Posts Tagged ‘Deficit hawks’

Super Committee’s Failure Raises Questions About Healthcare Funding

Wednesday, December 7th, 2011

Now that the Super Committee has failed to identify $1.2 trillion in cuts from the federal budget, automatic cuts totaling billions for everything from Medicare to biomedical research, start in 2013.  Some healthcare sectors will fare better than others.  The primary health entitlement programs, Medicare and Medicaid, are protected under the law that created the Super Committee.  Automatic cuts will not impact Medicaid, the joint federal-state health program for the poor.  Medicare would be cut by two percent – all from payments to hospitals and other providers.

The bad news is that unless Congress reworks the legislation mandating the automatic cuts, a series of across-the-board reductions will begin in 2013.  The House and Senate appropriations committees must decide how to spread the cuts among various programs.  And some of the larger, better-financed lobbies may be able to influence what is cut and what is kept.

Even though the Medicare cuts are limited to hospitals and other medical providers and would not exceed two percent, they argue that is too much and that they sacrificed plenty in the Patient Protection and Affordable Care Act (ACA).  Rich Umbdenstock, president and CEO of the American Hospital Association, said sweeping cuts would hurt Medicare beneficiaries and their families and “also have an impact on the ability of hospitals to provide essential public services to the communities they serve given the impact that Medicare has on the entire healthcare system.”

Officially known as the Joint Select Committee on Deficit Reduction, the Super Committee was unable to meet its deadline to come up with $1.2 trillion of deficit reduction required by the law that created it, much less the $4 trillion that deficit hawks said was necessary to stabilize the finances of the U.S. government, whose debt has topped $15 trillion.  The failure ensures that the fiscal debate between Democrats who want to protect social programs and increase revenue by raising taxes on the wealthy; and Republicans who want smaller government and have pledged to reject tax increases will be a fundamental choice confronting voters in 2012.

“After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline,” Representative Jeb Hensarling,(R-TX), and Senator Patty Murray, (D-WA) said.  The co-chairs thanked committee members, staffers and “the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task.”

Writing for Politico, David Nather speculates on whether the Super Committee’s failure has harmed efforts to reform Medicare and Medicaid.  It would be easy to conclude that the Super Committee’s failure means the big, expensive health care entitlement programs — Medicare and Medicaid — are untouchable.  It also would be wrong.  The timing was off, coming too close to a presidential election.  The co-chairs weren’t powerful enough.  The work came too soon after a summer debt deal that Democrats hated.  Republicans couldn’t give the kind of concessions on taxes that Democrats needed.  And the alternative to a Super Committee deal on healthcare entitlements — the two percent automatic cuts in healthcare payments and defense funding that will now take place in 2013 — wasn’t harsh enough to force a deal on Medicare and Medicaid. In fact, it might even have been the easier way out.  All of which means Medicare and Medicaid are not off the table forever.”

The Hill’s Sam Baker offers a different perspective. “The Super Committee’s demise is a mixed bag for the American Medical Association and other groups that wanted the 12-member panel to tackle Medicare’s payment formula, known as the sustainable growth rate (SGR).  The AMA — with bipartisan support in Congress — pushed hard for the supercommittee to include in its deficit-cutting package a long-term fix to the SGR.  The formula calls for automatic annual cuts in doctors’ payments, which add up as Congress consistently delays each cut from taking effect.  Aspirations of a long-term SGR patch should be put to rest, healthcare lobbyists said. But they questioned whether the supercommittee push was ever realistic, because an SGR fix would add to the deficit.”

“I never once believed that the Joint Select Committee would be the one to do that,” said Julius Hobson, a senior adviser at the Washington, D.C.-based law firm Polsinelli Shughart and a former AMA official.

Republicans Vow to Take on Healthcare Entitlement Programs

Wednesday, March 23rd, 2011

With the power shift in the House of Representatives, Medicare, Medicaid and Social Security are being targeted in proposed budget cuts designed to bring down the deficit. “It will likely be the first time you see a House have a prescription for Social Security, Medicare and Medicaid,” House Majority Leader Eric Cantor (R-VA) said at the Federation of American Hospitals’ annual public policy conference and business exposition in Washington.

Mississippi Governor Haley Barbour, a Republican, said that members of Mississippi’s Medicaid program saw its enrollment drop approximately 23 percent to 580,000 beneficiaries from 750,000 after the state started requiring beneficiaries to establish their eligibility in person.  Barbour began this practice in his first year as governor in 2004.  Senator Orrin Hatch (R-UT), the ranking Republican on the Senate Finance Committee, slammed the Patient Protection and Affordable Care Act (ACA), noting that its expansion of Medicaid will “bankrupt” the states, which already have strained budgets.  Hatch also cited Congressional Budget Office figures that say the ACA’s Medicaid expansion will cost taxpayers $435 billion over the next decade.

President Barack Obama said his proposed 2012 budget was a “down payment,” on cutting the federal budget deficit, and said that more work is needed to address “long term challenges”. Cantor said that on “individual items” there were “probably some areas of agreement” between the President and Republicans.  “But we can’t keep taking the savings and going to spend it,” he said.  “The object here is to cut.”  According to Cantor, the President’s plan “just misses the mark of living up to the expectations” Obama laid out in his State of the Union speech in January.  Asked if Cantor expected adjustments to Social Security and Medicare, Cantor said he was “hopeful that we can get some cooperation from [Senate Majority Leader] Harry Reid [D-NV] and the President, because these are programs that touch the lives of every American and we don’t want, nor can we, make these changes by ourselves.”

