Government affairs

Legislative Updates

Budget deal temporarily addresses budget caps, debt ceiling and Medicare premiums

On Nov. 2, President Obama signed the Bipartisan Budget Act of 2015 (H.R. 1314, PL 113-67), a deal that was negotiated with the White House by former Speaker of the House John Boehner (R-OH) before he stepped down at the end of October. As a result of those negotiations, discretionary spending caps were raised, along with the nation’s debt limit, through March 15, 2017. The agreement is expected to expected to deflect difficult fiscal issues for new Speaker Paul Ryan (R-WI) as he settles in to the role.

The agreement partially relaxes harsh sequestration spending cuts, required under the 2011 Budget Control Act, by increasing spending caps for Fiscal Years 2016 and 2017 by a total of $80 billion, allowing for an equal split between defense and non-defense. Specifically, the agreement provides the $73.5 billion in funding for overseas contingency operations for 2016 and 2017, which is comparable with the $74 billion allocated in FY 2015 and is about $16 billion a year more than the administration’s $58 billion FY 2016 request. It also prevents a sharp increase in Medicare Part B premiums for certain beneficiaries in 2016, and it keeps the Social Security disability insurance trust fund solvent until 2022.

The budget cap increases are offset by a variety of spending cuts and revenue increases, none of which hit the pocketbooks of federal-postal employees. Another provision in the legislation repeals a requirement in the health care law for large employers to automatically enroll their employees in health care plans.

With regard to the Medicare premium issue, the Social Security Administration recently announced that recipients would not receive a cost-of-living adjustment (COLA) in 2016 due to the lack of inflation during the COLA determination period. As a result, when there’s no COLA, Medicare’s Part B premium is frozen for about 70 percent of beneficiaries. However, current law requires that the funds lost due to the premium freeze affecting the majority of beneficiaries be recaptured through a sharply higher premium for the remaining 30 percent.

Due in part to the extensive lobbying efforts of NALC members and the federal-postal community, the budget deal included a limit on the premium increase for the 30 percent and the deductible to what it would be if there had been a COLA and premiums were not frozen. With the Medicare Part B premium baseline projected to be $120.70 per month for 2016, for 70 percent of beneficiaries, premiums will remain at $104.90 in 2016. For the 30 percent who are not held harmless, premiums will rise to $120.70, plus a monthly $3 surcharge beginning in 2016. The surcharge is expected to last five years.

Prior to passage, individuals would have seen their premiums rise 52 percent, from $104.90 to $159.30 per month.

“While this fix is not perfect,” NALC President Fredric Rolando said, “we are pleased that Congress and the administration worked to address it in some fashion rather than do nothing at all.”

Passage and enactment of the budget deal followed the end-of-September expiration of the 2013 budget deal, which required Congress to revert spending caps created in the 2011 debt limit law. With the 2016 appropriations process stalled in the House and Senate at that time, lawmakers resorted to passing a temporary funding measure to avoid a government shutdown at the end of September and have spent the last 10 weeks negotiating a new budget deal. Congress will now focus its energy on passing, by Dec. 11, either a continuing resolution or an omnibus spending package with the new caps.

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