subsidize the cost of expanding health coverage to more uninsured U.S. residents—has expressed frustration with new developments.

American Hospital Association President Richard Umbdenstock said, "Hospitals have repeatedly demonstrated a willingness to accept shared sacrifice and do what is best for our country, but our first commitment is to patients, whose access to care could be curtailed by further cuts to Medicare funding for hospital care."

Chip Kahn, president and CEO of the Federation of American Hospitals, said his group opposes the debt deal because it "sets in motion billions of dollars in arbitrary Medicare funding cuts." Kahn described the deal's reported protections for seniors as "illusory," adding, "Reducing critical Medicare payments to community hospitals will affect the ability of caregivers to ensure access to the timely care beneficiaries deserve and expect."

Meanwhile, some policy experts note that the potential spending cuts also would be in addition to a scheduled cut to Medicare physician payments in January, Politico reports. Julius Hobson, a senior policy adviser for Polsinelli Shughart, said, "It has always been my concern that if you didn't get a comprehensive deal now with a doc fix in it ... we would be looking at a double hit," adding, "In essence, they’ll be doing a debt deal at the same time we're dealing with the doc fix" (Hulse, New York Times, 8/1; Taylor, AP/San Francisco Chronicle, 8/2; Reichard, CQ HealtBeat, 8/1 [subscription required]; McCarthy, National Journal, 8/1 [subscription required]; AP/Miami Herald, 8/2; DoBias, Politico, 8/1).


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