BY RONALD A. FATOULLAH, Esq.
and YAN LIAN KUANG-MAOGA, Esq.
On August 2, 2011, the debt ceiling deal was signed into law. Congress has agreed to allow the President to raise the debt ceiling in exchange for $2.4 trillion in budget cuts over 10 years. How will this deal affect our elderly population?
The debt deal’s spending cuts will come in two waves. During the first wave of cuts, $917 billion from the budget will be cut evenly between defense and non-defense “discretionary” programs. For our elderly population, this means some aging and poverty programs such as assistance with heating cost may be affected. However, programs like Medicare, Social Security and Medicaid, which are “entitlement” programs, will be safe and unaffected.
It is in the second wave of cuts that Medicare, Medicaid and Social Security are at risk of significant cuts and changes. During this second wave of cuts, a 12-member congressional committee, six members from each party, called the super committee, must agree on an additional $1.5 trillion in cuts by Thanksgiving, and Congress must vote on their proposal (with no modifications) by December 23. The super committee will look at the possibility of raising the age of eligibility for Medicare, increasing premiums for wealthy recipients and cutting payments to providers and drug companies.
As for the Medicaid program, the super committee will consider giving states more flexibility to reduce eligibility and benefits, meaning that an elderly person may face even tougher rules in order to qualify for coverage. The committee will also be looking at cutting payments to nursing homes, which just got hit with a more than an 11% reduction. This may translate into reduced services and compromised care for our nursing home residents.
With regard to Social Security, we may see a change in how the program calculates annual cost of living increases, which may result in lower monthly Social Security benefits. The committee will also look at raising the eligibility age in order to receive benefits.
If this super committee cannot agree on a plan or Congress votes down its proposal or President Obama vetoes it, automatic spending cuts totaling $1.2 trillion would kick in beginning in 2013. In that case, Medicaid, Social Security and veterans’ programs are among the programs that will be exempt from these mandatory cuts. However, Medicare is not exempt. There would be a 2 percent cut to Medicare. Although, the cuts in Medicare spending will come from reduction in payments to providers like doctors and hospitals, such a reduction to providers would be on top of a 6 percent drop in provider payments already enacted to help finance health care reform. Medicare beneficiaries may not experience the impact of the cuts initially but would experience it soon enough as more providers refuse to treat Medicare patients, reduce services or go out of business.
There is, however, a strong incentive for this super committee to avoid these automatic cuts and instead agree on a plan that Congress can pass and the president can sign. If the super committee can not agree, there will be an automatic 8 percent reduction in defense spending, or nearly $500 billion, in addition to the 2 percent cut to Medicare. Cuts of this magnitude to defense spending would likely be too damaging for both Democrats and Republicans to contemplate.
Although the super committee will be looking at significant cuts in the budget, they may also be urged to look at increasing revenues by raising taxes on the wealthy and corporations. In order to reduce the impact on programs affecting our elderly population, we urge seniors and advocates for the elderly to push the super committee to consider raising revenues as a viable option. In fact, Warren Buffet recently wrote a letter urging our legislators to “stop coddling the super wealthy” and to raise taxes on the rich, who typically pay significantly less taxes (percentage wise) than middle class Americans.
Ronald Fatoullah is an attorney and a leading authority in the field of elder law. He is the founder and managing attorney of Ronald Fatoullah & Associates, a law firm concentrating in elder law, Medicaid eligibility, estate planning, special needs, trusts, wills, guardianships, & probate. He is certified as an elder law attorney by the National Elder Law Foundation, and he is the current Legal Committee Chair of the Alzheimer’s Association, LI Chapter. The firm has offices conveniently located in: Queens, Long Island, Manhattan & Brooklyn and can be reached at: 718-261-1700, 516-466-4422, or 1-877-ELDER-LAW, or 1-877-ESTATES. This article was written with the assistance of Yan Lian Kuang-Maoga, Esq.
