[NYAPRS Enews] Alert: Debt Default Means Uncertainty for Medicare, Medicaid, Call Washington!

[Harvey Rosenthal]

NYAPRS Note: The following action alert and timely posting comes from
the NYS Council's Lauri Cole. 

 

PLAN OF ACTION FOR THE NEXT TWO DAYS:

Call BOTH NYS Senators toll-free at 888-907-1485.  Tell them that
low-income and disabled individuals must not bear the brunt of the cuts
being contemplated on the Hill.  We deserve a debt plan that reduces the
deficit without reckless cuts to Medicaid, and other vital programs.
Thank them for standing strong against cuts to safety net entitlement
programs. 

Contact your representative in the House of Representatives by calling
the Capital switchboard at 1-202-224-3121.  If your representative is
from an upstate district and he/she is a Republican, please remind him
that thousands of vulnerable citizens in his voting district are served
by your Medicaid-funded programs and services each day.  The national
debt must not be balanced on the backs of poor and disabled individuals.


It doesn't matter if your representative already stated his/her
opposition to cuts to Medicaid as part of a deal to avoid default. We
need to continue to press.

If your member of Congress is a House Democrat, thank him/her for
standing strong despite what you know is growing pressure on him from
his colleagues to vote in lock step with House Republicans. 

 

 

For Medicare And Medicaid, Debt Default Means Uncertainty

By J. Lester Feder, Politico  July 21, 2011



A default scenario is so unthinkable that not too many people have
thought about what happens to Medicare and Medicaid if a deal isn't
reached.
One longtime Washington health hand said he had not contemplated the
overall picture of what happens after Aug. 2 without a deal because, "I
think it's unlikely, but it's also kind of [too] horrible" to think
about.
But people are getting nervous enough that it's time to give the issue
real thought, said Julius Hobson, former congressional affairs director
for the American Medical Association.
"I think up until last week people were buying into that usual,
conventional wisdom that they'd get that grand deal, and now they're
being disabused of that notion," he said.
So what does happen? Does Medicare keep making payments? If Social
Security checks continue to go out, will Medicare premiums be withheld?
Will states get their Medicaid dollars?
Most health experts gave answers to these questions like this one from
Gail Wilensky, who ran the programs under President George H.W. Bush:
"We've never been through anything like this, so I'm not sure anyone
knows exactly."
Though the experience of government shutdowns might be thought to
provide the best precedent, there are several reasons why the
administration might have to use an entirely different rule book if the
looming fiscal crisis becomes a reality.
A "normal" government shutdown - such as the one that the White House
and Congress narrowly averted in March - is brought on by the failure to
enact appropriations bills. In legal terms, that means the
administration doesn't have the authority to spend money even if it has
the cash on hand.
If a deal isn't struck before Aug. 2, President Barack Obama will be
faced with the opposite situation: Existing authorization bills obligate
the administration to spend cash that it doesn't have.
The Office of Management and Budget was the designated command center in
making preparations for the shutdown that threatened in March. It
ordered all agencies to draw up shutdown plans and designate "essential"
personnel who would be allowed to keep working without congressional
authorization.
But the funding crisis that could happen next month is not a question of
what spending is permissible but rather what spending is possible. So
Treasury will be in charge because it's the one that pays the bills.
When CBO examined the implications of hitting the debt ceiling in 1995,
it found, "Failing to raise the debt ceiling would not bring the
government to a screeching halt the way that not passing appropriations
bills would. Employees would not be sent home, and checks would continue
to be issued."
But the administration will have to figure out which checks to issue and
when after Aug. 2, since it will be missing about 40 percent of the cash
required to pay its bills.
Many assume that the administration would prioritize which payments go
out in order to minimize the political and economic disruptions. After
paying interest on the debt, Social Security checks are widely assumed
to be high on the list of priorities. Medicare payments are candidates
for holding back because many experts believe a delay in payments would
not jeopardize access as long as the crisis did not drag out too long
and they were paid after the crisis ended.
But the president may not have such discretion, warns Jay Powell of the
Bipartisan Policy Center.
"Everyone is assuming that if there's no debt ceiling increase, the
administration would make choices about what gets paid and what
doesn't," Powell said. "The administration might find it lacks clear
authority to make those decisions" because law requires the executive
branch "to treat all congressional spending as equally binding."
The BPC tried to break down the daily cash flow in the days following
the Aug. 2 deadline to give an idea of what could get paid. On Aug. 3,
there would be a $20 billion shortfall, with $2.2 billion left in
Medicare and Medicaid bills to vie with $23 billion needed for Social
Security payments, $1.4 billion in payments owed to defense vendors and
$500 million for federal salaries and benefits.
Health spending's place in the pecking order could change regularly,
depending on what other bills come due and the amount of revenue.
Susan Irving, Director for Federal Budget Analysis who signed a February
GAO report on the debt limit, observed that the cash flow system is a
large and complicated machine.
"You're talking about intervening in an automated system that
electronically sends out about 80 million payments a month," she said.
Matt Salo, executive director of the National Association of Medicaid
Directors, said that states get their federal matching money in
quarterly payments on the first of the month, so Sept. 1 would be the
first big date for the program.
Amid all this uncertainty, the only thing that's clear is that the
country would be in uncharted territory if there's no deal before Aug.
2.
"This is like Y2K, no one knows," Salo said.

 

http://www.politico.com/news/stories/0711/59607.html

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