Automatic cuts that would be enacted if the new debt panel cannot adequately reduce the deficit likely would be less severe for Medicare and Medicaid than whatever the committee would devise as an alternative, health care columnist Jonathan Cohn writes in a Kaiser Health News analysis.
As part of the recent debt deal, the panel will develop and pass by the end of November at least $1.2 trillion in federal spending cuts over 10 years. Failing to do so would trigger a series of across-the-board cuts (Cohn, Kaiser Health News, 8/15).
Medicaid would be exempt from those cuts, and Medicare is protected from deep spending cuts (California Healthline, 8/12).
According to Cohn, some fear that automatic cuts to Medicare "would leave the elderly without adequate financial protection or access to medical care." He notes, "It's a rational fear but, perhaps, not a necessary one," saying that the "impact of automatic cuts would be relatively modest."
He writes, "By design, the actual benefit structure of Medicare would be exempt from the automatic cuts." According to Cohn, the cuts would affect only health care providers, by reducing their Medicare payments by up to 2%.
Cohn acknowledges that the reductions would be in addition to other Medicare cuts mandated by the federal health reform law. He adds, "And unlike the cuts in the [reform law], many of which are in the form of payment reforms designed to penalize low-quality providers or reward high-quality ones, the automatic cuts in the debt deal would not make such fine distinctions."
"Still, the unknowns of leaving deficit reduction to the [panel] loom larger," according to Cohn.
He provides comments from Chris Jennings, president of Jennings Policy Strategies, who said that advocates and industry insiders are realizing that "any likely deal emerging from the super committee would include policies that are significantly bigger in size and scope than the [automatic cuts]. ... [T]hey get that if this political environment produces anything, it would almost inevitably be new and large" cuts to Medicare and Medicaid (Kaiser Health News, 8/15).
Medicare, Medicaid Cuts Might Not Significantly Reduce Deficit, Expert Says
Any cuts to Medicare and Medicaid recommended by the panel might not reduce deficit spending substantially, according to Urban Institute President Robert Reischauer, CQ HealthBeat reports.
He said the total program cuts recommended by the panel might only be enough to prevent expected Medicare payment reductions to physicians under the "sustainable growth rate" formula.
In an interview with CQ HealthBeat, Reischauer said, "The real issue, it strikes me, is you and I or the [debt panel] can come up with a long list of proposals, and if we're very lucky, they might sum to the amount that will be needed to fix the SGR," adding that "the net impact of all of this on deficit reduction over the long run is going to be fairly modest."
According to the Congressional Budget Office, it would cost more than $300 billion over 10 years to overhaul the SGR formula, while a temporary patch for the payment reductions would cost at least $20 billion.
Reischauer said that ideas for cutting Medicaid likely will be hindered by a forthcoming expansion of the program under the reform law. He added, "[Y]ou can't cut [Medicaid] back in the short run without thinking how does this impact the requirements" of the reform law. He noted, "I think when policymakers sit down to write out the details, they're going to find that that is an insurmountable challenge" (Reichard, CQ HealthBeat, 8/15).
Debt Panel Subverting Other Committees' Jurisdiction
The debt panel might usurp the power of other committees because it has no defined jurisdictional limitations and the freedom to propose any deficit-reduction strategies that its members deem necessary, Politico reports. According to experts, this is frustrating certain lawmakers who sit on previously existing congressional committees.
Norm Ornstein, congressional scholar at the American Enterprise Institute, said, "You've got to believe that every major committee is nervous that [its] core work is just going to be snatched away from it."
For example, analysts expect House Energy and Commerce Committee Chair Fred Upton (R-Mich.) to surrender some of his authority over Medicare and Medicaid so that the panel can make cuts (Samuelsohn, Politico, 8/16).