FISCAL OUTLOOK : Budgets, Negotiations and Other Uncertainties N4a 19 th Annual Aging Policy Briefing

1. FISCAL OUTLOOK : Budgets, Negotiations and Other UncertaintiesN4a 19th Annual Aging Policy Briefing Ellen Nissenbaum, Sr. VP, Gov’t Affairs www.cbpp.org nissenbaum@cbpp.org April 22, 2013

2. 2 Deficit Reduction Recap Bipartisan Interest in Deficit Reduction • Huge deficits hurt the economy • “Debt stabilization” should be the target • Significant deficit reduction already enacted • More deficit reduction needed

3. Deficit Reduction Achieved So Far $2.75 trillion in deficit reduction enacted since 2010 (not including sequestration cuts) – for the years 2014-2023 $1.6 trillion in spending largely from discretionary $0.7 trillion in revenues $0.45 trillion in interest $1.5 trillion more deficit reduction would stabilize the debt over coming decade ($1.3 trillion in policy changes, and $0.2 trillion in interest)

4. 70% of Recent Policy Savings to Reduce Deficits Have Come From Program Cuts

5. Funding for Non Defense Discretionary 1976-2023“Roadmap for Disinvestment”

6. Sequestration in 2013

7. Ryan dollar cuts to NDD

9. Health Care Many Deficit Proposals Threaten Health Coverage • Proposals that affect low-income beneficiaries • Medicaid cost-shifts to states • Structural changes to Medicare & Medicaid • Threats to the ACA

10. Ryan Budget Plan Would Slash Federal Medicaid and CHIP Funding by Nearly One-Third by 2023* * Compared to current law (after excluding effects of repealing medicaid expansion and CHIP extension in health reform law).

11. Health Care Medicare Beneficiaries Have Modest Incomes Share of beneficiaries by income group, 2008

12. Congressional Budgets Ryan Plan Takes Spending Cuts-Only Approach • Cuts domestic spending by $6.2 trillion • Protects defense • Cuts Medicare by $355 billion, raises eligibility age, moves to premium support • Cuts Medicaid & other health programs by $2.6 trillion • Cuts taxes without saying how to pay for them

13. 13 Murray Budget • Reduces the deficit by $1.85 trillion: 50/50 • Replaces all nine years of the sequester. • Reduces Medicare by $265b (no beneficiary cuts). • No cost shifts or harmful changes in Medicaid. • Reduces discretionary spending, both defense and domestic, below the Budget Control Act caps for the next decade. • Adheres to the Bowles-Simpson goal of ensuring deficit reduction does not increase poverty.

14. 14 Congressional Budgets Obama Budget Includes Offer to Boehner • Cuts debt by $1.8 trillion, total deficit reduction of $4.3 trillion • Repeals all 9 years of sequestration, additional $200 billion in discretionary cuts • Cuts $400 billion in health care, largely Medicare • Protects Medicaid beneficiaries and avoids state cost shifts • Includes $680 billion in new revenues

15. OBAMA BUDGET HEALTH CARE SAVINGS • Total healthcare savings: $370b in Medicare, $20b in Medicaid • Drops previous cost shifts to states in Medicaid • Medicare savings • Drug rebate savings • Provider savings • Higher premiums for upper-income seniors • Modest increases in cost sharing

16. Making The Case For Revenues • Demographics coupled with rising health care costs • Need for more investments • Need to replace the entire sequester, • Need to get our deficit under control – without increasing poverty or income inequality.

17. Tax Expenditures are Substantial Note: Tax expenditure estimates do not account for interaction effects; estimate does not include outlays. Source: Office of Management and Budget, Historical Tables 8.5 and 8.7 and Analytical Perspectives Table 17-2.

18. Offers From Both GOP and White House Proposed Higher Revenues Than the American Tax Relief Act

19. 19 Core Principles for Deficit Reduction • Any further budget/deficit deals should reflect that about 70% of the deficit reduction to date has come from spending cuts. • Accordingly,any further deficit reduction— which should replace the entire sequester—must include significant new revenues • Limit size of health care cuts • Don’t increase poverty or income inequality • No further cuts in non-defense discretionary funding • Don’t shift costs to states, especially in Medicaid

20. ADDITIONAL BACKGROUND

22. Ryan cuts to NDD grants in aid

23. NDD categories