Deficit Reduction Commission Recommendations Will Hurt

Medicare takes a hit from Deficit Reduction Committee proposals.  The bipartisan National Commission on Fiscal Responsibility and Reform will ask the Centers for Medicare and Medicaid Services (CMS) to create a new physician reimbursement system, increase Medicare cost sharing and create far-reaching medical malpractice liability reforms to cap non-economic and punitive damages.

The 50-page proposal supports cutting compensation for physicians and other healthcare providers.  At the same time, quality would be rewarded by speeding up payment reforms, increasing drug rebates and expanding Medicare cost sharing to promote healthcare choice and spending by consumers.  The commission wants to slow down federal health spending growth to match the GDP plus one percent after 2020 by “establishing a process to regularly evaluate cost growth and take additional steps as needed if projected savings do not materialize.”

The commission — chaired by Erskine Bowles, who served as chief of staff to President Bill Clinton and former Senator Alan Simpson (R-WY) — also proposed achieving healthcare savings by increasing accountable care organizations; bundling payments; slashing Medicare payments for bad debt; and reducing government funding for medical education, among other recommendations.  The likelihood of any of these recommendations being implemented is questionable as the proposal requires support from 14 of the commission’s 18 members to start a debate in Congress.

President Obama is taking a wait-and-see attitude.  “Before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts,” he said. If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they’re going to need to be armed with the information about the kinds of choices that are going to be involved, and we can’t just engage in political rhetoric.”  Obama said he will await the commission’s December 1 formal report before commenting further.

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