Senate Dems propose $275B in healthcare cuts

The first Senate Democratic budget proposal in four years would cut federal healthcare spending by $275 billion over 10 years.

The spending blueprint offered by Sen. Patty Murray (D-Wash.), chairman of the Budget Committee, would reduce—but not eliminate—annual deficits through an even combination of tax increases and spending cuts.

The healthcare cuts—for which few details were provided—were part of $975 billion in overall cuts the budget would implement over the coming decade. Murray's budget specified only that it would derive the savings through accelerating provisions that tie provider reimbursements to patient outcomes, reducing waste and fraud, and encouraging greater provider “engagement.”

“There are no sacred cows,” Murray said at a Wednesday hearing. “We put everything we can on the table but we do it in a responsible way that preserves, protects and strengthens the programs like Medicare and Medicaid that the American people strongly support.”

Murray's budget would eliminate the Medicare physician payment system that is slated to cut pay rates at the end of the year. However, it did not specify what would replace the sustainable growth-rate formula.

The spending plan also would end the so-called sequester, the $1.2 trillion program of 10-year cuts that took effect March 1 to reduce federal deficits. That includes a 2% cut in Medicare provider payments that HHS will impose on services provided after April 1. Eliminating the sequester cuts would save 750,000 jobs this year, Murray said, echoing concerns raised by some provider advocates.

Murray contrasted her approach with the one Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, put forward earlier this week. Ryan's plan assumes significant savings from allowing Medicare beneficiaries to choose premium subsidies for private health plans over the traditional program.

“We reject calls to dismantle or privatize Medicare by voucherizing it,” Murray said.

Sen. Jeff Sessions (R-Ala.), ranking member of the Senate Budget Committee, criticized the Murray budget for leaving untouched the “unsustainable” Patient Protection and Affordable Care Act and federal entitlement programs.

“We all know that's necessary,” Sessions said about the need to slow the contributions of Medicare and Medicaid to the federal debt.

The Senate budget drew criticism from American Hospital Association lobbyist Tom Nickels, who said the unspecified healthcare cuts could come from hospitals or other providers. “Any kind of cuts to Medicare after the significant cuts that we and other providers have experienced we think is a lot,” Nickels said.

Sen. Ron Wyden (D-Ore.) said partisan differences over Medicare and Medicaid have prevented bipartisan agreement on spending priorities but highlighted three savings initiatives where both parties could agree. Bipartisan support exists, he said, for combining Medicare parts A and B, improving care for chronic illness, and opening to the public a federal database specifying provider payments.

Sen. Mark Warner of Virginia, another Democrat urging changes to Medicare to extend its solvency, noted the declining ratio of workers to retirees during his lifetime as a compelling reason for making changes in the program.

Some Republicans also urged common ground on Medicare. Sen. Lindsey Graham (R-S.C.) echoed the call of some Democrats to expand Medicare's use of means testing to reduce spending by the hospital insurance fund, which is slated to exhaust its reserves in 2024 and begin running deficits.

Meanwhile, GOP leaders downplayed President Barack Obama's recent visits with Republicans on Capitol Hill, who control the House of Representatives. They said he still fails to see the need for substantial cost cutting in entitlement programs. The president's budget is expected April 8, or two months later than it is traditionally released.

The dueling budgets came amid increasing speculation on Capitol Hill that a major deficit reduction deal may be possible later this year, perhaps as part of a package to increase the federal government's borrowing limit. However, Obama said in a Wednesday television interview that partisan differences on deficit reduction may be too wide to bridge.