Members of Congress are talking about tax increases and additional healthcare spending cuts after their nonpartisan accounting office reported that federal healthcare spending will more than double in the next decade.
CBO projects rise in spending
Cuts, changes needed to prevent 'substantial harm'
The Congressional Budget Office reported that total federal healthcare spending on so-called mandatory programs—including on Medicare and Medicaid—will grow from $847 billion in the current fiscal year to $1.8 trillion in fiscal 2022.
“Because of the aging of the population and rising costs for healthcare, the set of budget policies that were in effect in the past cannot be maintained in the future,” the CBO report's authors wrote.
The report concluded that in order to keep the rising federal debt that is paying for much of that healthcare spending growth from causing “substantial harm” to the economy, policymakers will need to increase taxes or enact “major changes” to federal healthcare programs, or both.
Congressional Democrats generally emphasized tax increases in the days following CBO's latest gloomy budget projections. For instance, Democratic Whip Steny Hoyer (Md.) called for enactment of “a big and balanced deficit reduction plan this year.” “It is clear from the CBO's forecast that allowing the Bush tax cuts to expire for the wealthiest Americans can be a part of that solution,” Hoyer said in a written statement.
For Republicans, the report reinforced earlier calls to scrap costly provisions of the 2010 federal healthcare overhaul and enact cost-control changes to the major healthcare programs.
Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee, which oversees those health programs, highlighted the CBO's finding of accelerated Medicaid spending under the Patient Protection and Affordable Care Act. The report found that some of the fastest healthcare increases will occur in the Medicaid program, to which the 2010 law will add at least 16 million beneficiaries, and where spending will grow from $275 billion to $605 billion over the next 10 years.
“One of the primary reasons my colleagues in the GOP Doctors Caucus and I fought against Obamacare was because Democrats falsely promised it would solve not only our healthcare crisis, but tackle our ballooning deficit,” Rep. Phil Gingrey (R-Ga.), a physician, said in an e-mail. “Clearly, it did neither.”
Republicans have proposed capping Medicaid spending and using fixed state block grants that give states wide latitude in designing the programs to control costs through various changes, including cutting eligibility.
Also illuminated by the CBO numbers was the Republican effort to repeal the Community Living Assistance Services and Supports (CLASS) Act, part of the 2010 healthcare law.
For the first time since the Obama administration announced last fall (Oct. 24, 2011) that it would suspend the program because it lacked a financially sustainable model, the CBO deleted from its long-term spending baseline the $76 billion the program was supposed to save.
A day after the CBO released its report, the House of Representatives approved the Fiscal Responsibility and Retirement Security Act of 2011 to repeal the CLASS Act in a vote of 267-159. Rep. Charles Boustany (R-La.), a physician, introduced the legislation last year, and the bill received support from 28 House Democrats. Boustany's bill would eliminate the program—and prevent it from resurfacing.
“Nobody believed that it had any real merit when it was passed,” Rep. Tom Price (R-Ga.), a physician, told Modern Healthcare. “It was passed as a partial pay-for for the president's healthcare bill. So it's another portion of that bill that ought to come crashing down,” he said.
But supporters of the voluntary, long-term-care insurance program contend that without such a program, individuals will be forced to rely on Medicaid, which is already strapped financially.
“We're extremely disappointed, though not surprised, that the repeal bill passed,” Larry Minnix, president and CEO of Leading Age, said in a statement. Leading Age advocates for effective services to seniors, children and others with special needs. Minnix said his group will redouble its efforts to prevent a Senate repeal vote. “We need to keep CLASS alive because we believe it can be made to work. It is the only alternative so far to Medicaid as the primary means of financing long-term services and supports. If not CLASS, then what?”
Meanwhile, lawmakers from both chambers met in a conference committee to discuss policy differences on tax legislation that also seeks to avert a 27.4% cut in Medicare reimbursement to the nation's physicians after Feb. 29. While there was broad support among lawmakers for a permanent solution to the troubled sustainable growth-rate formula, there was little talk about how to pay for it.
A host of hospital provider groups, including the Federation of American Hospitals, the American Hospital Association and the Catholic Health Association, lobbied lawmakers last week to spare hospitals and instead use potential war savings—specifically, Overseas Contingency Operations Funds—as a way to fix the formula permanently. Rep. Sander “Sandy” Levin (D-Mich.), a member of the conference committee, said after a meeting last week there is “no other way” to fix the SGR permanently than using OCO funds. But CBO Director Douglas Elmendorf noted in a blog posting last week that this issue gets tricky because OCO funds are discretionary, and Medicare funding is mandatory.
Rep. Dave Camp (R-Mich.), chairman of the conference committee, suggested it's unlikely the panel will use those funds to solve the problem. “I know I heard members bring up the war spending as a possible,” Camp told reporters. “I haven't really dug into that issue. My view is it's outside the scope of conference. It's not in either the House or Senate bill.”
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