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Background Information on Washington Budget Policy
 

On New Year’s Day, Congress narrowly avoided the dreaded fiscal cliff. However, there are still numerous fiscal concerns, including the potential for large spending cuts. With Washington Days just around the corner, NHF has prepared a brief summary of Washington budget policy to help guide you through some of the concerns and what impact these negotiations could have on our community. 

NHF’s public policy team is keeping a close eye on these talks and will keep you updated.

What is the fiscal cliff?

The fiscal cliff is the name given for several federal tax and spending issues that all came to a head around January 1, 2013.  These issues included:

·         the expiration of the Bush tax cuts;

·         the implementation of an approximately 28% cut in Medicare physician reimbursement;

·         the expiration of Unemployment Insurance benefits; and

·         sequestration (defined below). 

 

What is sequestration?

Sequestration is a series of automatic, across-the-board cuts to the discretionary part of the federal budget that was set to begin on January 2nd, 2013. The Budget Control Act of 2011 increased the debt ceiling by $900 billion, made $1 trillion in immediate spending cuts and charged a Congressional “Super Committee” with finding an additional $1.2 trillion in savings.   Because the Super Committee failed to come to an agreement, sequestration will cut the $1.2 trillion instead.  In 2013, sequestration would mean an automatic 8.4% cut to most government programs.  Sequestration was never intended to be implemented; it was being used as a way to pressure the government to agree on budget issues, which Congress failed to do.

 

How was the fiscal cliff resolved?

On December 31st and January 1st, Congress passed a law to deal with some parts of the fiscal cliff. The law:

·         permanently extends the Bush tax rates for individuals with annual incomes below $400,000 and couples with incomes below $450,000, preserves the current estate tax exemption and permanently fixes the alternative minimum tax;

·         continues Unemployment Insurance;

·         blocks the cut in Medicare physician reimbursements for one year; and

·         delays the sequester until March 1.

 

What other budget deadlines are on the horizon?

·         FY 2013 Budget:  The Federal fiscal year (FY) calendar runs from October 1st through September 30th of each year.  Last year, Congress was unable to pass appropriations bills for FY 2013 by October 1st, so it instead passed a continuing resolution to keep the government funded at 2012 levels until the end of March.  Congress will need to pass a bill to fund the government after March. 

·         Sequestration:  Sequestration will take effect on March 1st, unless Congress averts it. 

·         Debt Ceiling: The federal government is expected to hit the debt ceiling, the limit on the amount of debt that the government can accumulate, this spring.  The House of Representatives recently passed a law allowing the federal government to suspend the debt ceiling until mid-May. The Senate is expected to follow suit in the next few weeks.

·         FY 2014 Budget: Separate from all of these other issues, Congress must also address appropriations for FY 2014, which starts in October. 

 

What does this all mean for the hemophilia programs?

There is a very real chance that the hemophilia programs at CDC and HRSA will face additional cuts if sequestration takes place or if further cuts are made to discretionary programs as part of a broader deficit reduction package.  We are concerned about how further cuts could affect the healthcare services received by people with bleeding disorders who depend on HTCs to lead healthy lives.  Our advocacy on Washington Days will emphasize the importance of these programs.
 

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