How The Budget Deal Affects The Affordable Care Act
So how does this mammoth budget-cutting deal, with its congressional “supercommittee” affect health reform?
Good question, because lots of people in Washington are asking it too.
More specific answers will become clearer in the next few weeks, but here’s a first version of the road map to both the policy and the politics.
First, understand there are two different processes – and each, separately, aims at cutting more than $1 trillion over the next decade.
The one that you’ve probably heard most about is the “supercommittee” of 12 members of Congress. They are supposed to identify savings by Thanksgiving. Entitlements – Medicare, Medicaid, Social Security and aspects of the Affordable Care Act – are part of their turf. So are taxes and revenue – at least in theory. It’s not so clear that the Republicans see it that way given the public statements of Congressional leaders.
If they agree on some kind of grand deal by Thanksgiving, Congress has to take it or leave it by the end of December, eliminating the usual congressional dilly-dallying. (It looks like dilly-dallying to the casual observer or much of the public, but remember that all that arcane, tedious process IS policy in Congress. If you slow something down, make it go through hoops, amend it, hold it up, etc., it doesn’t become law. That may be good or, depending on your point of view, bad politics.)
If Congress takes any recommendations that the supercommittee agrees on, that’s the law. If the committee fails, or Congress rejects it, then the “trigger” gets pulled. The official name is “sequestration.” That’s a fancy name for automatic cuts – 2 percent across-the-board cuts in Medicare, for instance, affecting all health care providers, doctors, hospitals, etc. It won’t affect beneficiaries – at least not directly.
Medicaid is not subject to the trigger. Neither, according to the preliminary interpretations I’ve received from analysts and congressional staff, are the big, key subsidies in the health care reform law – the Medicaid expansion and the subsidies that will help low-income and middle-income people afford health care in the new state exchanges.
Other parts of the health reform law are, however, subject to automatic cuts. Among them: Cost-sharing subsidies for low-income people. This isn’t the help paying the premium; this is the help with the co-pays when people do get care. But the payments are made to health plans, not directly to beneficiaries so it won’t have the direct impact of discouraging care. It may affect how health plans make decisions about what markets to participate in. Gary Claxton and Larry Levitt at Kaiser Family Foundation explain here.
Also, the supercommittee could have a partial deal – meaning there’s still a trigger, but a smaller one. Maybe they won’t reach agreement on $1.2 trillion to $1.5 trillion in savings, which would avoid the trigger. But maybe they could agree on, say, $500 billion. That means a trigger wouldn’t have to go as deep because some of the savings would already be identified.
To recap – before we go on to the second stage of this process: The “super-committee” can do whatever it wants to health care, Medicare, Medicaid, Social Security, etc. – if it can agree, if it can get the rest of Congress to agree and if the president doesn’t veto it.
Will the Democratic Senate and the Obama White House agree to cuts that eviscerate health reform? Not likely. In fact, the Democrats “won” on very few aspects of the budget/debt deal. Walling off Medicaid and key parts of the health coverage expansion were two of the “wins.” That’s a bright line worth paying attention to as this moves forward.
Does that mean other health-reform related spending will be untouched? Given how many moving parts there are to any spending deal, and the fact that defense and tax policy are also part of the mix, chances are it will be affected. But expect to see that bright line remain visible – maybe not quite as bright, but visible. (The CLASS Act, the voluntary long-term care program created under health reform, is a different story; it’s quite vulnerable.)
The second part is the annual appropriations process. The budget deal provides for cuts – real cuts in spending, not just slowing the rate of growth. Health programs (aspects of the health reform legislation touching on exchange creation, prevention, community clinics, etc., and just about everything else at the Department of Health and Human Services – the FDA, NIH, CDC, etc. – will be subject to these cuts. But this isn’t an across the board process, it’s a line-by-line, or at least category/agency-by-category/agency, process. And there is some horse trading.
It’s safe to say that the Republicans will try to cut discretionary portions of the new health law. That’s not a new political dynamic, it doesn’t arise out of the debt ceiling or the Wall Street woes. It’s what we’ve seen since last fall’s elections and the repeal/defund fights of the past few months. And House Budget Chairman Paul Ryan has publicly tried to insert health care into any potential deal. So expect to see more Republican push to cut, and continued Democratic push back. Will health spending emerge unscathed? It’s too soon to know but, given the amount of savings Congress needs to find –both in this budget deal and in the perennial quest to fund the “doc fix” payments – some cuts are clearly possible. Some of it may affect aspects of exchange establishment, regulation, prevention, public health, etc. But it’s hard to see the Democrats allowing cuts so deep that they basically constitute a side door to repeal.
