Is No Deal a Good Deal? Deficit Reduction, HIV Services & What Comes Next

Is No Deal a Good Deal? Deficit Reduction, HIV Services & What Comes Next Hold on The webinar will start soon! Download the slides at www.hivhealthreform.org/blog Prepared By: AIDS Foundation of Chicago (AFC) AIDS United (AU) Harvard Law School Center for Health Law & Policy Innovation Treatment Access Expansion Project (TAEP) December 15, 2011 1

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Presentation Outline Part 1: Overview: Deficit Reduction and the Budget Control Act of 2011 (Malinda Elwood, HLS/TAEP) Part 2: Where Are We Now? Description of the Automatic Cuts Process (Ronald Johnson, AU) Part 3: What Does This Mean for Annual Appropriations? (Donna Crews, AU) Part 4: Where Do We Go From Here? Next Steps and Advocacy Efforts (John Peller AFC) Q & A Download the slides at www.hivhealthreform.org/blog 4

Part One Overview: Deficit Reduction and the Budget Control Act of 2011 5

Why We Have a Deficit In 2000, the U.S. government had a surplus of over $237 billion the third consecutive surplus and the largest surplus ever Now the U.S. government is running the largest deficits in its history This is largely the result of Bush-era tax cuts, the wars in Iraq and Afghanistan, and the recession Under Current Policies the U.S. Debt will climb to $20 trillion by 2019 Tax cuts and the wars in Iraq and Afghanistan will account for almost 50% of that debt The stimulus law and financial rescues will account for less than 10% of that debt. 6

The Federal Budget Over Time Source: The Congressional Budget Office 7

What Is Deficit Reduction? Right now, the federal government spends more money than it brings in through revenue The difference in spending and revenue over time has resulted in a federal debt now over $14 trillion Congress and the President have now agreed to reduce the cumulative deficits of the next ten years (Budget Control Act) 8

What s At Stake: What Deficit Reduction Could Mean for HIV/AIDS Programs Deficit reduction will mean reduced spending on federal programs A fair, balanced approach must include revenue increases Reducing the deficit solely through spending cuts could harm essential health programs Ryan White Program Prevention Funding Entitlement Programs (Medicaid & Medicare) 9

The HIV Community s Deficit Reduction Priorities Deficit reduction must include revenue increases A fair and balanced approach is necessary it can t be all cuts Protect vulnerable populations and funding for health and HIV programs Cuts to these programs mean higher rates of infection, worse health outcomes, and higher health care costs in the long run Protect Medicaid and Medicare They provide health care for millions of Americans, including people living with HIV/AIDS Cutting federal spending on Medicaid just shifts costs to states and consumers Continue to fund health care reforms that will improve quality and cost-effectiveness in delivery of care Cuts to reform programs are a lost opportunity to improve care and lower costs 10

The Budget Control Act of 2011 Step 1 (complete) August 2011 Debt ceiling increased (meaning, Congress allowed the U.S. to continue paying its bills), and Congress required to vote on a balanced budget amendment to the Constitution by Dec. 31, 2011 Immediate spending cuts for defense and non-defense discretionary programs ($900 billion over the next ten years) Medicare, Medicaid, Social Security, and certain other lowincome entitlement programs were not cut for now ( exempted programs) 11

The Budget Control Act of 2011 (cont.) Step 2 (complete) August-November 23, 2011 Bipartisan joint Super Committee tasked with recommending an additional $1.2 - $1.5 trillion in reductions Super Committee could have recommended changes to taxes (revenue), entitlement programs (like Medicaid), and discretionary spending (like Ryan White Program) If the Super Committee did not reach an agreement, the law requires automatic cuts to both defense and non-defense programs, with some entitlement programs exempted 12

The Budget Control Act of 2011 (cont.) Step 3 (ongoing) November 23, 2011: The Super Committee did not reach a deal and therefore automatic spending cuts are triggered Automatic spending cuts do not affect Medicaid, Social Security and other entitlement programs (Medicare cuts are limited) January 2013: Automatic spending cuts go into effect (they will be in effect over the next 8 years) 13

No Deal Was Better Than a Bad Deal! Super Committee proposals included significant cuts to Medicaid and Medicare: initial Super Committee Democrats Proposal, $475 billion in cuts initial Super Committee Republicans Proposal, $685 billion in cuts Automatic cuts protect Medicaid and limit Medicare cuts (for now) 14

BUT: The Fight s Not Over Discretionary programs (like the Ryan White Program) may face cuts as part of the automatic process Congress is currently considering additional cuts (e.g., slashing key pieces of health care reform, such as reducing the prevention and public health fund) Just because Medicaid is protected from the automatic cuts, does not mean that it is protected from additional cuts in the future Revenue increases are still needed We must continue to work together to protect our priorities! 15

Presentation Outline Part 1: Overview: Deficit Reduction and the Budget Control Act of 2011 (Malinda Elwood HLS/TAEP) Part 2: Where Are We Now? Description of the Automatic Cuts Process (Ronald Johnson, AU) Part 3: What Does This Mean for Annual Appropriations? (Donna Crews, AU) Part 4: Where Do We Go From Here? Next Steps and Advocacy Efforts (John Peller AFC) Q & A Download the slides at www.hivhealthreform.org/blog 16

Part Two Where are we now? How the Automatic Cuts Work 17

How the Automatic Cuts Work The Budget Control Act includes an enforcement mechanism to make automatic, across-the-board spending cuts that will kick in since the super committee did not reach an agreement. The process to make the automatic cuts is called sequestration. 18

How the Automatic Cuts Work Not So Fast: Sequestration process starts Jan. 2, 2013 19

How the Automatic Cuts Work Core Domestic Low-Income Entitlement Programs Exempt: Medicaid and Children s Health Insurance Program Supplemental Nutrition Assistance Program (SNAP) Child Care Entitlements and Child Nutrition Earned income Tax Credits, Child Tax Credit Affordable Care Act Premium Credits (not cost-sharing subsidies) Supplemental Security Income (SSI) and Temporary Assistance to Needy Families (TANF) Medicare beneficiaries 20

How the Automatic Cuts Work The process for the FY 2013 cuts will be different from the process for fiscal years 2014-2021. The Appropriation Committees will have more control over how the cuts are distributed after FY 2013. 22

How the Automatic Cuts Work The Budget and Control Act will not, by itself, control the deficit and federal debt problems, but will have a significant impact on discretionary spending, especially for domestic non-defense programs. 23

What does the Budget Control Act Mean for Appropriations? Fiscal Year 2012 27

Appropriations Glossary of Terms Appropriations: The process by which Congress (both House and Senate) provides new budget authority for discretionary federal programs, in theory though often not in practice through enactment of 12 separate appropriations bills. Fiscal 2013 The budget year that runs from Monday, Oct. 1, 2012, through Monday, Sept. 30, 2013. (every Fiscal Year starts October 1 st ) Rescission: The cancellation of previously appropriated budget authority a common way to save money that already has been appropriated. To take effect, a rescission bill must be passed by Congress and signed by the president (or enacted over his veto), just as an appropriations bill is. 28

Appropriations Glossary of Terms Discretionary spending: Spending for programs that Congress finances as it chooses through annual appropriations. Roughly a third of all federal spending falls into this category. Examples include the military; the basic operations of all federal agencies, Congress, the White House and the federal court system; and programs that support education, space exploration, scientific research, child nutrition, housing, transportation and foreign aid. Mandatory spending: Mostly this includes spending for entitlement programs, whose eligibility requirements are written into law. Any person who meets those requirements is entitled to the money until Congress changes the law. Examples include Social Security, Medicare, Medicaid, unemployment benefits, food stamps and federal pensions. Another major category of mandatory spending is interest paid to holders of federal government bills, notes and bonds. Both Social Security and interest payments on the debt are permanently appropriated. Although budget authority for some other mandatory programs is provided through the appropriations process, appropriators have little or no control over the money. Mandatory spending accounts for about two-thirds of all federal spending. 29

Budget Glossary of Terms Budget authority: Permission, provided by law, for federal agencies to spend or otherwise obligate money. Budget outlays: Money that is actually spent in a given fiscal year, as opposed to money that is appropriated for that year. One year s budget authority can result in outlays over several years, and the outlays in any given year result from a mix of budget authority from that year and prior years. Budget authority is similar to putting money into a checking account; outlays occur when checks are written and cashed. Budget resolution: A concurrent resolution that is adopted by both chambers, but is not signed into law, and is used to guide appropriations actions and other budget changes for the coming fiscal year. Established by the 1974 Congressional Budget and Impoundment Control Act (PL 93-344), the budget resolution is supposed to be adopted by mid-april, but the deadline has frequently been missed in recent years. Congress did not adopt a budget resolution at all for five of the past 12 years, including fiscal 2011, the current year. Budget resolutions can also direct committees to take actions to change spending and revenue through the reconciliation process. 30

Budget /Appropriations Timeline 2012 (ideal not real) President releases his budget request for next year: First Monday in February (February 6 th ) Congressional Budget committees review: Hearings begin after release of President s budget Appropriations committees receive 302A allocation: House in March; Senate in May Congress adopts Budget Resolution: by April 15 th (not signed by the President) Appropriations subcommittees receive 302B allocation: House in April ; Senate in June Appropriations hearings: House April / May; Senate June / July Appropriations floor Action: House June /July; Senate July / September Congressional Conference committees : Ongoing as needed June September New Fiscal Year begins: October 1 st All 12 Appropriations bills signed or Continuing Resolution: signed to keep government functioning October 1 st Sequestration begins: January 2, 2013 31

Budget Control Act and FY 2012 Appropriations Total for FY2012 appropriations is $1.043 trillion This amount is higher than the House-passed Ryan Budget that Republican members had been basing their FY2012 appropriation bills. This amount is 4% lower than current FY 2011 spending The House and Senate have agreed to this FY 2012 spending amount 32

