The House of Representatives started the process last Tuesday when the Budget Committee unveiled its resolution. It includes more than $5.5 trillion in cuts over 10 years. It would do this by converting Medicaid into a block grant to states and reducing projected funding by $913 billion over that ten year period. It would repeal the Affordable Care Act and save $2 trillion over ten years by keeping in place the medical savings realized through spending cuts and revenue and tax increases that were a part of the ACA. It would save $150 billion in Medicare largely by converting it into what some call a “premium support” program that others see as turning the retiree health insurance program into a voucher to buy health insurance on the private market. It also envisions converting the Supplemental Nutrition Assistance Program (SNAP) into a block grant. That is part of a directive in the resolution that would save $1 trillion in mandatory spending cuts (in addition to the changes to Medicaid, Medicare, and the ACA). The broad cut in mandatory spending would likely include the elimination of the Social Services Block Grant (SSBG) which was not specifically singled out as it has in some recent House Budget resolutions.
The Senate then unveiled its resolution on Wednesday. The proposal differs from the House plan but still includes significant cuts of $4.5 trillion over ten years, lower than the House target but severe none-theless. The Senate resolution requires $600 billion in cuts through “reform of welfare programs.” It also envisions additional savings through Medicaid and while it doesn’t specifically call for a block grant of the program it calls for converting Medicaid to a model similar to the Children’s Health Insurance Program (CHIP) which is a block grant. It too repeals the ACA but keeps the revenue. The Senate resolution also sets up a reconciliation process bill by the Senate Finance Committee and the HELP Committee to be reported by the end of July. That could serve as legislation on the Affordable Care Act, repeal or otherwise depending on what the Supreme Court rules in their pending ACA case.
Both resolutions were passed out of their respective committees on Thursday on party line votes. The House process was unexpectedly delayed when there were disagreements within the Republican caucus over the level of defense spending. The President has proposed both doing away with the sequestration caps and proposes to increase defense spending to $561 billion (with the current sequestration caps setting defense at $523 billion). The House (and the Senate) resolution do not eliminate the sequestration but attempt to get around the caps on the defense side by classifying it as “emergency spending” that isn’t counted against spending limits. The House would increase defense spending and well beyond what the President requested. The House sets spending at $617 billion with the additional
$96 billion being classified as part of the emergency spending fund, the Overseas Contingency Operations fund. Later in the day the Senate used the same tool to set dense spending at the same level.
Both houses are expected to debate and pass their resolutions after floor debate sometime this week.