Debt Limit Breach: Potential Implications For Federal Health Care Programs

Republicans in the U.S. House of Representatives are currently negotiating with the Biden Administration over a deal to raise the federal debt limit and enact spending cuts, but the deadline in which the government will run out of money to pay its bills on time is rapidly approaching. U.S. Secretary of the Treasury Janet Yellen has indicated that this date could be as soon as early June.

This would be the first time the U.S. has ever defaulted on its debt and the specific impacts this event could have on the health care sector are uncertain. However, it is expected that bondholders would likely be prioritized to avoid defaulting on that debt, with potential reductions to Medicare and Medicaid payments, among others, occurring to make that possible.

In this scenario there could be downstream effects on the entire medical system that would further worsen depending on the time it takes to reach a solution. For example, providers would need to respond to payment disruptions and cash on hand will be integral to continuing operations. Large health systems could have enough to function for as long as a year, but smaller facilities or physician practices with less cushion would be more vulnerable. Providers with significant Medicare and Medicaid populations are likely to face the greatest difficulty and the soonest, potentially needing to reduce hours or services.

While ongoing discussions between decisionmakers provide an opportunity for resolution, the prospect of such a major disruption, and its foreseeable severe impacts on the health care industry, remains concerning. The ACC Advocacy team is closely monitoring the situation and will continue to provide further updates on this topic as they become available.

Clinical Topics: Cardiovascular Care Team

Keywords: Physicians, Government, Negotiating, Medicare, Medicaid, United States, ACC Advocacy

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