Writing on the Huffington Post, Richard Eskow took an alarmist tone, saying that “entitlement reform” is a euphemism for allowing the elderly to die if they become ill. “’The President’s budget punts on entitlement reform,’ reads a statement by House Republicans.  ‘Our budget will lead where the President has failed, and it will include real entitlement reforms.’  ‘You have to do entitlement reforms if you are serious about this budget,’ according to Representative Paul Ryan (R-WI).”  Eskow counters “Reality check: Nobody’s proposing ‘entitlement reform.’ That term is a cloaking device for some very ugly intentions.  It’s a meaningless manufactured phrase cooked up by some highly-paid consultant, and it diminishes the sum total of human understanding every time it’s used.  The phrase is a euphemism for deep cuts to programs that are vital and even life-saving for millions of elderly and poor people, but it’s politically unpalatable to say that.  So it became necessary to come up with yet another cognition-killing term designed to numb us from the human toll of our political actions.  ‘Entitlement reform’ is the new ‘collateral damage.’”

The Washington Post’s Ezra Klein is more diplomatic in his assessment of the possibility of entitlement reform. “We’ll see.  I wouldn’t be surprised if Obama has his name on a broader deficit-reduction bill at this time next year.  If he takes the deficit away from Republicans before 2012, his reelection campaign becomes considerably easier.  And on a less cynical level, his administration is stocked with deficit hawks — the same folks who actually balanced the budget under Bill Clinton.  And similarly, Republicans want to deliver on the deficit-reduction promises they’ve made to their base.  In theory, everyone’s incentives and ideologies are pointing in the same direction.  That’s a good sign for progress.”

A CLASS Act

Tuesday, March 1st, 2011

The Obama administration is fending off critics of the CLASS Act, a voluntary insurance program created by the Patient Protection and Affordable Care Act designed to assist individuals who require long-term care and who want to remain in their communities. Health and Human Services Secretary Kathleen Sebelius is looking into revisions to assure that the program is financially self-sustaining.  The Community Living Assistance Services and Support Act (CLASS Act), which HHS will oversee, is envisioned as providing cash benefits to be used for non-medical expenses, such as paying for a home health aide or a family member to provide care, make modifications to the home and provide special transportation needs.

Opponents to the CLASS Act, such as the Heritage Foundation’s Brian Blase, argue that the program won’t support itself and could become a burden to taxpayers.  Blase says the program is “a Ponzi scheme that transfers money from current payees to current beneficiaries.”  Some Republicans are even calling for the law’s repeal.  Sebelius disagrees, noting that her department is looking at options to make certain that doesn’t happen.  She emphasized the importance of attracting healthy, less-costly people to the program to rein in costs and said that her department is “looking at options for indexing premiums so they would rise along with benefits.”  In addition, she wants to “close loopholes” that would let people drop out of the program and then return without paying a penalty.

According to Howard Gleckman, Senior Research Associate at the Urban Institute, “A key goal of national long-term care insurance is to reduce the role of Medicaid, which today pays for more than 40 percent of all personal care for seniors and others with disabilities. While Medicaid provides a critical safety net, it also often forces the disabled into the wrong care, in the wrong place, at the wrong time.  For instance, most benefits go only to those in nursing homes, even though they are often the last place people want to live.  And to qualify, people normally are allowed to keep only a few thousand dollars of financial assets and earn only a few hundred dollars a month.”

To the extent that national long-term care insurance can cut the number of people who go broke and turn to Medicaid for help, both states and the federal government will also be winners.  Fully a third of Medicaid’s budget, or more than $100 billion a year, is spent on long-term care.  The Congressional Budget Office estimates that Medicaid will absorb a stunning one-sixth of all federal tax revenues by 2050, and is putting financial pressure on states to pay nearly 50 percent of its costs.

So, how does Congress fix the CLASS Act?  First, CLASS needs to be an insurance-only program.  http://www.sacbee.com/2011/02/14/3401075/fix-the-class-act-dont-repeal.html Congress should make personal assistance benefits available to working people with disabilities – but through a separate program.  Second, employers should be encouraged to include this insurance in their employee benefit plans.  CLASS will succeed only with significant enrollment, so Congress should add incentives that will encourage employers to interest their employees in the program.  Finally, Congress should create an independent fund to accumulate and invest CLASS premiums.  This would end the budget gimmickry that troubles deficit hawks.  More important, it would assure participants that they are buying real insurance and not just exchanging their premium dollars for government IOUs.

“Someday, perhaps, the United States will make the choice that nearly every other major developed nation in the world has already made.  And that is to create a national, mandatory, long-term care insurance system funded by some mix of taxes and premiums.  Coverage could be provided by private insurers – just as the Medicare Part D drug benefit is today – or it could be run by the government,” according to Gleckman.  “Given our current anti-government, anti-tax climate, this won’t happen any time soon.  But that doesn’t mean our long-term care needs are going away.  It costs more than $200-a-day, on average, to stay in a nursing home.  Home health aides cost $20 per hour.  And after reaching age 65, more than two out of three of us will need some long-term care before we die.  We are woefully unprepared both as families and as a society for these needs, and the problem will only get worse as 77 million baby boomers age.  Medicaid is not the answer.  Neither is repealing CLASS.”