TheWeekInCongress.com

Elements of the Deficit Bill's

The Senate bill would cut $39 billion in spending over five years and would bring in $11 billion from the sale of broadband licenses. Primarily the bill would cut entitlements although dairy farm subsidy cuts were removed from the bill to continue at about $1 billion.

Most attention has been paid to Medicare, Medicaid, aid to States for the poor and student loan provisions.

MEDICAID

Under the bill States can regulate Medicaid co-payments and eligibility:

A recent Congressional Budget Office report estimated that due to potentially increased premiums to be imposed by States about 45,000 (Medicaid) enrollees would lose coverage in fiscal year 2010 and 65,000 would lose coverage in fiscal year 2015. The CBO report concluded that 60% of those losing benefits will be children.

The report went further to note a predicted 13 million low-income Americans will face higher co-payments or co-payments where once there were none. The report also calculated that 13 million poor Americans will pay more for prescription drugs by 2010. A third impacted (4 million) are likely to be children.

If a beneficiary failed to make premium payments for over 60 days Medicaid coverage could be cancelled by the state. If a beneficiary does not pay the co-pay to a doctor or hospital the services or treatment could be denied. The CBO concluded that it is likely to see savings because new or increased co-payments may cause beneficiaries to not seek medical care. The report estimated that states would impose premiums on 1.3 million poor people and cut benefits to 1.6 million. The report continued to note that most of the cuts would be for dental, psychological and vision care.

Those who bury or transfer assets to lower their net worth and so qualify for Medicaid payments for nursing home care will find that states are empowered to find ways to thwart the practice. The bill sets the equity limit after which the person is no longer eligible for nursing home benefits at $500,000. States could increase that equity amount to $750,000. The provision is expected to immediately affect 120,000 people each year by delaying eligibility. The equity provision is expected to end payments for 2,000 people per year. The savings is calculated at over $6 billion in ten years.

The bill also raises the bar on requiring recipients to prove they are Americans. Medicaid is expected to drop coverage for 35,000 largely expected to be illegal immigrants.

STUDENT LOANS

The bill begins to close the loophole that lenders have exploited whereby they are paid the difference between what interest rate they lend college money at and 9.5%. Simplistically, lenders (banks, private businesses and others) are paid the difference between 9.5% and the interest rate at which the money is loaned. The process has provided windfall profits for the lenders estimated at almost $17 billion in 2004 and was reigned in by Congress about ten years ago but lenders found loopholes and the cost of the program increased..

WELFARE

 The bill cuts funds for child support enforcement normally given to the states to administer the program. States are empowered to to require welfare recipients to work more under the Temporary Assistance for needy families program if they want benefit payments.

Cuts in funds for child support enforcement to states. Other provisions of the bill would establish stricter work requirements for welfare recipients and cut federal payments to the states for enforcing child support orders. The cut would save the federal government $4.1 billion over 10 years, but child support collections would decline as a result, the budget office said.

DOCTORS AND INSURANCE COMPANIES 

The Senate intended to cut as much as $26 billion over ten years  to private HMO businesses that are part of Medicare but heavy lobbying from the health insurance industry squelched the cuts to about $4 billion. The bill took aim at the fact that private insurers have a higher number of healthier members than the government programs yet they receive the same subsidy providing more money than is spent. The CBO report concluded that Medicare payments to HMOs, will drop through 2010 but increase from there on to exceed payments now made.

Medicare payments to doctors were earmarked for a 4% cut but the provision was removed from the bill.

BROADBAND

The government will auction of broadband licenses and will use some of the expected $10 billion to pay for converter boxes when Americans are faced with buying new TVs after the conversion to digital TV takes place and they find their TVs don't work anymore.