The Super Committee and the Budget

The future of federal spending on health care, medical research, and countless other programs will be determined by the actions this fall of a new Congressional committee. The Joint Select Committee on Deficit Reduction, also known as the "Super Committee," was created by the Budget Control Act of 2011 as part of the August 2011 compromise to raise the federal government’s borrowing limit (the "debt ceiling") and reduce the federal deficit. The Super Committee is charged with producing a plan by Nov. 23, 2011 to reduce the federal deficit by at least $1.2 trillion over 10 years. If the Super Committee does not produce a plan that achieves this much in savings, or if the committee’s plan is not passed by both houses of Congress by Dec. 23, 2011, automatic spending cuts (implemented through a process called "sequestration") will take effect over fiscal years (FY) 2013 through 2021. The Budget Control Act also set new limits on discretionary spending, including spending on medical research for FY 2012 and 2013.

Meet the Super Committee

The Super Committee is composed of 12 members of Congress, 3 from each party from each house. The members were chosen by the leaders of each party in each house. The committee roster is:

Rep. Jeb Hensarling (R-Tex.), Co-Chair

Sen. Patty Murray (D-Wash.), Co-Chair

Sen. Max Baucus (D-Mont.)

Rep. Xavier Becerra (D-Calif.)

Rep. Dave Camp (R-Mich.)

Rep. Jim Clyburn (D-S.C.)

Sen. John Kerry (D-Mass.)

Sen. Jon Kyl (R-Ariz.)

Sen. Rob Portman (R-Ohio)

Sen. Pat Toomey (R-Pa.)

Rep. Fred Upton (R-Mich.)

Rep. Chris Van Hollen (D-Md.)

The Super Committee began meeting on Sep. 8, 2011, and as of Oct. 13, it held two public hearings and many closed door sessions to discussion options for spending cuts. Interest groups from across the country, representing nearly every issue in the federal budget, are trying to influence the Super Committee’s decisions and help it set priorities.

Potential Automatic Spending Cuts For FY 2013-2021

With an even number of members from each party, the Super Committee might not be able to reach an agreement, particularly when there are sharp partisan divisions about whether deficit reduction should include increased revenues as well as spending cuts. If the Super Committee succeeds at producing a bill, the legislation must be approved by both houses of Congress. No amendments or filibusters (prolonged debate in the Senate to avoid a vote) of the bill would be permitted. If Congress does not pass legislation to achieve the required level of deficit reduction by Dec. 23, 2011, automatic spending cuts will take effect in FY 2013-2012 through the sequestration process. Half of the automatic cuts would come from defense spending, and the other half would come from the rest of the federal budget, excluding Social Security and other retirement programs, Medicaid, and certain safety-net programs for people with low-incomes. Cuts to Medicare would be limited to 2% of payments to provider and Medicare Advantage plans; beneficiary costs would not increase. The cuts would be applied evenly across Medicare, but physician payments would be reduced by more than 2% if the physician update formula is not repealed.

Healthcare Options on the Table

One of the difficult issues the Super Committee faces is how to achieve reductions in Medicare spending while also preventing another payment cut under the physician fee schedule. Repealing the current physician payment update formula, which has produced payment reductions of 20%-30% before being reversed by Congress, is estimated to cost $300 billion over ten years. The Medicare Payment Advisory Commission (MedPAC) developed a proposal to replace the current update formula with a new approach that would freeze payments to primary care physicians and reduce payments to other physicians. Additional savings could come from other parts of the Medicare program. For example, payments to hospitals for bad debt and graduate medical education could be reduced, payments to physicians for imaging services could be cut, and beneficiary cost-sharing could be required for laboratory and home health services. Any or all of these options could be on the table for the Super Committee to consider. Medicare is a large part of the health spending at issue, but all other federal spending on health issues also is up for debate by the Super Committee. As the committee looks for potential deficit reduction options, it may consider spending on medical research, Medicaid, and other health-related expenses, as well.

Opportunities for Medical Research Spending in FY 2012 and Beyond

In addition to creating the Super Committee, the Budget Control Act set limits on discretionary spending – federal spending excluding Social Security, Medicare, and Medicaid and the wars in Iraq and Afghanistan. The spending cap for 2012 ($1.043 trillion) is $7 billion less than the total approved discretionary spending for FY 2011 ($1.050 trillion), but $24 billion more than the House of Representatives approved in its budget for FY 2012. The spending cap for FY 2013 is only $4 billion more than the FY 2012 cap, but beginning in 2014, the annual cap will increase by $20 billion to $25 billion per year. These increases in the spending cap could allow for increases in appropriations for the National Institutes of Health and other federal research programs.