Memo

Super Committee Fails to Reach Agreement; Automatic Cuts to Kick In for 2013

The congressional Joint Select Committee on Deficit Reduction, known as the “super committee,” failed to reach an agreement by its November 23 deadline on a deficit-reduction plan.  Therefore, $1.2 trillion in automatic trigger cuts will occur in January 2013.  Democrats and Republicans could not agree on a mix of tax increases and spending reductions.  A major sticking point was the future of tax cuts signed by President Bush that are scheduled to expire at the end of 2012.

The 12-member super committee, which included California Rep. Xavier Becerra, was charged with submitting a plan by November 23 to reduce the national deficit.  Since the super committee failed to achieve the targeted savings, automatic across-the-board cuts (sequestration) — 50 percent to defense and 50 percent to non-defense spending, including up to a 2 percent reduction on total Medicare spending — are scheduled to go into effect January 2013 through 2021.

Health care providers nationwide will experience approximately a $123 billion reduction in Medicare payments.  For California, Medicare fee-for-service payments will be reduced by $305 million beginning in 2013. 

Next Steps

In addition to efforts to prevent the Medicare cuts from going into effect, CHA will now focus on the health care agenda that remains for this year, including fixing the sustainable growth rate (SGR) for physician payments and extending a variety of health-related programs set to expire December 31.  Our priority will be to ensure hospital payments are not reduced further in an effort to finance either effort.  The SGR fix will cost approximately $20 billion in 2012, and while we support fair and adequate payments for physicians, additional cuts to hospitals are unacceptable.

Further, some members of Congress say they will re-examine sequestration methods in 2012 and work to address the defense cuts.  Hospitals will be called on to continue advocacy efforts to ensure any change in cuts to defense spending are not pushed onto health care providers.

CHA Action

In addition to working closely with Rep. Becerra throughout the super committee process, CHA engaged the membership through several CHA Advocacy Alerts, two lobby days in Washington, D.C., and several CHA DataSuite-impact reports.  Our efforts focused on blocking proposals that would have drastically cut Medicare and Medicaid payments to hospitals — particularly those focused on graduate medical education, Critical Access Hospitals, bad debt and provider taxes.  Additional resources and information regarding efforts to reduce the federal deficit and federal spending are attached.

Commands