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Entitlement Programs would Face Huge Cuts Under CAP Act, Study Finds

June 22, 2011
by root
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Five consumer and healthcare provider groups released a study Wednesday highlighting the significant impacts that proposed spending cuts in federal programs could have on the nation’s entitlement programs and their beneficiaries.

The groups—which included AARP, American Hospital Association, American Medical Association, American College of Cardiology and LeadingAge (formerly AAHSA)—commissioned healthcare policy research firm The Lewin Group to examine the Commitment to American Prosperity (CAP) Act and its projections. Introduced this past February, the CAP Act would limit federal spending to about 20 percent of Gross Domestic Product and automatically cut spending across all federal programs in any year where spending is projected to exceed the spending cap.

“The process is designed to allocate the greatest cuts to programs experiencing the greatest growth, which would concentrate the cuts among major mandatory programs such as Social Security, Medicare and Medicaid,” according to The Lewin Group report. “Because the spending cap is set based on spending, changes in taxes could not be used to reduce the level of cuts required.”

The Lewin Group analysis found that the CAP Act would cut $4.2 trillion from federal spending between 2013 and 2021, considerably impacting programs with expected growth such as Social Security, Medicare and Medicaid. Specifically, cuts for major programs over this period would be $1.3 trillion in Social Security, $859 billion under Medicare and $575 billion in federal Medicaid payments to states, according to the report.

The report found that by 2021:

Social Security benefits would be cut by nearly 20 percent.

Reductions in fees for physician services could lead to fewer physicians participating in the Medicare program.

Up to 1.3 million healthcare workers could lose their jobs.

“We cannot force our nation’s most vulnerable citizens and their families to bear the brunt of federal budget deficit reduction,” LeadingAge CEO Larry Minnix said in a statement. “It’s unethical, unconscionable and unsound economics.”

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Full report: Limiting Federal Spending as a Proportion of Total Gross Domestic Product(PDF download)

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