Just when you thought the federal budget battle between Democrats and Republican's had been resolved, on the heels of passing a bill that funds the government through Sept. 30, the House on Friday passed a bill which would effectively eliminate Medicare as we know it and slash more money out of the Medicaid (Medi-Cal in California) system. It caught many by surprise, a move to cut spending by $5.8 trillion over the next ten years as part of a budget plan for next year that will never make it through the Democratic-led Senate. The plan calls for an overhaul of Medicare for those under 55 years of age, moving from a government paid system to one where seniors receive a subsidy which is unlikely to cover premiums and not guaranteed to keep up with inflation, as well as a complete revamping of the Medicaid system. A Congressional Budget Office (CBO) review of the proposal to switch from government pay to private pay found that seniors would pay more for their health care if it were passed, no big surprise here since the plan is projected to cut Medicare costs by $30 billion over the next ten years. The CBO found that the new Medicaid plan would reduce benefits for Medicaid patients. Again, no surprise--the plan is projected to cut Medicaid costs by a massive $771 billion over the next ten years. The bill that passed is extremely controversial. President Barack Obama told the Associated Press that there was "nothing serious" in its overall outlook and it would reward millionaires and billionaires while hurting the poor and middle class. Not one Democrat voted for the proposal and four Republicans voted against it. Although the 2011 budget was squeezed through after a long fight and tense negotiations, this move set off another battle between the two political parties. "It is not courageous to provide additional tax breaks for millionaires while ending the Medicare guarantee for seniors and sticking seniors with the cost of rising health care," Representative Chris Van Hollen of Maryland (the senior Democrat on the Budget Committee) told the New York Times. This year's budget cut $38 billion in costs, nowhere near the $61 billion that House Republicans wanted. Therefore, Republicans were eager to battle with Democrats for more budget cuts and are quickly taking this to the political battlefield. 59 Republicans opposed the deal House Speaker John Boehner struck to pass the 2011 budget, so it's not completely harmonious in the House. It's going to be tough to find common ground with the Democrats "The Republicans have made a major mistake in turning a debate over the budget into a debate over whether to keep or eliminate Medicare," Senator Charles Schumer (Democrat) told the New York Times. It was a bold move given that recent polls have shown that independent voters are hesitant to cut "entitlement" programs like Medicare and Medicaid. But Republicans are trying to force Democrats to negotiate draconian cuts, refusing to raise the ceiling on our nation's debt limit unless their vote is tied to a deficit reduction plan. There is a July deadline, and if the ceiling isn't raised the U.S. would be in default on its debt, effectively turning T-Bills into something akin to Junk Bonds. Wall Street and the Treasury Department are expected to lobby for a quick resolution as this could cause extreme turbulence in the bond markets the longer this goes on. Although clearly something must be done to reduce the deficit, the plan will be difficult to sell--those under 55 aren't likely to lose the security of Medicare, while poor seniors aren't likely to be happy with seeing further reduction in Medi-Cal, which has already been hard hit.

[http://www.nytimes.com/2011/04/16/us/politics/16congress.html?nl=todaysheadlines&emc=tha2]

http://www.familyinhomecaregiving.com/blog/index.html?entry=federal-budget-showdown-could-have

http://online.wsj.com/article/SB10001424052748704495004576265013724755094.html