One further twist – some Republicans are calling for a delay in health reform implementation to save money.”Delay” may sound better to an ambivalent public worried about spending than “repeal.” What’s delayed (if anything), how it’s delayed, how long it’s delayed, and what stopgaps are created in the meantime could have an impact on how many people get covered in 2014.
Assorted committees and government agencies are still examining the new budget law and how it will affect … everything. So the perspective I’ve outlined here – and I’m writing amid all the market turbulence – may change as the economic and political climates change. But the lines in the sand around the trigger – health reform, Medicaid and Social Security – tell us something about where the White House will come down.
By: Joanne Kenen, Association of Health Care Journalists, August 10, 2011
Boehner’s New Proposal Could Produce Greatest Increase In Poverty And Hardship Of Any Law In Modern U.S. History
House Speaker John Boehner’s new budget proposal would require deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, the repeal of health reform’s coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans.
The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.
This may sound hyperbolic, but it is not. The mathematics are inexorable.
The Boehner plan calls for large cuts in discretionary programs of $1.2 trillion over the next ten years, and it then requires additional cuts that are large enough to produce another $1.8 trillion in savings to be enacted by the end of the year as a condition for raising the debt ceiling again at that time.
The Boehner plan contains no tax increases. The entire $1.8 trillion would come from budget cuts.
Because the first round of cuts will hit discretionary programs hard — through austere discretionary caps that Congress will struggle to meet — discretionary cuts will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions.
As a result, virtually all of that $1.8 trillion would come from entitlement programs. They would have to be cut more than $1.5 trillion in order to produce sufficient interest savings to achieve $1.8 trillion in total savings.
To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties (including House Budget Committee Chairman Paul Ryan’s plan) have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.
The evidence for this conclusion is abundant.
The “Gang of Six” plan, with its very tough and controversial entitlement cuts, contains total entitlement reductions of $640 to $760 billion over the next ten years not counting Social Security, and $755 billion to $875 billion including Social Security. (That’s before netting out $300 billion in entitlement costs that the plan includes for a permanent fix to the scheduled cuts in Medicare physician payments that Congress regularly cancels; with these costs netted out, the Gang of Six entitlement savings come to $455 to $575 billion.)
The budget deal between President Obama and Speaker Boehner that fell apart last Friday, which included cuts in Social Security cost-of-living adjustments and Medicare benefits as well as an increase in the Medicare eligibility age, contained total entitlement cuts of $650 billion (under the last Obama offer) to $700 billion (under the last Boehner offer).
The Ryan budget that the House passed in April contained no savings in Social Security over the next ten years and $279 billion in Medicare cuts.
To be sure, the House-passed Ryan budget included much larger overall entitlement cuts over the next 10 years. But that was largely because it eviscerated the safety net and repealed health reform’s coverage expansions. The Ryan plan included cuts in Medicaid and health reform of a remarkable $2.2 trillion, from severely slashing Medicaid and killing health reform’s coverage expansions. The Ryan plan also included stunning cuts of $127 billion in the SNAP program (formerly known as food stamps) and $126 billion in Pell Grants and other student financial assistance.
That House Republicans would likely seek to reach the Boehner budget’s $1.8 trillion target in substantial part by cutting programs for the poorest and most vulnerable Americans is given strong credence by the “Cut, Cap, and Balance” bill that the House recently approved. That bill would establish global spending caps and enforce them with across-the-board budget cuts —exempting Medicare and Social Security from the across-the-board cuts while subjecting programs for the poor to the across-the-board axe.
This would turn a quarter century of bipartisan budget legislation on its head; starting with the 1985 Gramm-Rudman-Hollings law, all federal laws of the last 26 years that have set budget targets enforced by across-the-board cuts have exempted the core assistance programs for the poor from those cuts while including Medicare among programs subject to the cuts. This component of the “Cut, Cap, and Balance” bill strongly suggests that, especially in the face of an approaching election, House Republicans looking for entitlement cuts would heavily target means-tested programs for people of lesser means (and less political power).
In short, the Boehner plan would force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor. It would do so even as it shielded all tax breaks, including the many lucrative tax breaks for the wealthiest and most powerful individuals and corporations.
President Obama has said that, while we must reduce looming deficits, we must take a balanced approach. The Boehner proposal badly fails this test of basic decency. The President should veto the bill if it reaches his desk. Congress should find a fairer, more decent way to avoid a default.
By: Robert Greenstein, President, Center on Budget and Policy Priorities, July 25, 2011
GOP Death Wish: Resume The Debt Debate In 2012?
So here’s the new Republican debt-ceiling idea:
Pass a $1 trillion increase in the debt ceiling joined to $1 trillion in spending cuts over the next 10 years, no revenues.
