CQ TODAY ONLINE NEWS – HEALTH
June 21, 2011 – 9:30 p.m.
Options on Entitlement Changes Range From Overhaul to Series of Tweaks
By Joanne Kenen, CQ Staff
Congressional leaders and administration officials looking to save money on health care entitlements face a variation of the old television game show “Let’s Make a Deal.”
Behind Door No. 1 for the debt talk negotiators are substantial changes to Medicaid and Medicare similar to those favored by House Republicans and included in the House GOP’s fiscal 2012 budget.
Behind Door No. 2 lie caps on Medicare spending that could mandate cost reductions or trigger automatic cutbacks. Deciding exactly how to configure those caps or triggers could keep congressional authorizing committees busy for months.
But Door No. 3 is generating the most speculation. That option would not transform the entitlement programs, but would aim to save billions through adjustments that could include raising Medicare co-payments or deductibles and requiring drug companies to pay rebates for prescription drugs provided to low-income elderly.
Some health policy experts say the current debt limit standoff will not be settled without making some of the tweaks behind Door No. 3.
“Folks who are watching this make a mistake if they think at the end of the day it will be caps and triggers and promises that get put off into the future,” said Dean Rosen, a health care attorney who has worked for top congressional Republicans. “There’s going to be some Medicare changes and perhaps some Medicaid. To me, that’s the only way I can now see a debt limit vote getting through the House and the numbers adding up to $2 trillion.”
Negotiators led by Vice President
“You can’t do a credible, large package without entitlement reform,” Senate Minority Leader
But Biden told reporters late last week that Republicans and Democrats remain deeply divided on “anything having to do with health care,” including the smaller steps that would save money but not fundamentally change Medicare and Medicaid.
Analysts said it remains unclear how much the Biden group will try to wring from Medicare and Medicaid as it seeks to find savings in the neighborhood of $2 trillion. Some say it could end up being less than $250 billion — maybe as little as $100 billion over 10 years — because of Democratic resistance. That would keep pressure on Congress to take action to extend the life of the Medicare trust fund, now forecast to run out of money in 2024, after a debt ceiling deal is worked out.
Holding Out for Major Change
Conservative House Republicans have not given up on the Door No. 1 scenario, still favoring the proposal by Budget Chairman
But despite House adoption of Ryan’s budget resolution (
Options on Entitlement Changes Range From Overhaul to Series of Tweaks
Liberal advocacy groups worry that Medicaid remains vulnerable to cuts, even if proposals to convert it to a block grant are turned aside. Republicans including Sen.
Democrats argue that state officials have sufficient leeway under current law. They oppose taking benefits away from low-income people already hard-hit by the sluggish economy — particularly when Republicans adamantly oppose collecting more taxes from those in upper-income brackets.
“Instead of shortchanging Medicaid, we must have the courage to rein in tax breaks for corporate America and for people of great wealth,” Sen.
Health policy experts said triggers, targets or some kind of spending caps are likely to be part of any deficit-reduction deal, although information is scarce on the details of what might emerge.
In April, President Obama proposed tightening a health care law provision that requires an independent Medicare cost-control panel to recommend cost savings if the program’s cost grows more than 1 percentage point faster than does the gross domestic product. The president also raised the possibility of creating an automatic mechanism to impose cost savings.
Lobbyists and health care advocates said several senior Senate Republicans favor increasing Medicare deductibles and shifting co-pays. Depending on how that is done, such a strategy could not only raise money, but also change some of the outdated incentives in fee-for-service Medicare, and discourage overuse of some health services.
Both the president’s fiscal commission last fall and a recent report from the Medicare Payment Advisory Commission, a nonpartisan group that advises Congress on Medicare payment policy, suggested changes to the program’s co-pays and deductibles. One proposal would require seniors to pay a bigger share of the cost of some common services, but limit how much they would have to pay out of pocket for a catastrophic illness.
Medicare does not now have such a protection, which is often provided by supplemental insurance.
Rockefeller and other Democrats back a prescription drug rebate proposal for those eligible for both Medicare and Medicaid. Manufacturers already provide rebates to Medicaid, but they no longer have to pay for those enrolled in both programs, called “dual eligibles,” as they did before the Medicare prescription drug plan (PL 108-173) was enacted.
The Democrats’ bills (