American Society of Hematology

Washington Update: What the Debt Deal Means for Hematologists

Published on: August 03, 2011

As you are most likely aware, the President and Congress struck a last-minute deal and approved legislation to raise the nation's debt limit and reduce the deficit. While the conclusion of the debt bill saga prevents the country from default and ends one of the most contentious legislative periods in congressional history, there are still political hurdles and deadlines ahead, and many ASH members have questions about what this will mean for hematologists. Below please find a summary and explanation of the legislation.

The legislation, known as the "Budget Control Act of 2011" (BCA) institutes spending caps on discretionary spending at levels necessary to cut nearly $1 trillion from the current budget over the next ten years. The BCA also paves the way for a short-term increase in the debt ceiling of $900 billion. The specifics of the spending cuts will be determined by the House and Senate Budget and Appropriations Committees through the normal appropriations process. In this first phase, Medicare and other entitlement programs are not affected.

In the second stage of the process, a new, bipartisan, special congressional panel is assigned to find $1.5 trillion in additional deficit reduction. Recommendations from the panel may also include entitlement reforms, tax increases, or the closing of tax loopholes. The panel is required to report its recommendations to the Congress by a majority vote no later than November 23, 2011. Congress is required to vote on the recommendations by December 23, 2011.

If the panel finds at least $1.5 trillion in savings and its recommendations are enacted by Congress, the debt ceiling will be raised by $1.5 trillion. If the panel fails to produce a bill, its bill is not enacted, or it produces less than $1.2 trillion in savings, the debt limit will increase by $1.2 trillion and across-the-board cuts known as "sequestration" will be triggered to achieve $1.2 trillion in savings. One-half of the across-the-board cuts would come from defense spending, with the remaining coming from non-defense spending, both discretionary and mandatory, for FY 2013-2021. While this means Medicare could be cut, the legislation specifies the cut would be limited to no greater than 2 percent of total program costs and any such cut would come from payments to providers and insurance plans. Benefits and beneficiary cost sharing would remain unchanged.

Impact on Providers

Although earlier versions of a debt deal included a proposal to protect physician payment from cuts for the next ten years, that measure was not included in the final deal. This means that Medicare physician payments are still slated for a 29.5 percent cut beginning next year, and providers could still experience additional cuts resulting from a sequestration penalty. On the other hand, because the new congressional panel will need to make recommendations for congressional approval this fall, some expect that it will try to address the physician payment problem and provide at least a short-term fix to prevent implementation of the cut. ASH will continue to advocate for a long-term solution and replacement of the sustainable growth rate formula.

Impact on Federal Funding of Research

Federal funding of research still must be determined through the appropriations process, which must be finalized by September 30 or through a funding extension resolution. The BCA, however, contains a budgetary blueprint for the next two years and caps non-security discretionary spending, which includes funding for public health programs such as the National Institutes of Health (NIH), at $359 billion in FY 2012. This is $22 billion more than the funding provided for in the House of Representatives FY 2012 budget that was passed earlier this spring, but still almost $15 billion (4 percent) less than final FY 2011 spending.

What this means for NIH in FY 2012 remains to be seen. Some of the non-security-related bills that have been approved by the House of Representatives have cuts deeper than the 4 percent called for under the terms of the BCA. It is unclear whether House appropriators will go back to the drawing board and apply a 4 percent cut to all non-security bills or will keep the bills that have passed "as-is" and provide more or less funding for the remaining non-security bills, including the one that includes NIH.

Congress has recessed for its August break and no further work will be completed on any of the appropriations bill until the House and Senate return in September. However, as Congress continues to formulate the details of the FY 2012 budget, funding for the NIH remains in jeopardy. All Members of Congress need to hear from their constituents about the need to adequately fund NIH. To contact your representative and senators quickly and easily, utilize the email template offered in our online ASH Advocacy Center. ASH strongly encourages you to contact Congress and share this message through this site.

ASH will continue to monitor developments and keep the membership informed. If you have any questions, please contact

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