That sounds dramatic. But $1 trillion in spending cuts over a decade is not as big a deal as it sounds, especially if you are allowed to be vague about them. And a $1 trillion debt ceiling increase carries the United States government only into the early part of next year, meaning that this debate will recur in 2012.
House Republicans apparently regard the early renewal of the debt-ceiling debate as a feature, not a bug. It means that they can resume the debate over debt and deficits in the election season.
Except – I thought the 2012 election was supposed to be about the economy? Jobs and the Obama administration’s disappointing record of creating them?
Isn’t that the winning issue?
Why the eagerness to change the subject in 2012 to Republican plans to end the Medicare guarantee for those now under 55?
Isn’t that a big loser?
Republicans and Democrats alike assume that a 2012 debate over the debt ceiling hurts Democrat’s and helps Republican’s. Maybe. But I’d be careful about that assumption. If it means that we spend 2012 debating the Ryan plan all over again – only this time with the big general electorate watching – then the assumption may be wrong.
And if there’s one thing that could alienate younger voters who have begun to drift back to the GOP because of the jobs issue, isn’t a big debate over a Republican plan to end the Medicare guarantee for younger people a good approximation of that one thing? Why frame a national election around that?
By: David Frum, The Frum Forum, July 25, 2011
Tom Coburn’s Cuts: Military’s Tricare Prime Health Care Program Targeted
Sen. Tom Coburn (R-Okla.) wants to cut taxpayer funding for non-military elements of the Defense Department, starting with making retired, uninjured service members pay more for what he described as “extremely low-cost health care for life” for themselves, their wives and dependents under the Tricare Prime system.
For military retirees eligible for Medicare, he also wants to raise the co-payments that they are charged to be in Tricare for life, the second payer for health care after Medicare. In addition, he wants to increase low fees that Tricare beneficiaries pay for pharmaceuticals purchased at their local drugstores.
Former defense secretary Robert M. Gates proposed raising Tricare Prime enrollment fees for single retirees from $230 a year to $260 a year and fees for retiree families from $460 a year to $520 a year. Coburn wants the fees to be much higher and more in line with private-sector health plans.
Part of his concern is fairness, first for uninjured veterans who, for example, served in Iraq and/or Afghanistan but “leave the military without serving 20 years [and] are not entitled to any of these health-care benefits.” They represent some 70 percent of those serving, according to Pentagon officials.
Another comparison he makes is to other federal government workers whose plans are not as cheap. A medical doctor, Coburn told reporters last Monday: “Nobody in the country, as a single person working 20 years for the government, should be able to get health care for $250 a year. Nobody was ever promised that, and nobody should be able to do that.”
Instead, he wants to increase the enrollment fee for single retirees to “approximately $2,000 per year and $3,500 for a family.” At the same time he would limit out-of-pocket expenses at $7,500 for those retirees with families. He thinks these changes could save $11.5 billion a year.
His Tricare for life would require retirees to pay up to $550 for half the initial cost not covered by Medicare and then up to $3,025, after which all costs would be paid by Tricare. This change could save $4.3 billion a year.
Coburn wants to reduce the $8 billion annual government share of the cost of drugs that Tricare beneficiaries purchase from their local private retail pharmacies rather than buying them at lower cost by mail order or at military base facilities. Where the price is now $3 for a 30-day supply of a generic drug and $9 for a brand-name from private pharmacies, Coburn would raise that to$15 for generic and $25 for brand names and save some $2.6 billion a year.
Coburn told reporters he has no doubt about the reaction to his Tricare ideas.
“There’s no question,” he said, “. . . retired military, they won’t like what I’ve done. But the fact is is nobody’s going to like what we’ve done, because everybody gets a pinch — everybody. ”
Beyond health care, Coburn has several other proposals that will rattle the Pentagon. He wants to eliminate most of the $1.3 billion-a-year subsidy that supports the Defense Commissary system of 252 grocery stores on military bases worldwide. Prices at commissaries are much lower than at civilian supermarkets; they are listed at cost plus a 5 percent surcharge. That money goes to offset costs of new commissaries or to repair and maintain old ones. It does not pay for salaries and benefits of the roughly 18,000 people who work at the commissaries.
Coburn supports a Congressional Budget Office proposal that would reduce the taxpayer subsidy over five years and see a gradual raise in prices so commissaries could become self-sufficient. The increase in cost, according to the CBO, would amount to $400 per service family per year and save the government about $900 million annually.
He also wants to close down the Congressionally Directed Medical Research Program, which for more than 20 years has added around $200 million a year primarily for breast, lung and prostate cancer projects that have to be managed primarily by contractors. Coburn’s option is to “transfer funding for cancer research that affects the general population back to [the National Institutes of Health] and reduce the administrative costs of administering this research for savings.”
By: Walter Pincus, The Washington Post, July 24, 2011
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