President Releases Fiscal Year 2014 Budget Proposal
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President Releases Fiscal Year 2014 Budget Proposal

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April 15, 2013

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Last week, President Obama released his budget request for FY 2014.

Instead of outlining his ideal budget vision, the document seeks a deficit reduction compromise by restating offers made in recent discussions with Republican leaders, specifically House Speaker Boehner (R-OH) in December.  

The proposal would stabilize the debt with twice as many spending cuts as revenue increases. Vulnerable seniors, children, and their families would see additional decreases in programs and benefits they depend on.

NCOA called the plan a mixed bag for seniors. Here are more details on what's included:

Non-Defense Discretionary Cuts

The President’s budget would eliminate the sequester, including the arbitrary, across-the-board cuts it imposes this year.

However, the request calls for another $200 billion in cuts to discretionary programs—half from defense programs and half from non-defense. 

Older Americans Act
With the exception of SCSEP (below), the programs of the Older Americans Act remain essentially level-funded in this budget-cutting environment.

Senior Community Service Employment Program (SCSEP)
The Administration once again proposes to cut SCSEP—this time by nearly $70 million, or 15%. This is surprising and disappointing, given that more seniors are working past traditional retirement age to make ends meet and are unemployed for longer periods than any other age group if they do lose their jobs. SCSEP is the only federal job placement and training program designed to serve low-income older workers.

Low-Income Home Energy Assistance Program (LIHEAP)
The plan proposes to cut $500 million from this program.

New Investments

New, long-overdue investments are being sought for elder justice; senior housing; and Alzheimer’s research, services, and caregiver support, including:

  • $2 million for adult protective services
  • $25 million for Section 202 Housing for the Elderly (with $20 million for new housing and supportive services demonstrations)
  • $10 million for Housing Counseling, including reverse mortgage counseling
  • $80 million to the National Institute on Aging for Alzheimer’s therapies
  • $16 million to the Administration for Community Living for Alzheimer’s services and supports

Medicare & Medicaid

The FY14 budget includes $371 billion in Medicare cuts and $22 billion from Medicaid over 10 years. 

Most of the Medicare savings would come from aligning Medicare prescription drug payments with Medicaid policies through additional rebates for low-income beneficiaries (saving $123 billion) and adjusting payment updates for certain post-acute care providers (saving $79 billion). 

NCOA is pleased that the timeframe would be accelerated for gradually closing the Part D prescription drug coverage gap, or donut hole.

However, we're concerned about proposals that would shift additional costs onto beneficiaries, including: 

  • Requiring new enrollees to pay higher Part B deductibles
  • Requiring new enrollees to pay home health copayments
  • Further increasing income-related Part B and D premiums, affecting beneficiaries with incomes above about $47,000
  • Increasing Part B premiums for beneficiaries who buy more generous Medigap policies.

NCOA is analyzing another proposal that would increase the price differential between brand name and generic prescription drugs for Part D low-income beneficiaries, saving an estimated $6.7 billion over 10 years. 

Social Security

The budget includes the controversial proposal to reduce the Social Security Cost-of-Living Adjustment (COLA) through the use of a chained Consumer Price Index (CPI), reducing benefits by $130 billion and increasing revenues by $100 billion.

Certain vulnerable populations, including beneficiaries over age 76 and individuals with disabilities who have been receiving Social Security for at least 15 years, would receive modest protections from the calculation change.

NCOA supports updating the Consumer Price Index for the Elderly (CPI-E) and adopting it for COLA adjustments to provide better accounting of the out-of-pocket health costs that seniors face.

Nutrition Assistance

The budget request proposes to restore the cut in Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) benefits scheduled to take place this fall.

Funding for the Commodity Supplemental Food Program (CSFP) is protected, but investments to allow six new states to join the program would once again be denied.

Next Steps

With the House and Senate already passing their own, very different, budget resolutions, negotiations may begin soon on trying to craft a bipartisan compromise. However, the prospects are not good because Republican leaders continue to refuse to consider any new revenues for deficit reduction. 

The next big budget deadline may occur near the end of July, when the debt ceiling will again need to be lifted in order to pay for government obligations previously incurred.

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