Three more fiscal cliffs are on the horizon

AHA News
   Hospital leaders get ready.

More “fiscal cliffs” are coming.

Congress and the White House last week may have managed to avert a fiscal cliff – for now – but Washington soon will confront three more serious fiscal challenges. How the president and legislators deal with them could have serious consequences for America’s hospitals and funding for patient care.

Just a week after the “American Taxpayer Relief Act” cut hospital payments by more than $14 billion, the AHA and hospital leaders are bracing for the possibility that fiscal showdowns over the debt ceiling, sequester and an expiring continuing federal budget resolution could trigger new rounds of cuts in funding for hospitals’ Medicare and Medicaid services.

The debt ceiling. The president had barely signed the fiscal cliff legislation into law on Jan. 2, when lawmakers began sparring over the limit on federal borrowing. Republicans say they will press their demand for deep spending cuts, with House Speaker John Boehner, R-OH, insisting on a dollar reduction in federal spending for every dollar increase in the nation’s borrowing limit. But the White House and congressional Democratic leaders insist they won’t negotiate on the goal of raising the $16.4 trillion debt ceiling, which officially reached its limit on Dec. 31.

By late February or early March, the Treasury Department will run out of options to cover the nation’s debts and could begin defaulting on government loans unless Congress raises the legal borrowing limit, or debt ceiling.

Economists warn that a default could trigger a global recession.

At stake: a possible governmental shutdown.

The sequester.
In approving the taxpayer relief legislation, Congress decided to push off any decisions for two months about the $110 billion in spending cuts included in the fiscal cliff – a legacy of the last battle over the debt ceiling in 2011. Half needed to from defense and half from other portions of the government’s budget, including an automatic 2% cut in Medicare funding.

Those deep automatic Medicare spending cuts are expected to take effect for hospitals at the beginning of April, about a month after the sequester patch expires, unless Congress decides to replace some or all of those planned reductions with cuts in funding for other programs.

The continuing budget resolution.

The federal government works on a fiscal year that starts every Oct. 1. Both chambers of Congress are supposed to adopt by April 15 their own budget resolutions, which are to broadly outline how much the government will collect and spend for the year. This is when the appropriations committees are supposed to get to work in each chamber, drawing up 12 separate bills that outline how much money will go to different agencies for various programs. Each chamber is supposed to pass its own versions of the 12 bills, then negotiate the differences between them and pass identical measures by the time the fiscal year ends Sept. 30.

But it seldom works that way. Instead, lawmakers usually buy time with short-term spending bills – or continuing resolutions – that keep the government open. On March 27, the temporary measure that funds government activities expires, and congressional approval will be needed for another continuing resolution to avoid a temporary shutdo...
Topic: Advocacy and Public Policy

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