Sen. Orrin Hatch (R-Utah) was among Republicans who attacked the proposal to curtail the tax as “placing a further strain on already stretched state budgets.”
The nation's healthcare providers had their own concerns with the president's budget. In a statement, Bruce Siegel, CEO at the National Association of Public Hospitals and Health Systems, said his organization is “disappointed that the administration proposes to reduce Medicaid provider taxes—a legitimate source of revenue which states use to finance the nonfederal share of Medicaid costs. With Medicaid consuming ever larger portions of state budgets,” Siegel's statement continued, “reasonable financing tools like provider taxes, which ensure access to care for our nation's most vulnerable citizens, should not be limited.”
Richard Umbdenstock, president and CEO of the American Hospital Association, echoed Siegel's concerns about the budget's Medicaid reductions. In a statement, Umbdenstock also expressed disapproval for the budget's elimination of funding for the graduate medical education program “at a time when there is a need for an expanded physician workforce.”
Meanwhile, Republicans criticized the Obama administration for not addressing entitlement reform, but they weren't the only ones. In comments made to the Washington Post, Erskine Bowles and Alice Rivlin, two members of the president's recent bipartisan fiscal commission—and former members of the Clinton administration—also said that significant entitlement reform is necessary to reduce long-term deficits.
Bowles, the commission's co-chairman, said the administration's budget goes “nowhere near where they will have to go to resolve our fiscal nightmare.” House Budget Committee Chairman Paul Ryan (R-Wis.) enlarged Bowles' comment on a poster board for a news conference, during which he declared Obama's proposal “debt on arrival.”
But the White House deserves credit for addressing two healthcare issues that are important to its Republican opponents, namely the sustainable growth-rate formula for physicians and medical liability reform, says Julie Barnes, director of health policy at the Bipartisan Policy Center, a Washington-based organization established by four former Senate majority leaders: Republicans Howard Baker and Bob Dole, and Democrats Tom Daschle and George Mitchell.
“We are thrilled that Obama's budget seems to have real bipartisanship in it,” Barnes said, adding that it bodes well for both political parties. “Obama is clearly making an effort to reach across the aisle not only to Republicans, but to the medical community.”
U.S. Treasury Secretary Timothy Geithner, testifying before the House Ways and Means Committee, said the budget's $250 million in grants to help states reform medical liability laws “can reduce overutilization of some expensive procedures without compromising patient outcomes.” Separately last week, the House Judiciary Committee voted to approve a medical liability reform bill that Rep. Phil Gingrey (R-Ga.), a physician, introduced last month. Committee Chairman Lamar Smith (R-Texas) said the issue is a “top 10 priority” for House Republicans.
Also, at least some of $18.4 billion from the reduction in state provider taxes would help fund a $62 billion, two-year delay in provider reimbursements under the sustainable growth-rate formula. Other funding for the two-year “doc fix”—to continue current payment rates through 2013—would come from a mandate that Medicaid physicians use more generic pharmaceuticals.
The healthcare components of the president's budget drew Republican rebukes and appeared likely to revive the battle over the 2010 reform law. In her hearing before the House Ways and Means Committee—a powerful panel that makes tax law—Sebelius spent hours answering questions about the law, which also came up when she testified before the Senate Finance Committee.
“We are looking at a collision course between implementation” of the Affordable Care Act and jobs, Sen. Olympia Snowe (R-Maine) told Sebelius at a Feb. 15 hearing on the budget, referring to Congressional Budget Office projections that the law would reduce the workforce by 0.5%, or about 800,000 jobs, in the first 10 years because some people will no longer have to work just to afford health insurance.
While Republicans announced their intention to target all of the $465 million in the budget for implementing the healthcare law, administration officials said they will defend both the law and new initiatives.
“The ACA is clearly the law of the United States,” Sebelius told reporters at a Feb. 14 budget briefing. However, “it becomes exceedingly difficult without the resources to fulfill that.”
Additionally the budget revived the fight over the controversial CLASS Act, which is a new long-term healthcare subsidy program created by the healthcare law. The program would add billions in new federal revenue in its first five years as it collects premiums but could run substantial deficits in later years as it begins to pay out benefits. Republican criticisms from last year that the CLASS Act was a new deficit-exploding entitlement were revived last week.
Sebelius appeared to accept that argument to some extent Feb. 7, when she announced an attempt to redesign the program to improve its long-term fiscal sustainability.
“Using the flexibility in the law, we determined fairly quickly that it would not be self-sustaining,” Sebelius told members of the Senate Finance Committee on Feb. 15. “We will not start it unless it is self-sustaining.”