On Tuesday night, the House of Representatives voted 257-167 to approve the Senate bill to avoid the so-called fiscal cliff – the expiration of the Bush tax cuts and the across-the-board sequestration of billions of dollars from the federal budget set to take effect in 2013. The House vote came just 21 hours after passage of the Senate plan brokered by Vice President Joe Biden and Senate Republican leader Mitch McConnell. President Obama has signaled that he will sign the bill as enacted.
The deal maintains the Bush tax cuts for individuals making under $400,000, and for families earning under $450,000. Above those income levels, Americans will see their top income tax rate increase to 39.6%, up from the current 35%. The sequester of federal budget funds was not finally solved, but delayed for two months. In effect, the deal merely postpones a final resolution of that issue for the Congress, which is already facing both looming debt ceiling and continuing budget resolution crises.
Health care entitlement programs were not spared in the deal, especially the Medicare and Medicaid programs. Medicare’s scheduled 27% pay cut to doctors was postponed for another year, a move that will cost the Medicare program an additional $25 billion over the next ten years. However, to pay for the doctor fix, other health care providers will see cuts to their reimbursement programs by some $25 to $30 billion. Approximately half of those cuts will be borne by hospitals, which will see downward adjustments in their annual base payment increases from Medicare, and reduced disproportionate share payments under Medicaid. These cuts are on top of cuts already made to these programs by the Affordable Care Act.
Pharmacies and dialysis clinics are among the other providers which will experience cuts.
“While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals’ ability to care for seniors and their communities,” Rich Umbdenstock, President and Chief Executive Officer of the American Hospital Association, said in a written statement. Chip Kahn, President and Chief Executive Officer of the Federation of American Hospitals, also expressed dismay stating, “It is not in the best interest of patients or those who care for them to rob hospital Peter to pay for fiscal cliff Paul,” he said.