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Senior Citizen Politics
Debt Deal 'Super' Committee's Impact On Health Spending Explained
Q&A: How congressional
super committee's deliberations could influence Medicare and Medicaid
By Mary Agnes Carey and Phil
Galewitz, KHN Staff Writers
 Aug.
4, 2011 - The deal President Barack Obama and Congress struck this week to raise the nation's debt ceiling has prompted many questions about
how a special "super committee" established by the law will affect federal health care programs.
By the day before Thanksgiving, the bipartisan,
bicameral panel of 12 lawmakers must report recommendations to trim at least $1.2 trillion in federal spending over the next decade. If the
committee members don't reach consensus, or if Congress does not approve a package they offer by Dec. 23, a series of automatic spending cuts
would kick in by 2013, creating additional pressure on the panel to act.
>>
Click to Summary of Debt Ceiling Agreement
Here's a guide to how the panel's deliberations
could influence Medicare and Medicaid.
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Q: Aren't Medicare and Medicaid protected
from cuts right now?
A: Yes—and no. The debt deal, which was signed
into law by Obama on Aug. 2, makes $917 billion in discretionary spending reductions during the next decade. Neither Medicare nor Medicaid
would be touched in those reductions.
However, that changes a bit in the second round
of funding cuts called for in the law. Between now and Nov. 23, the super committee is asked to find at least an additional $1.2 trillion in
debt reduction over 10 years. The panel can make those recommendations by changing any part of the budget. The committee could recommend cuts
in entitlement programs, including Medicare and Medicaid. It could also propose tax increases.
Q. Won't deep differences between the parties
over the structure and future of entitlements and taxes prevent the panel from reaching any agreement?
A. Democrats are sure to insist on tax increases
to match any spending cuts, which will anger Republicans, and Republicans will surely want entitlement cuts, which will upset Democrats.
Stan Collender, a partner at Qorvis Communications and former congressional budget staffer, said he gives less than 5 percent chance the
committee will come to an agreement that Congress will approve. "In an era of hyper partisanship have you seen any other special committee of
elected officials come up with some broad-based deficit reduction package looking at tax increases and spending cuts?" he asks.
If Congress doesn't agree on a debt plan, the
current law has a trigger mechanism that will automatically guarantee the $1.2 trillion savings beginning in 2013 through cuts in defense and
other federal spending. Included in these cuts would be is a 2 percent reduction in Medicare payments to hospitals and other providers.
Medicaid funding would not be touched by that trigger.
Sen. Pat Roberts, R-Kan., describes the idea of
across-the-board cuts as "Armageddon" because of their severity and that half of the cuts would have to come from defense. "You can't cut
defense by 50 percent. You can't cut Medicare providers, including doctors, more," Roberts said.
Q: There have been
plenty of commissions that have worked on debt reduction, including the Simpson-Bowles panel last fall. What makes this different?
A: The threat of the automatic, across-the-board
spending cuts is what gives the debt panel more clout than its predecessors, including a
commission established by Obama and co-chaired by former Sen. Alan Simpson, R-Wyo., and former President Bill Clinton's chief of staff
Erskine Bowles. Many lawmakers dislike the idea of surrendering any power over the federal purse, especially when it could mean that spending
on a favorite program could be at risk.
The committee will look at many of the same
alternatives as the deficit task forces earlier this year formed by Obama and the
Bipartisan Policy Center, which was headed by President Clinton's budget director Alice Rivlin and former Senate Budget Committee chairman
Pete Domenici, R-N.M., and a
plan formulated by a bipartisan group of senators known as the Gang of Six.
Q. What else will the super committee be
looking at?
A. Among some of the alternatives expected to be
considered are Medicare premium supports, which would give enrollees vouchers or credit to purchase a private insurance plan rather than
having the government directly pay for covered services; converting Medicaid to a block grant program, which would also limit federal funding;
or asking higher-income Medicare beneficiaries to pay more for their coverage. Changes in spending for the 2010 health care overhaul may also
be considered.
Collender doubts Democrats on the committee
would accept major changes to either Medicare or Medicaid.
