Impending Crisis: US Debt Limit

Long-term care advocates and experts warn that the US is in danger of breaching its debt limit, which could have serious repercussions for the long-term care sector.

The country hit its debt limit of $31.4 trillion on Jan. 19, and the US Treasury has been taking “extraordinary measures” to keep the federal financial system running.

The system includes Medicaid payments that are sent to states for distribution, as well as Medicare payments.

Despite the potential fallout, the American Health Care Association remains optimistic that policymakers will find a solution. If the US defaults on its debt, those payments would halt, at least temporarily.

The treasury’s “extraordinary measures” are expected to last until early June. The Republican-run US House passed legislation on party lines suspending the debt limit until March 31, 2024, or by $1.5 trillion—whichever comes first—but the bill is not expected to go anywhere in the US Senate, which Democrats lead.

“The exact scope and timing of the implications of the US defaulting in its debt is not immediately clear,” said Katie Smith Sloan, president, and CEO of LeadingAge.

The Biden administration “would have some discretion about what to fund and what not to fund,” according to several experts interviewed by Axios.

If the US defaults on its debt, those payments would halt, at least temporarily. Even a short-term cessation could be “catastrophic,” said Katie Smith Sloan. “They simply cannot withstand another financial blow,” she added.

“Although a debt crisis is a cause of great concern for the long-term care industry, the discussion in this article is a lost cause. In my humble opinion, the US never has and will never default on debt to the point of disruption in Medicaid and Medicare payments,” Joel Zupnick, Owner/President.