Congress Nears Deal on 'Fiscal Cliff,' Obama Says

Failure to reach agreement could have significant impact on health care in U.S.

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By Steven Reinberg
HealthDay Reporter

MONDAY, Dec. 31 (HealthDay News) -- Congress and the White House seemed to barely avoid falling over the so-called fiscal cliff late Monday afternoon, with agreement to head off widespread tax increases set for midnight.

But political and philosophical differences kept Republicans and Democrats from agreeing on legislatively mandated spending cuts, delaying decisions on how to reduce federal spending until after the start of the New Year.

"It appears that an agreement to prevent this New Year's tax hike is within sight," President Barack Obama said during an afternoon news conference updating the nation on the negotiations, the Associated Press reported. "But it's not done."

Republican Sen. Mitch McConnell of Kentucky, the GOP leader of the Senate, working with Vice President Joseph Biden, agreed with Obama that a deal was drawing closer. Speaking on the Senate floor Monday, McConnell recommended that Congress act quickly to pass legislation raising tax revenue, and "continue to work on finding smarter ways to cut spending" next year, the AP reported.

The technical deadline to avoid automatic tax increases and spending cuts was midnight Monday, the last day of 2012. But passage of legislation by the time a new Congress returns to work at noon on Jan. 3, 2013, would likely avoid any unanticipated impact on taxpayers, the news service said.

The debate over how to reduce federal spending was not going as smoothly on Monday. Republicans have said they're willing to delay the across-the-board cuts, but only if Obama and his fellow Democrats agree to corresponding targeted savings from government programs, the AP reported.

The big stumbling block: What to do about $110 billion in automatic annual spending cuts over the next decade -- a process known as "sequestration" -- set to begin Jan. 2.

Failure to reach agreement on spending cuts could have a significant effect on health care in the United States, according to Kaiser Health News.

For instance, Medicare providers would see a 2 percent across-the-board payment cut, or $11 billion in fiscal year 2013. According to a September report from the Office of Management and Budget, hospitals would be hit hardest by the cuts, with payments slashed by about $5.8 billion, Kaiser Health News reported.

Seniors would experience no changes in their benefits, however, and Medicaid would not face any automatic cuts come Jan. 1.

The National Institutes of Health would have to contend with a $2.5 billion cut in funding for 2013, which would mean the agency would "have to halt or curtail scientific research," according to the OMB analysis.

Other federal agencies would face funding cuts as well, such as the Centers for Disease Control and Prevention ($490 million), and the Food and Drug Administration ($318 million), Kaiser Health News said.

Dr. David Katz, director of Yale University School of Medicine's Prevention Research Center, tried to put the debate over the fiscal cliff and its potential impact in layman's terms.

"To some extent, talk of a 'fiscal cliff' and its implications can seem remote. But there is a very personal element to all of this. If Medicare reimbursement is slashed, the federal government will, in essence, be cutting the income -- along with raising the taxes -- of physicians who don't work for the federal government. This certainly makes Washington gridlock personal for all of my fee-for-service colleagues. If they, in turn, translate resentment of this heavy-handed imposition into practice, this may get personal for Medicare patients who have a harder time accessing care."

And, he added, "massive cuts to the NIH (National Institutes of Health) budget may seem remote and impersonal -- unless the research that isn't funded as a result would have saved your life, or that of someone you love. Cuts to CDC (the Centers for Disease Control and Prevention) may seem remote -- unless you are a victim of a neglected disease outbreak, or of a preventable chronic disease no longer the focus of research and programming.