"I don't see the trigger as a sort of sword
hanging over their head," he said, noting that Congress can always vote again to reverse the cuts planned under the trigger. He said if the
economy continues to falter, he would doubt Congress would allow funding cuts to occur.
But Bob Crittenden, executive director of the
liberal Herndon Alliance, said Medicaid is most at risk in the super committee because the group is unlikely to agree on cuts to Medicare or
Social Security.
Steve Bell, senior director or the economic
policy project at the Bipartisan Policy Center, said he expects the super committee will lead Congress to make some cuts to the deficit but no
dramatic restructuring to entitlement programs. That’s because the savings goal is not high enough and the two political parties can’t agree
on the main options to reduce spending in Medicare and Medicaid. "You will get out of this what you got out of the last four months—something
mushy in the middle that does not address the underlying fiscal crisis," he said.
Q. Why are Medicare and Medicaid part of the
debt discussions?
A. Medicare and Medicaid make up about 23
percent of federal spending and their costs have been growing faster than the overall economy. Spending for both programs is rising as a
result of overall cost of health care, but each has its own issues. Medicare costs have climbed partly due to the aging population, which has
meant more people are eligible for coverage under the program. Medicaid costs increased with the recent economic downturn, which led to
dramatic uptick in enrollment as people lost jobs and private health coverage.
Q. What do doctors and hospitals say about
the cuts proposed as part of the automatic trigger?
A. Although the debt ceiling law says that only
Medicare providers could face cuts, providers say those reductions could impact their ability to deliver medical care and impact
beneficiaries.
"From our view, there's no separation between
these kinds of provider cuts and something that will affect beneficiaries," said Chip Kahn, president and chief executive officer of the
Federation of American Hospitals. "It will affect the way providers operate and at some point this artificial separation between things that
affect beneficiaries and provider cuts has got to be identified for what it is – an artificial break. If it affects providers, it affects
beneficiaries."
Rich Umbdenstock, the American Hospital
Association president and chief executive, echoed that sentiment. In a statement he said cutting hospitals will mean decreased access for
seniors. "That’s why the total Medicare program – including caregivers – should be exempt" from cuts that he said could overload emergency
rooms, shut trauma units and reduce patient access to the latest treatments.
Q. How does a "fix" to Medicare's doctor
payments figure into the issues facing the super committee?
At the end of the year, Medicare is scheduled to
cut pay to physicians by about 30 percent. That is caused by a budget rule adopted years ago. Since 2003 each time the requirement has come
due Congress has averted it. Some analysts argue that the debt reduction efforts and the need to fix the doctor reimbursement formula could
collide, especially because of the cost of fixing doctor pay. Pushing the issue off for another year would cost about $25 billion, although
doctors have been pressing for a two-year fix at a cost of roughly $50 billion. These fixes would add to the nation’s deficit and complicate
the super committee's work.
Q. This sounds similar to the BRAC (Base
Realignment and Closure) commission used by Congress to decide which military bases to close. Will it work the same?
BRAC was an
independent nine-member panel appointed by the president that evaluated which bases to close from 1998 to 2005. Once that list was approved by
the president, Congress could change it only by voting down the list in its entirety.
Similar to BRAC, the super committee's
recommendations will face an up-or-down congressional vote. Congress will not be able to amend the recommendations. But the super committee's
charge is far broader than BRAC since it will be able to make recommendations on cutting or changing any type of government program. It also
will have to grapple with deciding whether to recommend raising taxes.
"This is a heckuva lot bigger than BRAC—the
concept is the same—but its purview is the broad range of government and entitlement programs," said Robert Bixby, executive director of the
nonpartisan Concord Coalition, a budget watchdog group. He gives the committee less than a 25 percent chance of coming to an agreement.
>>
Click to Summary of Debt Ceiling Agreement
>> About
Mary
Agnes Carey and
Phil Galewitz, KHN Staff Writers
|
 Some
of this
information is reprinted from
kaiserhealthnews.org with permission from the Henry J.
Kaiser Family Foundation. You can view the entire Kaiser
Daily Health Policy Report, search the archives and sign up
for email delivery. © Henry J. Kaiser Family Foundation. All
rights reserved. |
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