Supercommittee Fails to Reach Deal by Nov. 23 Deadline

by Rebecca Farley on December 1, 2011

What are the Implications for Behavioral Health?

Members of the Joint Select Committee on Deficit Reduction

As you have no doubt heard, the co-chairs of the Joint Select Committee on Deficit Reduction have announced that they were unable to reach a deal on a plan to reduce federal spending by $1.2 trillion. The announcement came after nearly three months of negotiations failed to produce a compromise that could win the support of the bipartisan 12-member committee.

In the days since the announcement by co-chairs Representative Jeb Hensarling and Senator Patty Murray, Republicans and Democrats have traded barbs over who is to blame for the Supercommittee’s failure. Cutting through the rhetoric, what does all of this mean for behavioral health and Medicaid – and what can we do to best position ourselves for the road ahead?

Automatic Cuts Scheduled to Begin in 2013

Under the terms of the Budget Control Act, the Supercommittee’s failure to produce a plan will trigger $1.2 trillion in automatic, across-the-board spending cuts. These cuts will be applied 50% to defense/security spending and 50% to other federal programs. If Congress makes no other changes to federal law, the automatic cuts (also known as “sequestration”) will go into effect in January 2013.

Fortunately for our field, Medicaid is exempted from these automatic cuts, as are SSI, WIC, and several other programs that serve vulnerable individuals and families. Medicare would be subject to a 2% reduction in provider payment but could not be cut further. However, discretionary spending on other healthcare programs and agencies – including SAMHSA, HRSA, NIH, and others, would be subject to the cuts. In fact, if these automatic cuts are applied equally across the board, all agencies within the Department of Health and Human Services (HHS) would be subject to a 7.8% cut.

2013 Cuts would Add to Spending Reductions Already Under Consideration

This 7.8% cut would come on top of proposed cuts to SAMHSA that are currently on the table during the 2012 budget negotiations. The House Appropriations Committee version of the 2012 Labor-HHS-Education spending bill would strip over $180 million from SAMHSA, with the brunt of the cuts falling on initiatives that provide important funding for prevention and treatment. Although the Senate version of the 2012 health spending bill includes full funding for these programs, the House and Senate are currently engaged in negotiations to find a compromise on 2012 spending levels. Even a compromise that sees the two sides meeting halfway would still result in tens of millions of dollars of cuts to SAMHSA – cuts that would only be worsened if sequestration goes into effect in 2013.

Could Congress Dismantle the Automatic Cuts?

The one-year lag time between the Supercommittee’s failure and the initiation of automatic cuts means that Congress has time to decide whether or not to dismantle the cuts. Some lawmakers have already begun discussing a repeal of the automatic defense spending cuts, although President Obama has said he would veto such a move. However, because the cuts were purposefully designed to be unpalatable to most lawmakers as an incentive for the Supercommittee to succeed in its task, there may be substantial support among Congress for repealing them. It is too early to say with certainty whether Congress will pursue this option.

Could Congress Replace the Automatic Cuts with a New Deficit Reduction Plan?

Congress could opt to pass a new deficit reduction plan, effectively replacing the $1.2 trillion in automatic cuts with a new option for reducing federal spending. This process would be substantially more difficult than that outlined in the Budget Control Act because, unlike the Supercommittee plan, legislation introduced in regular Congressional procedure is subject to a lengthy, highly public, and often divisive process of amendments and debate. This added transparency would be a boon to organizations seeking to preserve critical programs, but would add to the difficulty of passing new legislation.

The fate of Medicaid and behavioral health spending are major issues of concern for our field should Congress explore new deficit reduction legislation. A massive and sustained grassroots advocacy effort over the last year has protected Medicaid from major cuts thus far. However, Republicans and Democrats alike have proposed substantial changes to the program that would result in a loss of hundreds of billions of dollars for Medicaid services and a shifting of costs to states. These proposals are still very much alive and could be included in any future legislation, as could additional cuts to behavioral health services funded by SAMHSA and other agencies.

With the failure of the Supercommittee so recent, most Members have not had time to react. It is impossible to say at this time whether Congress will attempt new deficit reduction legislation.

How Do the Upcoming Elections Fit into the Mix?

Congress’ preparations for the 2012 elections will have a major impact on what type of legislation is able to make it through the legislative  process during the next year. Partisan gridlock over federal spending has characterized much of the past year, with Republicans and Democrats repeatedly failing to reach a deal on a variety of budget reduction plans. The entire House and one third of the Senate are up for re-election, and all evidence indicates that it may be a particularly volatile election season. This volatility could harden partisan positions and be an obstacle to the passage of new deficit legislation.

What Difference Can We Make in This Complicated Environment?

National Council members have already been a key force in protecting Medicaid and behavioral health from spending cuts. Over the course of the last year:

  • 1,564 advocates have sent 3,740 emails to Congress urging lawmakers to protect behavioral health during deficit reduction talks.
  • 1,735 organizations and individuals signed on to a letter to the Supercommittee urging them to protect Medicaid and behavioral health.
  • Nearly 500 providers, consumers, and executives visited with their legislators in person at Hill Day 2011.
  • Many more of you have reached out to your legislators and their staff on a personal level to build their support for behavioral health.
  • At least 9 National Council members have had their Letters to the Editor published in their state and local newspapers, calling on the Supercommittee to do no harm to Medicaid and behavioral health programs.

In particular, we would like to take a moment to recognize the dedicated staff at St. Clair County Community Mental Health in Michigan, the Association for Behavioral Health in Massachusetts, Community Counseling of Bristol County in Massachusetts, and the Henrietta Weill Memorial Child Guidance Clinic in California, who truly rose to the challenge of making their voices heard in media outlets throughout their states. Legislators look to local media to get a pulse of public opinion in their districts. Your letters to the editor are raising awareness of the importance of behavioral health and pushing our cause forward!

As Congress returns from recess next week and begins to think about its next steps, we must stay vigilant. We must stay engaged. And we must continue to make the case to our legislators for the value of behavioral health services and the healthcare safety net.

The National Council’s dedicated team of policy analysts will be keeping close tabs on the ongoing deficit reduction debate and will let you know when opportunities for action arise. Please stay tuned to the Public Policy Update and our Action Alerts for the latest news and information on how to make your voice heard in Washington.

We have a tough road ahead as we continue the fight to preserve funding for Medicaid and behavioral health. Together, we’ve been successful so far – and together, we’ll continue to succeed!




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