Debt Ceiling Deal Rattles Healthcare Delivery Prospects, Social Security and Medicaid Spared

August 3, 2011
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The initial spin on the recently squared away budget deal preventing a national default relates a necessary evil that not only carries the partisan rift seen in advance of the legislation, but also becomes a harbinger for a financial outlook that, in some ways, looks as bleak as the presumptive default did. Still retaining its triple-A rating, the credit outlook for the United States will be reflected in a “negative” forecast — likely resulting in a downgraded credit status within the next couple of years.

The initial spin on the recently squared away budget deal preventing a national default relates a necessary evil that not only carries the partisan rift seen in advance of the legislation, but also becomes a harbinger for a financial outlook that, in some ways, looks as bleak as the presumptive default did. Still retaining its triple-A rating, the credit outlook for the United States will be reflected in a “negative” forecast — likely resulting in a downgraded credit status within the next couple of years. Of course, all of this big-picture wrangling really doesn’t mean much to the millions of people whose salaries are paid — in part — by the federal government. A harsh reality at the forefront of this thinking, given the current jobless rate and achingly persistent unemployment levels is the specter of the loss of unemployment insurance for those currently receiving benefits. Minnesota is just one of many states bracing for such an apocalypse which appears to be sparing future cuts in another enormous federal subsidy — Medicaid.

Department of Human Services Commissioner Lucinda Jesson said she was relieved that Medicaid, known as Medical Assistance in Minnesota, is exempted from the initial cut. That doesn’t mean the new bipartisan commission charged with driving down the deficit won’t come after it once the panel breaks out the budget knife. “We are going to track it very closely,” Jesson said Tuesday. She said her department will also keep a close watch on child protection, food support and other assistance for seniors.

What about cuts to the service side of the equation? Since Social Security and Medicaid are specifically exempted from the ravages of the debt ceiling bill, physicians could see an additional 2 percent pay cut on top of double-digit Medicare reductions already slated for 2012 under the debt ceiling deal. Perhaps more concerning is the strong likelihood for major Medicare cuts and overhauls in long term care payments as a by product of a commission[1] created as part of the deal agreed to on Sunday. Nursing homes would be hit extremely hard in this scenario — potentially affecting care delivery to the most medically complex beneficiaries in the LTC sector. Understandably, the deal reached by a less than jubilant Hill on Sunday has many folks extremely wary about the nation’s prospects on an already shaky economy. Its effects on federally subsidized healthcare delivery ups the ante for lobbyists, providers, and most importantly — patients. | LINK

  1. The deal to raise the debt ceiling would task a 12-member bipartisan committee to come up with $1.5 trillion in deficit reduction and would require a significant swath of cuts starting in 2013 if those efforts at reducing the deficit should fail.
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