How Does the Fiscal Cliff Deal Affect Medicare and Social Security?

cliff on Fugloy Faroe IslandsAfter months of worrying about the tax increases and the "sequestration" budget cuts set to take effect January 2, 2013, a deal has passed in the Senate and the House to avoid going over the so called fiscal-cliff. Many, including people with disabilities and the elderly, who rely on Medicaid, Medicare and Social Security are breathing a sigh of relief since these were facing major cuts under the "sequestration" federal spending cuts.

So what does this new deal mean for those programs and for those who rely on them for medical and financial assistance?

The fight over cutting federal spending (including the federal entitlement programs) vs. increasing revenue through tax increases for Americans over a certain income level was the biggest issue separating the Republicans and Democrats.

In the end, the new fiscal-cliff deal says Bush era tax cuts will no longer apply to individuals earning over $400,000 per year ($450,000 for couples) and the "sequestration" budget cuts are delayed for two months to allow time for further negotiation between the parties. This delay saves the federal entitlement programs for now. But since the Republicans lost the battle in preventing tax increases for the wealthier Americans and didn't get the budget cuts they were hoping for in this deal, it is likely they will be working hard to extract cuts once the two month delay of the

"sequestration" cuts ends on March 2, 2013.

"We still have more opportunities. We've got the debt ceiling coming, sequestration," John Fleming (R-La.) said. "So we're going to get taxes off the table. The president can't say, 'We've got to raise taxes first before we get to spending cuts.' We will have already done that. Now the topic will be spending cuts, from this point out."

Another issue avoided was the scheduled 26.5 percent payment cut for Medicare physicians, called the 'Doc Fix'. Many were afraid that this significant drop in their revenue would indirectly affect the elderly and disabled community who rely on their care. The cut could have forced physicians to lay off employees or stop implementing quality-improving technology in order to compensate for the loss. Others could have been forced into bankruptcy. 

Instead hospitals will see the significant cuts, picking up almost half of the loss of revenue that would have come from the payment cuts to Medicare Physicians. According to Kaiser Health News, cuts will be made to hospitals in two ways:

"First, it would cut $10.5 billion from projected Medicare hospital payments over 10 years for inpatient or overnight care through a downward adjustment in annual base payment increases. The Senate measure also would reduce Medicaid disproportionate share payments to hospitals by an additional $4.2 billion over the next decade. These cuts are on top of those made to hospitals as part of the 2010 health care law."

In this way no changes are made that could increase cost for the elderly or disabled and there is no change to their benefits or quality of care. For now we wait to see what, if any cuts will be made on March 2. 

Img. Source: under GNU General Public License



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