Aug 092011

The debt deal signed into law on August 2 2011 has left a lot of Tennesseans unhappy.  Many of the politicians and people of Tennessee want deeper cuts to solve the US debt problem.  Many are also worried about funding for important programs like Social Security, Medicare, Medicaid, and other entitlement programs.

Tennessee’s Republican senators Lamar Alexander and Bob Corker both voted for the compromise legislation.  The benefits garnered by the law were keeping the US from defaulting while and the immediately reducing the budget deficits by $917 billion over 10 years and the promise of an additional $1.5 trillion cuts by a committee.  The $917 billion was the first step in cuts and probably the easiest to make.  The second step will be made by a bipartisan committee which will have to come up with an additional $1.5 trillion in additional deficit cuts over a ten year period.  This will be no small task as our society has become increasingly dependent on big government spending that has ballooned out of control.  Many constituents wished the senators had held out for an actual balance budget amendment which is ultimately needed to solve the root of the problem.

Currently Social Security and Medicaid will be exempt and Medicare cuts cannot exceed 2 percent. If any Medicare cuts are made, they would affect provider payments but not benefits.  But cuts to provider payments are troublesome for seniors just the same.  As doctors get paid less for their services they are less likely to except Medicare and more likely to have excess charges that hit seniors’ pocketbooks directly.

Alexander said on the Senate floor before the vote that entitlement programs, which accounted for about half of federal spending in 2010, must be restructured “so that seniors can count on them and taxpayers can afford them”.   This is a huge political hot potato that most democrats and some old school republicans are unwilling to address.

The effects of the first round of cuts may not be felt by Tennesseans right away, but the second round of deficit cuts may be more noticeable, especially if the special congressional committee decides to take up entitlement or tax reform.  Ultimately if the government doesn’t find a way to balance the budget then the nation will feel the effects for many generations to come!

If you are turning 65 and best way to protect yourself from the gaps in Medicare is to purchase Medicare supplemental insurance also known as Medgap.  Medigap can cover you Medicare deductibles, co-payments, and even Medicare Part B excess charges.  Click here to learn more about Medicare supplement insurance.

Joel Moyer