BREAKING NEWS: The “Fiscal Cliff” Negotiation Process Breaks Down as an Alternative GOP Proposal Collapses

December 21, 2012
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Partisan politics threatens to cripple efforts to resolve the so-called “fiscal cliff” crisis
BREAKING NEWS: The “Fiscal Cliff” Negotiation Process Breaks Down as an Alternative GOP Proposal Collapses

Complications of partisan politics threatened to cripple efforts to resolve the so-called “fiscal cliff” on the evening of Thursday, Dec. 20, as a House Republican plan popularly known as “Plan B,” and formally known as the Spending Reduction Act of 2012, failed to garner enough support to lead to a floor vote, throwing the entire legislative process into confusion.

At the end of a week of high-stakes negotiations between President Barack Obama and Speaker of the House of Representatives John Boehner, the Speaker’s move to push forward an alternative taxation and budget proposal standing outside those negotiations onto the House floor ran into trouble when conservatives in the House Republican caucus made it clear on Thursday evening that they would not support the Speaker’s proposal.

Though in theory efforts to conclude the “fiscal cliff” negotiations could resume during the brief partial week between Christmas and New Year’s Day, the likelihood that the federal government might “go over the cliff,” triggering a budget sequestration process, seemed to grow stronger as of Thursday night, with only 11 days remaining until the new year, when more than $500 billion in automatic tax increases and spending cuts will be triggered.

And though the Medicaid program was explicitly exempted from sequestration, the Medicare program was not, and would see significant cuts. Budget sequestration, a rarely invoked process, was passed by Congress last year under the Budget Control Act of 2011, which authorized an increase in the federal debt ceiling in exchange for $2.4 trillion in deficit reduction over the next ten years.

Should sequestration be triggered, hospitals and physicians would experience 2-percent across-the-board reimbursement cuts, the federal Office of Management and Budget noted in a report in September. According to a report from "Healthwatch," the healthcare blog published by The Hill, sequestration would cut $11 billion from Medicare in the next year, and cut millions of dollars from Affordable Care Act implementation programs. In addition, grants to help states establish health insurance exchanges under the ACA would be cut by $66 million, while the law’s prevention and public health fund would lose $76 million. The Medicaid program and the Children’s Health Insurance Program were exempted from the sequester, but other programs could be hit hard, including the Food and Drug Administration, which would lose $318 million, or more than 8 percent of its budget; and the National Institutes of Health would see a cut of more than $2.5 billion.

What’s more, according to a report commissioned by the American Hospital Association (AHA), American Medical Association (AMA), and American Nurses Association (ANA), and released on Sep. 12, the 2-percent sequester could result in as many as 766,000 healthcare and related jobs lost by 2021. That report was produced by Tripp Umbach, a firm specializing in conducting economic impact studies. Speaking of the Tripp Umbach study, AHA CEO Rich Umbdenstock said in September that “Hospitals’ ability to maintain the kind of access to services that their communities need is being threatened. Cuts to hospital services could create devastating job losses in communities where hospitals have long been an economic mainstay," he added.

Healthcare Informatics will continue to bring readers updates on this unfolding situation.

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