Congress’s Budget Proposes Significant Cuts to Health Care Programs

Earlier this month Congress agreed on a budget that should worry consumer health care advocates. It proposes slashing Medicaid spending and makes other changes that threaten low-income consumers’ access to health care. Expect a busy summer as committees debate these measures.

First time since 2009 that both chambers of Congress agree on budget resolution

In early May, both the House and the Senate came to an agreement on a budget resolution for fiscal year 2016 (which begins October 1, 2015). This proposal is a non-binding framework that sets the total amount Congress can spend along with policy priorities for the next fiscal year.

This is the first time the House and the Senate have agreed on a joint budget resolution since 2009. The budget proposal represents the beginning of a process that will likely last several months and culminate in a federal budget that will undoubtedly challenge important health care programs along the way, including the Affordable Care Act (ACA) and Medicaid.

Families USA has several concerns with this budget resolution. First, the resolution allows for a process known as budget “reconciliation.” This method allows Congress to avoid the usual procedural hurdles—particularly in the Senate—to more easily pass what is often contentious legislation. Instead of needing a certain number of votes in each chamber to pass legislation, reconciliation allows for a simple majority vote. Some Republicans would like to use reconciliation to repeal the ACA.

Fortunately, in the event that this legislation would make it to the president’s desk, we are confident he would veto any effort to scrap a law that is his signature legislative achievement. However, getting a repeal bill passed through Congress would represent a new milestone for opponents of the ACA.

Budget resolution proposes severe cuts to Medicaid, would hurt millions of low-income people who rely on the program

In addition to efforts to repeal the ACA, Republicans may attempt to make drastic cuts to the Medicaid program during the reconciliation process. The fiscal year 2016 budget agreement envisions “Medicaid reforms,” including severe cuts to Medicaid through the use of:

• A block grant for long-term care, and
• Medicaid per capita caps for other populations (like low-income children and parents).

The proposed framework also includes repealing the ACA’s Medicaid expansion—a process that has given more than six million people access to affordable health coverage. Any attempt to block grant Medicaid or institute per capita caps would be incredibly harmful to low-income people who rely on the program for health and long-term care. Plus, these cuts would make it difficult for states to operate Medicaid because costs could be shifted from the federal government to states. For additional information on why cutting Medicaid is bad for states and families or on Medicaid per capita caps, check out our issue briefs.

In the coming months, Congress may challenge other key ACA provisions

Medical device tax: Over the summer and beyond, we may see continued assaults on different pieces of the ACA, such as a repeal of the medical device tax, which allows for a 2.3 percent federal tax on certain medical devices. Funding for the ACA was specifically designed to ensure that the industries benefiting most from health reform—including both the medical device and health insurance industry—were required to contribute to the cost of the law. However, even though the 2.3 percent medical device tax is very smalland arguments for its repeal are often based on anecdotal evidence, the industry continues to gain traction with its lobbying efforts. Members of Congress from both political parties are calling for its repeal.

Health insurance tax: We also continue to see aggressive efforts to repeal the health insurance tax, which charges health insurers an annual fee to help pay for the ACA. These efforts have been particularly fruitful in the House. These types of repeal efforts would compromise the framework of the ACA and undermine the law’s financing.

Definition of full-time worker: We could also see renewed efforts to change the ACA’s definition of a full-time worker from 30 to 40 hours per week. For information on this and why this is a bad idea, check out our blog from earlier this year. In addition to compromising the health law’s framework, it is unclear how Congress would pay for these proposals. We are concerned the necessary funding offsets would come from making harmful changes to the ACA, Medicaid, or other health care programs that benefit low- to moderate-income consumers who rely on these essential programs.

Supreme Court’s ruling in King v. Burwell case will shape priorities in Congress moving forward

We expect a decision in mid- to late June from the Supreme Court on the King v. Burwellcase, which challenges the availability of subsidies in the federally facilitated marketplaces (states that use healthcare.gov). While we remain optimistic about this court case, the decision from the Supreme Court will help shape what Congress chooses to focus on in the health care arena in the remainder of 2015. For more information on what’s at stake in King v. Burwell, visit our initiative page.

Congress is in recess this week, but the break won’t last very long.  Consumer health care advocates should anticipate a busy summer of congressional activity on health care.