As the fiscal 2005 budget remained stalled in the Senate last week, the healthcare community mobi- lized opposition to new proposals House Republicans are crafting to alleviate concerns among GOP conservatives about the growing federal deficit.
Under the measures, which could be brought to the House floor as early as this week, mandatory spending programs such as Medicare and Medicaid could face spending caps. Similar caps have been proposed in the past but have never been enacted.
The main budget-reform measure, introduced in March by Rep. Jim Nussle (R-Iowa), chairman of the House Budget Committee, proposes limits on discretionary spending and on new expenditures that could include Medicare and Medicaid. Separately, bills introduced earlier this year by Rep. Jeb Hensarling (R-Texas) and Rep. Mark Kirk (R-Ill.) would limit spending on entitlement programs and could affect the two healthcare programs.
Nussle's proposal calls for any improvements to Medicare and Medicaid to be offset by cuts in other entitlement programs or by cuts to other parts of Medicare and Medicaid. For example, if Congress were to increase payments to hospitals by 5%, above a 2% increase that had already been approved by Congress, the 3% cost difference could be met by cutting into the new Medicare drug benefit.
Hensarling and Kirk go even further, putting a hard aggregate spending cap on all entitlement programs except for Social Security. A Hensarling spokesman said his bill, introduced in February, had 103 co-sponsors as of last week. "We thought now with a historically high deficit and government spending increasing every year, this would be a good time to do this," said Michael Walz, Hensarling's spokesman.
Senate Majority Leader Bill Frist (R-Tenn.) has been trying to advance a measure that would require 60 votes to pass mandatory spending increases or tax cuts that add to the federal deficit. Under that proposal, similar to Nussle's, any improvements to Medicare and Medicaid would have to be offset by cuts in other programs.
Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities, a nonpartisan think tank, said Nussle's bill may pass in the House, but the future of Hensarling's and Kirk's bills is more cloudy because they go further in reining in costs and have greater potential to hurt programs such as Medicare and Medicaid. He said the Senate is likely to defeat all three because of Democratic opposition.
But even the threat of spending caps was enough to create a furor among providers last week. The American Hospital Association and other healthcare groups fired off two letters to members of Congress expressing their consternation. "We strongly urge you to protect healthcare for Americans by rejecting any budget enforcement measure that contains Medicare and Medicaid spending limits or caps," said one letter dated June 14 to all members of the House. The letter was signed by the AHA, the Catholic Health Association, the American College of Physicians and five other provider groups.
Another letter to Nussle dated June 14 said: "We are opposed to ... rules that allow tax cuts to be enacted without spending offset, while prohibiting Congress from legislating improvements in entitlement programs such as Medicare, Medicaid and (the State Children's Health Insurance Program) unless there are offsetting cuts in other entitlement programs."
That letter was signed by 19 provider groups including the AHA, the American Academy of Family Physicians and the American Academy of Pediatrics.
The Nussle measure is being considered as Congress struggles to pass a budget for fiscal 2005. While the House narrowly passed a compromise budget it negotiated with the Senate in May, the Senate has yet to vote on it and so far has lacked the votes to pass it. That budget resolution included potential cuts of $2.2 billion over five years to Medicaid.
Although the House passed the budget resolution, many Republicans expressed concern about the $367 billion deficit projected in the resolution. Nussle's bill and the proposals by Hensarling and Kirk were one way to try to appease conservative rumblings, said Kristen Morris, vice president of legislative affairs at the AHA.
Park said House conservatives have insisted Medicare and Medicaid would be protected under the Republican proposals, but according to the budget center's analysis of Hensarling's and Kirk's proposals, all entitlement programs would be cut by a total of $1.8 trillion during a 10-year period. Medicare could face a cut of $800 billion between 2006 and 2014, while the federal portion of Medicaid could be cut by $400 billion over the same period, said Richard Kogan, a senior fellow at the center.
If Medicare and Medicaid were to grow, then in order to stay within the aggregate cap on entitlement spending mandated by the Hensarling and Kirk proposals other entitlement programs such as farm aid, direct student loans and veterans' healthcare could be eliminated. But because Congress would be unlikely to take such a drastic step, the alternative would be to cut deeply into Medicare and Medicaid, the center said. Under Hensarling's and Kirk's proposals, cuts in payments to providers or the scaling back of benefits to both programs could occur.
Angela Kuck, a spokeswoman for Nussle, declined to comment on whether he supports Hensarling's or Kirk's bill. "We're saying we need a bill that bill pass the House," she said. "That's our main focus."
In a written statement, Rep. John Spratt of South Carolina, ranking Democrat on the House Budget Committee, voiced his opposition to the Nussle bill. "Returning the budget to balance will require bipartisan agreement on budget enforcement-applicable to both spending increases and tax decreases," he said. "Like the president's budget, the budgets passed by the House and Senate put tax cuts ahead of deficit reduction, tax cuts ahead of Social Security solvency, and tax cuts ahead of veterans' healthcare, No Child Left Behind, the Land and Water Conservation Fund, and lots of other priorities. Democrats support tax relief for middle-income Americans, but we do not support more tax cuts tilted toward the wealthy ahead of pressing priorities."