The Fiscal Cliff and Medicaid Support

One might expect to hear less these days about federal politics, as the tumultuous election finally ended in November. However, the end of the election has done little to temporarily end political drama, as the final month of the year is now filled with intense debate over the so-called “fiscal cliff.” This cliff refers to a series of mandatory tax increases and spending cuts that are slated to take effect at the first of the year unless the parties in Congress and the White House can reach agreement on an alternative.

What exactly is the fiscal cliff?

A recent CNN Money article provides a helpful foundation for the main details of the cliff. Even a quick glance makes clear that many different issues are affected, and virtually every American will see some changes if we actually go over the cliff or fail reach certain compromises. That may includes New York seniors who are using support services like Medicaid and Medicare.

It is important to distinguish exactly what is and is not included in the spending cuts which would be enacted if the cliff is hit. Uniquely, Medicaid is actually not included. Medicare, however, would see some changes. For example, a Medicare “doctor fix” will expire. The fix was in place to ensure caregivers recived enough money from Medicare to pay for the cost of treatment. In practical terms this means that many doctors will immediately receive 27% less reimbursement from the federal government for their services.

Will Medicaid’s exclusion from the fiscal cliff ensure no future cuts?

Not quite. That is because it is widely expected that eventually (though perhaps after the first of the year) an agreement will be reached on an alternative to the fiscal cliff. That agreement will almost undoubtedly include some spending cuts–and Medicaid is very much on the table for those “compromise” plans. An article at provides a helpful summary of these Medicaid issues.

One option is that certain Medicaid expansion provisions in the Affordable Care Act (Obamacare) will be cut back as part of the “entitlement” reform portion of a possible compromise. Instead of having significant financial incentives to expand Medicaid, states may have the benefit cut as part of the compromise, limiting Medicaid expansion that might otherwise take place.

Also, in previous budget proposals the President has conceed slight Medicaid matching fund cuts in the next decade. That has led many observers to suggest that, if push comes to shove, some federal Medicaid matching fund cuts (or changes to the manner that the program works) might be part of a compromise to avoid the fiscal cliff.

In any event, it will be important to follow along with the developments in these fiscal cliff negotiations and seek out financial and legal advisors who can explain how any changes might affect your situation.

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