“The Republican budget, pure and simple, would pull out the rug from under seniors to finance tax cuts for billionaires,” Sen. Sherrod Brown (D-Ohio) said at a news conference last week about the $2 trillion in tax cuts in the House budget.
But some form of change is needed in the program, if only to keep it from fueling ever-larger deficits, noted Democrats such as House Democratic leader Nancy Pelosi. In an appearance on CNBC’s “The Call” last week, Pelosi (D-Calif.) said the nation must put everything on the table to reduce the deficit. When pressed if that included Medicare, she said yes.
HHS Secretary Kathleen Sebelius, during a rare appearance at a Capitol Hill news conference, agreed that cuts to Medicare are needed. She touted President Barack Obama’s deficit-reduction “framework” introduced in April, which also included Medicare cuts. Although Obama’s plan is vaguely sketched, with many of its Medicare cuts to be determined by the healthcare law’s Independent Payment Advisory Board, it would cut Medicare by $340 billion over 10 years.
“The approach that Democrats in Congress and the president want to take is to improve Medicare, and it’s already under way thanks to last year’s healthcare law,” Sebelius said May 19.
The calls for Medicare changes by senior Democrats—who generally are seen as its most reliable defenders—has persuaded healthcare provider advocates to take seriously the calls of leaders of both political parties for bolstering its long-term fiscal outlook as the key to reining in growing federal deficits.
“There’s not just smoke, there’s real fire there,” Bruce Siegel, CEO of National Association of Public Hospitals and Health Systems, said in an interview. “The deficit reduction talks are very real.”
Medicare is the second largest entitlement program after Social Security and its financial outlook is much worse. That financial tailspin was highlighted by the recent Medicare trustees’ report, which concluded the program will exhaust its trust fund by 2024—five years earlier than trustees predicted last year.
However the Senate vote comes out, the debt issue—and Medicare’s large role in it—will remain as Congress faces an August 2 deadline to raise the government’s debt limit. Republicans are expected to use that vote to leverage substantive cuts to all entitlement programs.
Although Medicare’s inclusion in a final deficit-reduction measure appears more likely, it remains absolutely unclear which of many proposed Medicare changes Congress will include.
The leading proposals to balance Medicare’s finances have drawn concerns from many provider advocates.
For example, Dr. Cecil Wilson, president of the American Medical Association, said in an interview that automatic across-the-board Medicare cuts—such as those used in the president’s and others’ deficit plans—will only reduce access to providers as reimbursements are slashed. “It’s a meat cleaver instead of a scalpel,” Wilson said.
Similarly, the Republican plan has drawn fire from providers concerned that a switch to slow-growing insurance “premium supports” could quickly leave beneficiaries unable to afford care in the future.
Some hospital advocates have voiced concerns about the deficit-reduction recommendations of the Simpson-Bowles bipartisan commission appointed by the president. Among the recommendations it issued in November are cuts aimed at hospitals that would reduce Medicare funding by about $100 billion over 10 years.
Some providers are urging patience to allow time to feel the fiscal impact of the patient-care improvement initiatives included in the 2010 healthcare law that promised reduced spending through higher quality care. Siegel said he expected “big savings” within five years through the law’s initiatives to prevent unnecessary and costly hospitalizations, such as medical homes and accountable care organizations.
Other provider advocates are urging lawmakers to consider alternate approaches to the leading plans, including raising deductibles, premiums and eligibility ages for Medicare beneficiaries.
“We’ve already made a very significant contribution to healthcare reform in terms of reducing Medicare outlays,” said Richard Pollack, executive vice president for advocacy and public policy at the American Hospital Association, referring to cuts hospitals agreed to as part of negotiations on the 2010 healthcare law. “It’s time to look at a number of other alternatives.”