At first glance, it looks like Medicaid and other key government programs for the frail elderly and others with disabilities avoided a major hit in the debt limit agreement reached by Congress today. But in truth all of these programs remain in severe jeopardy.
The complex deal calls for several stages of deficit reduction. The first is a cut of $25 billion in planned 2012 spending for government agencies (excluding entitlements such as Medicare, Medicaid, and Social Security). While we won’t know exactly what those cuts will be until sometime next fall, there is a very good chance that funding for important non-Medicaid assistance will be reduced.
Programs such as Meals on Wheels, transportation, housing subsidies, and information and referral services—all key to the support many seniors need to age in place—will be cut. Many were trimmed in the budget passed by Congress last April, and they face deeper reductions this year.
And that could just be the beginning. While the deficit agreement does not force spending decisions on future congresses, it does point the way towards sharper future cuts in these critical safety net programs.
The second phase of deficit reduction will come from a new congressional super committee that will have the authority to recommend $1.5 trillion in new cuts in government spending over 10 years. Unlike the first round, these can come from anywhere in government, including Medicaid and Medicare.
This panel must finish its work by Thanksgiving and Congress must vote on its recommendations by the end of the year. If the cuts are not made, the debt agreement would impose $1.2 trillion in automatic spending reductions. Nearly all would come from the same pool of agency funds as this year’s cuts. Medicaid would be exempt from these across- the-board cuts but Medicare provider payments could be trimmed.
Here is a summary of what the deficit agreement may mean for some key programs aimed at the elderly and younger people with disabilities:
The CLASS Act: While some early debt limit plans would have killed CLASS outright, the final agreement did not repeal the national long-term care insurance program. However, it remains in serious jeopardy. There is a strong chance that much of the $120 million in funding requested by the Obama Administration to roll the program out next year will be cut. And if the congressional deficit committee can agree on a broad fiscal plan (very much a long-shot), repeal of CLASS could be back on the table.
Medicaid: If it settles on a plan, the deficit committee is likely to include cuts in Medicaid funding as well as new flexibility for the states. This would likely result in some combination of provider cuts, as well as reductions in both eligibility and benefits. Remember even President Obama has endorsed $100 billion in Medicaid cuts.
Medicare: Provider cuts are almost certainly in the cards. Last week, Medicare reduced payments to nursing homes by 11.1 percent starting Oct 1. That could be only the beginning.
Non-Medicaid benefits: Cuts here are a near-certainty. The only question is how deep will they will be.
In short, while most programs to fund long-term care for seniors and those with disabilities survived the first fiscal round, they are likely to fare much worse in the next phase of the far-reaching budget debate.