V I E W P O I N T

WHAT HAPPENS TO SOCIAL SECURITY, MEDICARE AND MEDICAID AFTER THE SUPER COMMITTEE?

• After three months of negotiations, the Super Committee could not agree on legislation that would have reduced the federal deficit by $1.2 trillion over ten years.

• The panel's so-called "failure" is a hopeful sign that Members of Congress are paying attention to the National Committee's recent polling which found 70 percent of the American people of all ages and political stripes soundly reject the idea that cuts in Social Security, Medicare and Medicaid should be part of a deficit reduction package.

• The National Committee's "Hands Off - No Cuts" campaign of rallies and emails, phone calls and petitions to Congress helped protect Social Security, Medicare and Medicaid from a bad deal that would have singled out middle-class Americans.

• While we won a battle, the war is not over. The Super Committee's failure to develop a deficit-reduction proposal triggers across-the-board cuts in January 2013 which some lawmakers may want to avoid by reducing Social Security, Medicare and Medicaid instead. However, the impasse on deficit reduction is likely to continue, particularly in the highly-charged partisan atmosphere of a presidential election year. In any event, we must remain vigilant.

• Congress can cut the deficit without further stacking the deck against the poor and the middle class if it focuses on improving the economy and asking those who have done extremely well in the last decade to finally pay their fair share.  

If Congress and the President Take No Action and Gridlock Continues  

Sequestration (Automatic Cuts): The law passed by Congress in August 2011 that increased the debt limit requires automatic across-the-board cuts - also known as "sequestration" -- to reduce the deficit by $1.2 trillion over ten years if the Super Committee did not agree on a proposal to cut the deficit. The part of the federal budget which funds the day-to-day operation of the federal government and some "mandatory" programs -- like Medicare -- would be subject to the automatic cuts. However, Social Security and Medicaid are exempt from sequestration.

• Medicare: Medicare benefits and premiums would not be affected by the cuts, but the National Committee is concerned that $123 billion over ten years of reductions in the payments made to health care providers could affect Medicare beneficiary access to doctors and hospitals. Medicare payments to private insurance carriers would also be affected.

• Discretionary Programs: Under the sequestration required in January 2013, funding for the daily operation of government - called "discretionary" spending - would be reduced by $109 billion a year, for the next ten years. The $109 billion annual reduction would be evenly split between domestic and defense programs at roughly $55 billion apiece. According to the Congressional Budget Office, domestic program cuts would range from 7.8 percent in 2013 to 5.5 percent in 2021. The January 2013 sequestration cuts would be in addition to the $917 billion in reductions to discretionary spending that were required by the August 2011 debt limit increase law.

Programs vital to seniors that will be subject to large automatic cuts include :

•  Older Americans Act Programs, which funds senior centers, congregate meals and meals on wheels, in-home services, family caregiving assistance, transportation, health promotion and other critical services.

•  Older American Volunteer Programs, including the Retired and Senior Volunteer Program (RSVP), the Foster Grandparents Program and the Senior Companion Program.

•  Low Income Home Energy Assistance Program (LIHEAP), which helps older adults, individuals with disabilities and low-income families who are struggling to meet basic needs. Forty percent of households receiving LIHEAP have an adult age 60 or older residing there, and those seniors should not have to choose between buying food and medicine or paying for home energy.

If Congress and the President Try to Avoid Automatic Cuts

Avoiding Sequestration: The automatic cuts required by the failure of the Super Committee to agree on a deficit reduction package were designed to be so burdensome for domestic and defense programs that lawmakers would avoid them by compromising on an alternative deal to cut the deficit by $1.2 trillion over ten years. In fact, soon after the Super Committee announced there would be no deal, President Obama said he would veto any legislation that would exempt certain programs from the automatic cuts unless Congress found another way to reduce the deficit by $1.2 trillion.

Congressional Budget Process: A deficit reduction bill to avoid the automatic cuts could be considered through the annual congressional budget process. Budget legislation could be considered before Congress adjourns in October 2012 to campaign for the general election or it could be negotiated after the election during a "lame-duck" session in November and December 2012.

A Repeat of 2011 Deficit Reduction Debate: Negotiations on a budget deal to avoid automatic cuts would mean a repeat of the debate that occurred within the President's Fiscal Commission, the Senate's "Gang of Six," Vice President Biden's "Blair House Group" and the Super Committee. In other words, the fight would continue over the cuts which have been proposed for Social Security, Medicare and Medicaid and plans to increase revenue by asking those who have done extremely well to pay their fair share.  

Looking Forward

The good news is that the National Committee successfully delivered the message through our "Hands Off -- No Cuts" campaign, that the vast majority of Americans of all ages and political persuasions say Congress should not cut vital programs like Social Security and Medicare in the name of deficit reduction.

The bad news is that the President and some key Members of Congress are on record as having endorsed proposals that would reduce parts of our social insurance safety net. For example:

• The President's September 2011 Deficit Reduction Plan does not include fundamental changes to Medicare, like privatization or increasing the age of eligibility, but it would shift costs to current and future beneficiaries. Our job in opposing these proposals is harder because of the key policymakers who publicly supported them during the budget debate in 2011.

• Medicare "Premium Support" proposals are gaining support. There was more evidence of the continued assault on Medicare in a November 24, 2011 New York Times article by Robert Pear which describes the interest expressed by Members of both parties in Medicare offering the so-called "premium support" model, whereby a fixed amount of money would be offered to each beneficiary to buy coverage from competing private plans. This plan is similar to the "voucher" proposal to privatize Medicare which was included in Rep. Paul Ryan's (R-WI) Budget Resolution passed by the House of Representatives in April 2011.

Continuation of Deadlock Likely: Even under the threat of automatic cuts in January 2013, the inability of the 12 Super Committee members to compromise decreases the likelihood that 535 Members of Congress will make a deal during a presidential election year that would cut Social Security, Medicare and Medicaid. Nevertheless, the greatest threat ever to the integrity of these important programs will continue in 2012 and require our full attention.

Government Relations and Policy, December 2011