A second Balanced Budget Act is likely with growing federal deficits, and if so, Medicare will take a major hit, according to PricewaterhouseCoopers Health Research Institute. In a report examining the health policy agenda for President Bush's second term, the institute predicted that Medicare will suffer "BBA-like cuts" of about $450 billion over 10 years, or roughly the same amount allocated for the Medicare Modernization Act. Analysts did not project when Congress might address Medicare cuts but said deficit reduction is likely to be a high priority. If deficit reduction "is on the table, hospitals will bear the brunt of it," said Jack Rogers, managing director of health policy economics at PricewaterhouseCoopers. The federal deficit was $413 billion, or 3.6% of the gross domestic product, in fiscal 2004. The last Balanced Budget Act, in 1997, significantly reduced growth in Medicare spending, but many provisions were later revoked or eased.
In other predictions, the institute said it expects a continued struggle in Congress over medical malpractice reform; increasing transparency in hospital pricing and quality data; expansion of health savings accounts and individual health plans; and ongoing increases in bad debt as a result of the shift to individual coverage. Download the report. -- by Jeff Tieman