Welcome to MedeAnalytics’ The Budget Control Act of 2011 Resource Center! This is a complimentary educational service intended for the benefit of the healthcare industry and the general public.

The Budget Control Act of 2011 (BCA), Public Law 112-25, was the final resolution of the 2011 United States debt-ceiling crisis, which had threatened to push the nation into sovereign default during the summer of 2011.

The BCA passed by the House on Aug. 1, 2011 by a vote of 269-161. On following day, the Senate approved it by a vote of 74-26, and later that day, the BCA was signed into law by President Barack Obama.

The intent of the BCA was to raise the debt ceiling and rein in long-term federal spending. These were the most salient provisions of the BCA:

• The debt ceiling was increased by $400 billion immediately.
• The President could request a further increase of $500 billion, subject to a congressional motion of disapproval which the President may veto, in which case a two-thirds majority in Congress would be needed to override the veto.
• The Act directly specified $917 billion of cuts over 10 years in exchange for the initial debt limit increase of $900 billion.
• The BCA created a 12-person Joint Committee of Congress (the so-called “Super Committee”), composed of six members from each party, to come up with a plan to reduce the deficit by an additional $1.5 trillion over 10 years.
• If the Joint Committee failed to produce the aforementioned plan, the Act mandated a sequestration process (“sequester” or “trigger” plan) which would automatically reduce federal spending by $1.2 trillion in total from fiscal years 2013 through 2021, with across-the-board cuts and the reductions split equally between the defense and non-defense portions of the budget.
• Medicare would be subject to the sequester-driven cut, but cuts to that entitlement program would be capped at two percent.

With the Joint Committee’s inability to come up with a long-term plan to reduce the deficit, the sequester-driven cuts—totaling $109.3 billion for 2013 and effective starting on Jan. 1, 2013—were a significant part of the so-called “fiscal cliff” faced by the nation at the end of 2012. Per the sequester, Medicare was to be cut by almost $12 billion in 2013.

However, the American Taxpayer Relief Act of 2012, Public Law 112-240, enacted on Jan. 2, 2013, pushed out the sequester until March 1, 2013, reducing the total cut for the year by $24 billion or 22 percent to $85.3 billion.

Since President Obama and congressional leaders were unable to reach an agreement by March 1, 2013 to avert the sequester, the budgetary cuts are being implemented in FY 2013. Here’s a high-level breakdown of the cuts per the Congressional Budget Office (CBO):

Here is a plausible estimation of how the $9.9 billion cut to Medicare will be allocated, based on data from the CBO and the Office of Management and Budget:

We encourage you to visit this resource center often to keep informed on the latest material developments pertaining to the BCA and its impact on Medicare.