Tag: Debt deal 2011

The Debt Ceiling and Health Care

Over the weekend, I watched Twitter as drops of information about the debt ceiling leaked out bit by bit. There was a deal. No deal. Well, maybe a deal.The deal would require Congress to wait until a Balanced Budget Amendment passed in the states before it acted. Well, no it actually didn’t include that. Medicare was on the chopping block. Well, not cuts to members, only cuts to physicians and other providers. What’s an ordinary person to think?

There was plenty of humiliation to go around. Speaker Boehner didn’t return the president’s phone calls. Speaker Boehner couldn’t rally his own party to support his deal. Majority Leader Reid couldn’t get Republicans to talk to him. Sen. McConnell would only talk to Biden not Reid, and his unfortunate facial expressions left us with the impression that he had a serious digestive problem. The classic picture was Boehner in the House elevator letting out a long groan as the doors closed. He was not the only one groaning.

Pundits made the worst cliché pronouncements. Everything was a “crisis”; there was lots of “kicking the can down the road.” TV time had to be filled and fill it they did. Those smart folks who spent the weekend outside, barbecuing or swimming, were the wise ones. We all knew it would come down to the last moment, but oh, was it painful to watch those last agonizing hours.

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There Will Be Blood

The debt deal is finally done. But it really isn’t an agreement on what cuts will be made, just the process that will be used to make them.

The real work is left to the Congressional appropriators for the first $917 billion and for a super-committee of Congress for the second $1.2 trillion to $1.5 trillion in ten-year cuts.

That second tranche is where health care will make its contribution. The super-committee has to make its decisions by November 23rd and, as a practical matter, the Congress can only accept what the super-committee decides or face the consequences of the automatic $1.2 trillion fallback cuts.

When it comes to health care and the super-committee, all federal health care spending is on the table—–Medicare, Medicaid, the new law, benefits, and provider payments.

Since the budget window for the deal is ten years, it is not likely that any changes will be made to entitlement eligibility—such as delaying the Medicare eligibility age from 65 to 67. It just wouldn’t be fair to tell a 60-year-old their Medicare eligibility age is being raised. But we could see more means testing of Medicare premiums.

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Deficit And Debt Politics: A Wake-Up Call For The Health Care Industry?

The 2010 Affordable Care Act (ACA) called for significant Medicare savings.  All told, the Congressional Budget Office projected that the law would trim over $400 billion from Medicare spending during 2010-2019, reducing the program’s annual growth rate from 6.8 percent to 5.5 percent.

Those savings were enabled, at least in the case of hospitals, by the promise of expanding insurance coverage that would bring in more insured patients (and thus more revenues to help offset the Medicare cuts).  Yet some observers in the health industry no doubt assumed that the ACA’s payment reductions could be reversed over time.   After all, they had seen Congress repeatedly cancel scheduled payment cuts to Medicare physicians in the annual melodrama surrounding the Sustainable Growth Rate.

Why couldn’t the health care industry similarly expect to evade the ACA’s cost controls?  In coming years, the industry could argue that any payment cuts would jeopardize patients’ access to care.  And given that Medicare’s own actuary cast doubt on how realistic the projected savings were, the odds must have seemed good to hospitals and other providers that they could sooner or later count on SGR-like relief from Washington.  Health reform offered an appealing political and business strategy:  initially accept the projected cuts in the ACA, then gain more paying customers through the implementation of insurance expansion, and, finally, work to reverse the cuts and “unbend” the cost curve.

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