Houses Passes 2012 Budget Proposal
Published 4/15/2011
Members of the House have voted 235-193 to approve House Continuing Resolution 34, a measure that could lead to dramatic long-term changes in Medicare.
H. Con. Res. 34 would set guidelines for establishing a budget for the U.S. government for federal fiscal year 2012, which starts Oct. 1, and also set guidelines for what drafters call “appropriate budgetary levels” for fiscal years 2013 through 2021 Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, introduced the measure. He and other measure advocates say the measure would save about $4.4 trillion from 2012 through 2021.
The proposal would require Congress to reduce the annual budget deficit to $434 billion by 2021, from $1.1 trillion in 2012.
Every Democrat who voted opposed the resolution; 4 of the 239 Republicans who voted crossed party lines to vote against it.
Resolution Title V deals with policy issues, and it includes a policy statement on Medicare and a policy statement on Social Security.
In the Medicare policy statement, drafters note that the Medicare trustees say the Medicare Hospital Insurance Trust Fund could be exhausted by 2020, and that projections show mandatory Medicare spending could eat up 14% of national gross domestic product by 2080.
“Failing to address this problem will leave millions of American seniors without adequate health security and younger generations burdened with enormous debt to pay for spending levels that cannot be sustained,” the drafters say.
“It is the policy of this resolution to protect those in and near retirement from any disruptions to their Medicare benefits and offer future beneficiaries the same health care options available to Members of Congress,” drafters say.
If the policy statement takes effect as written, when future generations reach Medicare eligibility age, they will help with paying for products from a menu of guaranteed health coverage options.
Low-income beneficaries and those with greater health risks will get extra assistance, according to the policy statement.
In the Social Security policy statement, drafters cite projections that they disability trust fund will be exhausted in 2018 and the main retirement benefits trust fund will be exhausted by 2037.
The resolution assumes Congress will develop a trigger designed in such a way that if the Social Security trust fund trustees find that the 75-year actuarial balance of the Social Security trust funds is in deficit, the trustees will recommendand statutory reforms that can bring the trust funds back into 75-year actuarial balance.
Insurance industry officials say H. Con. Res. 34 is merely a blueprint. They say they are concerned about provisions that call for cuts in personal and corporate tax rates.
Congress would have to offset the cuts by eliminating existing tax breaks, and that could affect the tax-advantaged products sold by insurers, according to several industry officials and lawyers with an interest in insurance law.
One industry official says the blueprint will now to the House Ways and Means Committee, which has the responsibility for turning the blueprint into actual tax provisions.
Staffers and members of the Ways and Means Committee have indicated they will weigh carefully and deliberately all changes to the current tax system, insurance tax policy experts say.
Nathan Perlmutter, president of the Association for Advanced Life Underwriting (AALU), Reston, Va., says the AALU is still reviewing the ideas and proposals that have been presented thus far.
“Given the significance of the fiscal challenges facing the country, we recognize that something needs to be done,” Perlmutter says in a statement.
The AALU “will be working through our membership in the coming weeks to gather their perspectives on this important subject and ensure our constructive participation in the dialogue going forward, recognizing the important role that the life insurance industry plays in our nation’s economy and the financial security and protection of 75 million American families and thousands of businesses nationwide,” Perlmutter says.