Fiscal Year 2012 Appropriations In the HIV domestic portfolio the only Appropriations bill that has passed and received its FY 12 amount is the HOPWA program. It received $332 million, a $2.3 million cut from FY 11. The majority of the HIV domestic funding is in the Labor HHS package that is part of the final mega-bus currently being conferenced. It is unclear when this bill will be made public and voted on in the House or Senate. The package includes the remaining 9 bills for Fiscal Year 2012 for a total of $915 billion 33

Fiscal Year 2012 Appropriations increases requested in October 2011 Program House chairman s proposal CDC HIV prevention Senatecommittee bill Community Ask?? Flat $57.2 million Viral Hep Flat $10 million $10 million Teen Pregnancy Prevention Ryan White Program $85 million cut Flat Flat President Request - WAD Flat Flat $64 million $15 million RW ADAP Flat $15 million $55 million $35 million Abstinence only?? 0 0 NIH $1 billion - $190 million $1.3 billion 34

Fiscal Year 2012 Appropriations Policy riders in the bills have made it difficult to compromise, such as: The reinstatement of the ban on the use of federal funds for syringe exchange programs The inclusion of dedicated funding for ineffective abstinence-only programs We vehemently oppose the inclusion of both of these provisions. 35

Fiscal Year 2012 Appropriations Now the mega-bus spending bill is being held until the House and Senate agree how to extend the payroll tax holiday; extend unemployment insurance; and avert a 27.4% cut in Medicare reimbursement for doctors The Medicare provision is important to the HIV community since we need to keep as many doctors in the Medicare and Medicaid pipeline as possible. 36

Fiscal Year 2012 Appropriations If the Appropriations bill is not passed by the House, and the Senate and signed by President Obama by Friday at midnight there will be a government shutdown unless a third Continuing Resolution is enacted if only for just one additional week It is not known at this time what the funding amounts will be for FY 2012 Appropriations for the bulk of the HIV domestic portfolio We will inform you as soon as we know the numbers 37

Where Do We Go From Here? Advocacy! John Peller AIDS Foundation of Chicago 39

Keep advocating! Our budget advocacy worked!!!!! Congress and members of the Super Committee got the message that cuts to vital programs were bad for their constituents. We need to keep it up. 40

Ongoing advocacy work: Annual appropriations advocacy FY 12 appropriations (happening now): Continue for highest possible funding level for HHS, State Dept. programs FY 13 (starts Oct 1, 2012): push for highest possible funding level for HHS, HUD, State Dept. programs 41

Deficit Reduction Action Steps We all need to educate our community about deficit reduction, the process, and what happens next. We need to stop the message that deficit reduction was a failure. 42

Deficit talking point 1. The Super Committee Succeeded Talking points: The Super Committee succeeded in preventing major cuts to Medicare, Medicaid, Social Security and other programs. However, health reform, HIV programs and other vital programs that help vulnerable populations are still at risk. 43

Deficit talking point 2. Congress & the President must stick to their plan Talking point: Congress & the President passed a law that spells out how deficit reduction will proceed. They need make sure defense and nondefense spending are equally cut, as planned. We can t afford sacred cows. 44

Deficit talking point 3: Cuts aren t the only option. Talking point: New revenue has to be on the table as part of the solution. We call on Congress and the President to reduce the deficit with a balanced package of cuts and new revenue. 45

Deficit talking point 4: If Congress is serious about deficit reduction, fund HIV programs. Talking point: It is cost-effective to prevent new HIV cases, provide early medical care, and fund supportive services like housing. Knowing your status is deficit reduction! 46

Final thoughts Deficit reduction will dominate the 2012 elections and political environment for years to come. Nothing says Congress has to cut HIV programs or health reform. We need to show the value of our programs saving lives and money. The United States has a spending problem caused by two wars and tax cuts, but also a revenue problem. 48

Contact information Malinda Elwood, HLS/TAEP, Health Law and Policy Fellow, mellwood@law.harvard.edu Ronald Johnson, AIDS United, Vice President of Policy and Advocacy, rjohnson@aidsunited.org Donna Crews, AIDS United, Director of Government Affairs, dcrews@aidsunited.org John Peller, Vice President of Policy, AIDS Foundation of Chicago, jpeller@aidschicago.org 49

Resources AIDS Foundation of Chicago, http://www.aidschicago.org/ AIDS United, www.aidsunited.org Treatment Access Expansion Project, www.taepusa.org Center on Budget and Policy Priorities, http://www.cbpp.org/ Congressional Budget Office, http://www.cbo.gov/ Health Care Reform Resources Kaiser Family Foundation, www.kff.org FamiliesUSA, www.familiesusa.org Community Catalyst, www.communitycatalyst.org Healthcare.gov, www.healthcare.gov 50

Q&A Download the slides at www.hivhealthreform.org/blog 51