FY2012 Federal Budget Info

The House of Representatives voted on April 11, 2011 to pass HCR 34, which incorporated much of Budget Committee Chairman Paul Ryan’s proposal The Path to Prosperity:  Restoring America’s Promise, to resolve the Federal Budget deficit.  The Plan suggests a major change in structure to the Medicare and Medicaid program and a repeal of many of the provisions of the Affordable Care Act.

Medicaid Changes:  HCR 34 converts Medicaid from an entitlement program to a block grant program. The conversion would mean that states would receive a fixed amount annually, only increasing based on inflation and population growth.  Any growth in spending would be shifted to the states, potentially causing them to make drastic decisions such as reducing provider rates, limiting benefits and restricting eligibility.  The impact would be devastating for California’s millions of children, seniors and persons with disabilities who rely on Medi-Cal to meet their healthcare needs.

Repeal of Several ACA Provisions:  The bill also authorizes the repeal of the following provisions in the Affordable Care Act:

  • All Medicaid provisions, including raising eligibility levels to 133%
  • The individual mandate
  • Employer requirements and penalties
  • Health insurance exchanges and the premium credits and cost-sharing subsidies for exchange coverage
  • Temporary high risk pool program (which California is already benefiting from)
  • Early retiree reinsurance program
  • Small business tax credits
  • Tax on “high cost” plans.

The bill leaves in place many of the protections afforded by ACA. However, without the mandate, it is likely that insurers will want to minimize their risks, leading to higher premiums and greater use of the safety net system and emergency care. Senator Majority Leader Reid has already indicated he will schedule a vote to allow the debate to move toward a final budget compromise. More details and an analysis of the bill are available at the Congressional Research Service.


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