Budget:
Bracing Yourself For Another Balanced Budget Act?
Published on Thu Feb 26, 2004
Huge federal deficits could cost health care providers in the future.
Budget cuts affecting Medicare and other health programs could soon be in the news again, as federal account books show nothing but deficits in the foreseeable future and lawmakers begin to sweat over the red ink.
In an initial round of the 21st century fiscal wars, though, there could be a twist from the Medicare-related budget battles of 1997, analysts say. Rather than a new Balanced Budget Act that explicitly enacts cuts in Medicare and Medicaid in order to achieve overall budget goals, action this year could center on a number of budget-process proposals that may seem less intimately linked to health programs but could have equivalent impacts. Entitlement program expansions -- but not tax cuts -- would pay their own way. The Bush budget proposes reinstating budget rules that would require legislated spending increases to be immediately offset by corresponding spending cuts. So-called pay-as-you-go rules also were implemented in 1990, and they contributed to bringing down the deficit.
The new proposal has one substantial difference, however. The earlier pay-as-you-go rule required that any entitlement expansions or tax cuts be funded through offsetting entitlement cuts or tax increases.
The Bush administration's new proposal, on the other hand, would apply only to mandatory spending in entitlement programs like Medicare and to refundable tax credits that go to lower-income people whose tax bills aren't high enough for them to have paid the whole creditable amount in the first place.
Furthermore, entitlement-program expansions could only be offset with cuts to the same or another entitlement program -- i.e., a Medicare expansion would be paid for by a Medicare or Medicaid cut -- not by revenue measures such as a tax increase or closure of a tax loophole.
In effect, the plan would put entitlement programs and refundable tax credits at a disadvantage in future Congresses, because, unlike for tax cuts, lawmakers would be forced to offset them with other painful spending cuts. So ... Don't hold your breath for that refundable tax credit that targets the uninsured. With a short legislative year, a fistful of money worries, and a big health accomplishment just behind them in the Medicare prescription-drug bill, congressional leaders aren't likely to push hard on tax credits for the uninsured in 2004, even if budget law isn't changed to require an offset for the credit's refundable portion, as the White House wants.
If that budget rule passed, things could get even dicier for the credit. The refundable part of the credit would have to be explicitly offset by cuts to other mandatory spending -- $22 billion over five years. But the administration's budget offers no hints of where it would make such cuts, noting only that, "when the Congress moves legislation [...]
