As all Americans are likely aware, the United States Congress and President Obama face an August 2 deadline to raise the nation’s debt ceiling. Negotiations on legislation to accomplish this goal are ongoing. Failure to raise the national debt limit has never occurred; therefore, there is no precedent for a governmental response. However, the AOA believes it is important to provide advanced warning to our members that Congress and the President may not reach an agreement before the deadline.
Many financial analysts predict that, if the debt ceiling is not raised, the federal government will only be able to pay approximately 50% of its bills. Other financial analysts contend that there are sufficient funds flowing into the U.S. Treasury at the beginning of each month to cover what some might consider essential spending: interest on the debt, Social Security, and Medicare and Medicaid. The list of outlays that require payments include Social Security benefits, interest on Treasury Securities, active duty pay for the military, and Medicare and Medicaid claims, among others.
While we are optimistic that this issue will be resolved in advance of the August 2 deadline, we do feel it is our responsibility to notify you, our members, that there is a chance that Medicare claims will not be paid should the debt ceiling not be raised. We are communicating with the Centers for Medicare and Medicaid Services to better understand what steps they will take should events necessitate reductions in federal outlays. We will continue to provide updates as more definitive information becomes available.
If you have any questions, please contact the AOA Department of Government Relations at firstname.lastname@example.org.
Let's keep our fingers crossed that Congress and President Obama will reach an agreement.