House passes budget reconciliation that targets Medicaid and other low income programs

On May 10, by a vote of 218 to 199, the House passed a bill to stop most of the $109 billion in across-the-board spending cuts for FY 2013 scheduled to take effect in January under the Budget Control Act (BCA). It would do so by further reducing the cap on discretionary programs and by cutting mandatory programs. It would lower the cap for non defense discretionary programs by $19 billion, on top of the 6% reduction already required by the BCA in 2013. Mandatory programs would be cut by $310 billion over a decade through a “budget reconciliation” process, disproportionately targeted to programs for low income populations. These cuts include the following that would adversely affect people with disabilities:

  • Medicaid reductions of $28 billion over 10 years. This would occur through changes in provider taxes, hospital payments, maintenance of effort (MOE) requirements, and payments to territories. People with disabilities would likely face decreased Medicaid eligibility and benefits as the states adjust to the reduced federal participation.
  • Repeal of the Social Services Block Grant (SSBG). The $1.7 billion SSBG enables each state to provide social services that include special services to persons with disabilities. One of the SSBG’s five goals is preventing or reducing inappropriate institutional care by providing for home and community-based services.
  • Cuts to the Supplemental Nutrition Assistance Program (SNAP) (formerly known as food stamps). Monthly assistance for 44 million people would be cut by $35 billion and 2 million people will lose SNAP benefits entirely.
  • Increase repayment charges for people who receive health insurance subsidies.  An estimated 350,000 people would likely forgo coverage, making it more difficult for the health reform law’s insurance exchanges to function effectively.  People with low incomes who received the subsidies would be affected if their incomes increase later in the year because they found a job, received a promotion, got married, or for another such reason.
  • Elimination of the Prevention and Public Health Fund. The Affordable Care Act (ACA) established this fund to expand investments in prevention and public health, to improve health outcomes, and to enhance health care quality.
  • Revisions to the medical liability system by capping non-economic damages to $250,000, limiting attorneys’ fees and other changes.

However, the reconciliation process is not likely to proceed beyond the House of Representatives. A budget resolution, with reconciliation instructions, is unlikely to pass the Senate. However, the existence of a concrete plan to replace the unpopular automatic cuts could give House leaders leverage in discussions that will likely occur later this year, about how to stop the automatic cuts.

House to vote on plan that includes severe cuts to disability-related programs

House Republicans will take their first concrete steps today to avoid automatic spending cuts (known as a “sequester”) and begin a debate on ways to reduce spending on mandatory programs such as Medicaid and food stamps. The House Budget Committee will begin marking up two related bills, one of which would stop most of the $109 billion in across-the-board spending cuts that are scheduled to take effect in January under the Budget Control Act. The second is a “budget reconciliation” measure that would cut $300 billion over 10 years to substitute for the spending cuts. These combined measures include a number of provisions that would affect people with disabilities:

  • Repeal of the “maintenance of effort” requirements on states for Medicaid and the Children’s Health Insurance Program. The legislation would allow states to apply more restrictive eligibility standards for programs. The draft bill also would reduce the federal Medicaid match rate for U.S. territories from 55 percent to 50 percent, as well as cut the health care provider tax from the current 6 percent threshold to no greater than 5.5 percent.
  • Repeal of the Social Services Block Grant (SSBG). The $1.7 billion SSBG enables each state to provide social services that include special services to persons with disabilities. One of the SSBG’s five goals is preventing or reducing inappropriate institutional care by providing for home and community-based services.
  • Increase repayment charges for people who receive health insurance subsidies.  People with low incomes who received the subsidies would be affected if their incomes increase later in the year because they found a job, received a promotion, got married, or other reason.
  • Elimination of the Prevention and Public Health Fund. The Affordable Care Act (ACA) established this fund to expand investments in prevention and public health, to improve health outcomes, and to enhance health care quality.
  • Revisions to the medical liability system by capping non-economic damages to $250,000, limiting attorneys’ fees, and other changes.

Democrats intend to offer an alternative plan for replacing the spending cuts that they say will be more balanced. According to press reports, Budget Committee Democrats may propose eliminating tax breaks that benefit some companies in an effort to increase tax revenue instead of finding additional spending cuts.

The House floor vote is currently scheduled for May 10th. However, the reconciliation process is not likely to proceed beyond the House of Representatives. A budget resolution, with reconciliation instructions, is unlikely to pass the Senate. However, the existence of a concrete plan to replace the automatic cuts could give House leaders leverage in discussions that will likely occur later this year about how to stop the automatic cuts.