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House Passes FY 2012 Budget Proposal

Today the House of Representatives passed H. Con. Res 34, the Fiscal Year 2012 Budget Resolution. This legislation seeks to balance the national budget by cutting government spending and reforming Medicare and Medicaid. The plan would cut an estimated $6.2 trillion over 10 years, and reduce cumulative deficits by $4.4 trillion compared with President Obama’s budget proposal.

The House proposal seeks to reform Medicare by changing the program payment structure from the current “fee-for-service” model to a “premium support” model. This means that the government would offer subsidies to future beneficiaries to purchase a qualified private health insurance plan rather than being directly covered by a government-sponsored plan as is currently the case. Additionally, there would be a sliding benefit scale that would take into account low-income and high-risk beneficiaries.

The House budget proposal also seeks to reform Medicaid. The proposal would alter the current “federal-state” matching structure and instead the federal government would issue “block grants.” States would then be allowed to tailor their own programs to meet needs as they see fit.

Lastly, the House proposal would effectively defund the Health Care law passed last year. This Resolution would allow the Chairman of the Budget Committee to adjust allocations and appropriation levels of the Health Care Reform Law that have an effect on the federal budget, such as: the individual mandate; funding for state health insurance exchanges; Medicaid eligibility expansions; tax credits for small employers that offer insurance; employer penalties for not offering insurance; and the Medicare Part D subsidy, referred to as the "doughnut hole fix."

Obviously, the Budget Proposal will still need to clear the Senate before being fully enacted. The Senate will not be taking up this proposal until after they return from their Easter recess, in two weeks. The House budget is very unlikely to pass the Senate without many significant changes and the provisions dealing with Medicare, Medicaid and the Health Care Reform law. Senate Budget Committee Chairman, Kent Conrad hasn’t made clear yet what his budget plan is or how it will be different from either the House Budget or the President’s Budget.

To see the full Budget Report from the House Budget Committee, click here.

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