Inside Deficit Reduction What it Means for Health

Inside Deficit Reduction: What it Means for Health Care Alliance for Health Reform September 12, 2011 Katherine Hayes The George Washington University School of Public Health and Health Services Department of Health Policy

Budget Control Act of 2011: Overview Debt Ceiling Balanced Budget Amendment Vote Joint Select Committee on Deficit Reduction Enforcement Sequestration (of discretionary spending in a given FY) Sequestration of up to $1. 2 billion if no deficit reduction enacted and revision of discretionary spending caps Education Provisions (not addressed today)

Debt Ceiling Increase: Three-steps $2. 1 (or up to $2. 4 trillion) $400 billion – Presidential certification (August 2, 2011) $500 billion – 50 calendar days after initial certification (September 21, 2011) $1. 2 t 0 $1. 5 trillion $1. 2 billion – $0 to 1. 2 billion in deficit reduction enacted $1. 2 -1. 5 billion – Actual deficit reduction amount enacted $1. 5 billion – Constitutional amendment on balanced budget passes

Balanced Budget Amendment Congress must vote on a balanced budget amendment to the Constitution September 30 – December 31, 2011 If both Houses approve, debt ceiling can be increased by $1. 5 trillion Expedited procedures for 2 nd chamber consideration

Limits on Discretionary Spending 10 year “adjustable” statutory limits (appropriations caps) for FY 2012 -2021 FY 2012 and FY 2013 - Equally split between Security (Do. D, DHS, DVA, NNSA, intelligence, international affairs) Non-security (everything else) FY 2014 -2021 – no split between security and nonsecurity Enforcement

Annual Enforcement of Discretionary Spending Caps 15 days after end of a Congressional session If appropriations within a category is exceed, sequestration is triggered in “nonexempt” accounts. President issues sequestration order within category breached (security v. non-security) in FY 2012 -13 Congress can modify sequestration order (expedited procedure)

Joint Select Committee on Deficit Reduction Deficit reduction target of at least $1. 5 trillion FY 20122021 Expedited procedure for consideration of legislation (if any) reported by Super Committee If no deficit reduction legislation enacted by January 15, 2011, (minimum of $1. 2 trillion) automatic spending reductions go into effect on January 2, 2013 (unless there is intervening legislation).

Super Committee Deadlines August 16, 2011 – Appointment of Members September 16, 2011 – Committee must begin meeting October 14, 2011 – House and Senate Committees may make recommendations November 23, 2011 – Committee must vote on proposed deficit reduction legislation and report December 2, 2011 – If adopted, transmit to President, VP and House and Senate leaders December 9, 2011 – Committees of jurisdiction report December 23, 2011 – Final passage January 15, 2012 – Sequestration fallback if no law enacted January 31, 2012 – Committee dissolved

Joint Select Committee on Deficit Reduction – House Members House Speaker Boehner (R-OH) Jeb Hensarling (R-TX) – Committee co-chair Dave Camp (R-MI) Fred Upton (R-MI) Minority Leader Pelosi Chris Van Hollen (D-MD) Jim Clyburn (D-SC) Xavier Becerra (D-CA)

Joint Select Committee on Deficit Reduction – Senate Members Senate Majority Leader Reid (D-NV) Patty Murray (D-WA) – Committee co-chair Max Baucus (D-MT) John Kerry (D-MA) Minority Leader Mc. Connell (R-KY) Pat Toomey (R-PA) John Kyl (R-AZ) Rob Portman (R-OH)

Deficit Reduction Fallback If Super Committee bill is passed by January 15, 2012: Automatic spending reductions of amount full $1. 2 billion or any shortfall Discretionary caps revised: equally split between security and non-security (note) Proportional division between discretionary and direct spending Certain direct spending exempt or limited (Social Security, Medicaid, and others, Medicare – 2%) Spending reductions beginning January 2, 2013