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So-called "Fiscal Cilff" deal and health care

January 17, 2013

PHAN hosted two special calls today on the so-called fiscal cliff deal, its impact on health care programs, what to expect in the next couple of months, and some state updates.

Below, are the major bullet points presented on the call. Not included is much of the political analysis presented on the call or the state updates. To stream or download the call go here.

A little background:

The House and Senate recently (about 2 weeks ago) reached a deal in hopes of averting what the media has dubbed the “fiscal cliff.”

What’s the Fiscal Cliff?

Every year for the past decade or so we’ve had to raise the debt ceiling so that the country can continue to pay its bills. When President Obama needed it raised, Congress reacted by saying we first needed to come to an agreement to reduce the deficit. They issued a Super Committee (leaders from both sides of the isle) that was tasked with finding a way to reduce the deficit. The Super Committee failed to reach an agreement and so automatic spending cuts were to take place on January 1st, 2013. (These cuts you may have also referred to as sequestration).

These cuts, the need to raise the debt ceiling and the Bush era tax cuts coming to an end – all that together was known as the ‘fiscal cliff.’

So…what happened?

Some decisions were made (we’ll call that Phase I) however the big across-the-board spending cuts were pushed off until March 1st, so we can expect another ‘deal’ to be reached (which we’ll refer to as Phase II).

Taxes will increase on those making $400,000/year (families $450,000) rather than the richest 2% or people making over $200,000/year (what the President campaigned on).

Most of the Bush-Era tax cuts were made permanent. Income from dividends and capital gains will continued to be taxed at a lower rate than work and the Estate tax was made permanent, but locked into that works well for the richest 0.3%.

The Payroll Tax Holiday ended. Two years ago Congress lowered the amount we pay as a Social Security Payroll Tax from 6.2% to 4.2%. They then extended the one-year holiday for a 2nd year. Many folks hoped it would be extended for a 3rd year, but it was not.

Sequestration was delayed 2 months.

The “Doc-Fix” was passed for another year, again avoiding a 27% cut to Medicare physician payments.

No cuts to Medicaid.

Some Medicaid programs were extended like the Transitional Medical Assistance program. This program allows low-income families to maintain their Medicaid coverage as they transition into employment and increase their earnings. It also extends the Medicaid and CHIP Express Lane eligibility option through Sept 30, 2014.

The ACA was largely left alone with the exception of the CLASS ACT and CO-OP program.

The CLASS Act was repealed. Under the Affordable Care Act, the CLASS Act was a voluntary, long-term savings program. The Obama Administration had stopped implementing it in October of 2011.

The CO-OP program was defunded. Loans already issued and programs already funded will be allowed to continued.


Three important deadlines coming up:

Big-cuts/sequestration was pushed off until March 1st.

Debt Ceiling was reached December 31st but at this point we need the debt ceiling raised by the end of February.

Continue Resolution – The CR is the legislation that funds the government. It will expire and need renewal by end of March.

Thinking is that rather than negotiating this stuff separately, we’ll end up seeing lawmakers trying to figure out some kind of ‘package.’ This makes things harder for those of us working to defend Medicaid, Medicare, and Social Security.

Next steps on revenue
Only half the revenue or so was raised from this last deal. President Obama says he plans to continue pressing for more revenue from upper-income earners and by closing loopholes that benefit the wealthy. We need to hold him to that and continue pushing for increased revenue.

Other ways to counter spending include proposals like negotiating for lower Rx drugs in Medicare.

Our Next Steps

Advocates need to keep the conversation focused on raising revenue. For the next two months we need to remind our representatives in Congress that Medicaid, Medicare, and Social Security are critical programs that shouldn’t be cut.

PHAN has sample LTE’s ready to go. If you would like to submit one to your local paper, please let us know. Email Athena at

We also have a Task Force to Protect Medicaid and Medicare. Please feel free to join!