Wednesday, September 7, 2011

The Prognosis for a Budget Compromise on Medicare Under the Budget Control Act of 2011: Not Good

It sounds reasonable enough.  Across-the-board cuts for Medicare and national defense is such an anathema that the "The 12" Super Committee politicians from both extremes of the ideological spectrum will find some way to reach common ground, right?

Think again. 

That's the message from an eye-opening editorial from a D.C. insider who is laying odds on no agreement and that the automatic cuts will happen.

By way of background, the Disease Management Care Blog checked out this handy Kaiser Family Foundation Brief on the Budget Control Act of 2011.  Briefly, The 12 must present a $1.2 trillion 9 year plan (going from 2013-2021) by November 23.  It must be voted on by December 23 and it must be signed into law by the following January 15.  If no plan makes it past that finish line, the Office of Management and Budget will have to "sequester" (claw-back) already budgeted money equally over each of the 9 years. Half of the cuts will have to come from defense and the rest will have to come from non-defense areas. 

Even if defense and other parts of the budget are reduced by The 12, the math says Medicare (except for Part B and D premiums, beneficiary cost sharing and Part A revenues) would still have to be addressed one way or another. The maximum that could be cut from that entitlement is 2% per year; that would mean a reduction in payment rates.  

That's when providers would go bonkers, health care advocates' blood would boil, hospitals would threaten lay-offs, doomsday attack ads would distract from Dancing With The Stars and someone's grandma will die.  Would our already reviled political class even dare to toy with such Kryptonite this close to a Presidential election?

Former Clinton Advisor Christopher Jennings (who held his own crossing swords with Gail Wilensky on a past PBS NewsHour) writing in the New England Journal, basically says the prognosis for agreement is grim and that's exactly what is going to happen because:

1. All health care stakeholders and advocates already understand what would happen with an across-the-board 2% Medicare cut.  On the other hand, they have no idea what mischief could happen if The 12 dive into the weeds of how the entitlements currently function.  Strangely enough, therefore, they seem to prefer the former,

2. It's very possible that the Republicans could successfully insist on more than 2% in some parts of the program and that the Obama Administration would throw Medicare under the bus agree - if it means getting concessions on the President's yet-to-be-announced jobs plan, and

3. Medicaid is exempted from the process.  An agreement by The 12 would be almost certain to tack on reductions in Medicaid, which could bust a lot of state budgets.

Think a reasoned bipartisan compromise will emerge, based on a Congress that wants to avoid a replay that led to a downgrade and do what's best for the Republic?  Based on the ingredients above, you may be wrong.

No comments: