Congress has finalized selection on all 12 members of its Super Committee on deficit reduction today, as House Minority Leader Nancy Pelosi (D-California) named Reps. Jim Clyburn (D-South Carolina), Chris Van Hollen (D-Maryland) and Xavier Becerra (D-California) to the panel. The top Republican congressional leaders had already appointed six members with conservative policy credentials to make up the GOP half of the panel charged with reducing the deficit by $1.5 trillion over the next decade, including Ways and Means Chairman Dave Camp (R-Michigan), Energy and Commerce Chairman Fred Upton (R-Michigan) and Republican Conference Chairman Jeb Hensarling (R-Texas), all named by Speaker John Boehner.
Senate Majority Leader Harry Reid's picks for the "super committee" charged with finding more than $1 trillion in spending cuts by the end of this year included Democratic Senators Patty Murray (Washington), Max Baucus (Montana) and John Kerry (Massachusetts). Senate Minority Leader Mitch McConnell's Republican picks for the committee were Jon Kyl of Arizona, Pat Toomey of Pennsylvania and Rob Portman of Ohio.
Background - On August 2, President Obama signed into law the Budget Control Act of 2011 (BCA) (P.L. 112—25). The BCA established specific spending targets between fiscal years FY 2012, which starts October 1, 2011, and FY 2021, which ends September 30, 2021, and creates a special congressional budgeting process to meet those targets. The goal is to achieve cumulative budgetary savings of $2.1 trillion to $2.4 trillion over the ten-year period.
The BCA is a culmination of discussions between Democrats and Republicans over the last three months about achieving long-term deficit reduction as a precondition to increasing the U.S. government’s debt limit. The end result is a compromise that establishes a down payment of $917 billion in savings derived from cuts in discretionary spending over a ten-year period and a special budget procedure to produce another $1.2 trillion to $1.5 trillion in additional savings either through legislation recommended by a congressional Joint Committee on Deficit Reduction or by so-called automatic sequestration procedures.
By writing enforceable deficit reduction goals into congressional statute, Congress and the president believe they have demonstrated to global markets and the American people the collective commitment of both political parties to true deficit reduction. However, the BCA puts the onus on the joint congressional committee (referred to in most circles as the "Super Committee") to reconcile deep differences between the two political parties on entitlement reform, tax revenue, and spending priorities in order to avoid the draconian sequestration process that will occur if the joint committee cannot produce legislation.
If the joint committee proposal is not adopted, sequestration will include automatic cuts totaling $1.2 trillion and will come from, among other things, a two percent uniform reduction in payments to providers for services under Medicare Parts A, B, and C.
What this means is that various elements of the health care community who worked vigorously to stave off possible reimbursement cuts and policy changes in the months leading up to the BCA compromise still have their work cut out for them in trying to influence the outcome of the joint committee’s work. Because the committee must produce legislation by Thanksgiving and Congress must pass legislation by Christmas to stave off sequestration, time is short.
Leading up to the BCA, the pharmaceutical industry successfully lobbied against a proposal that would have required them to give the Part D prescription drug programs the same rebates that they are forced to provide the government under Medicaid, but that will likely be back on the table in the new committee's deliberations.
Hospitals, nursing homes and home health care providers have also been seriously eyed for cuts as part of deficit negotiations. Doctors, for example, are hoping lawmakers will include a permanent fix to their Medicare reimbursement rates. As it is now, doctors return to Congress year after year for their "doc fix" to prevent severe cuts to their Medicare reimbursement rates. According to several sources, the joint committee process is an ideal venue to deal with a long-term fix to the Medicare physician reimbursement problem because you can't realistically address the national debt without solving the physician payment problem. If they don't fix it, doctors' payments will be cut 29 percent. It they do, it will cost more than $325 billion.
For a more comprehensive look at the BCA, including our analysis of the joint committee's primary function and the Act's impact on the Affordable Care Act, click here.