CBO Targets Health Care in Options for Reducing Deficit

Every year the Congressional Budget Office publishes a menu of options for reducing federal spending and the federal budget deficit.  As in the past, this year’s compendium includes a number of options to reduce federal health care spending and raises federal revenue through health care initiatives.

The cost-cutting options include:

  • establish caps on federal spending for Medicaid
  • limit states’ taxes on health care providers
  • reduce federal Medicaid matching rates
  • change the cost-sharing rules for Medicare and restrict Medigap insurance
  • raise the age of eligibility for Medicare to 67
  • reduce Medicare’s coverage of bad debt
  • consolidate and reduce federal payments for graduate medical education at teaching hospitals
  • use an alternative measure of inflation to index social security and other mandatory programs

Options to raise additional revenue include:

  • increase premiums for Parts B and D of Medicare
  • reduce tax subsidies for employment-based health insurance
  • increase the payroll tax rate for Medicare hospital insurance

Many of these proposals, if implemented, would be damaging for private safety-net hospitals.

Learn more about the CBO’s recommendations, how they might be implemented, and their potential implications in the CBO report Options for Reducing the Deficit: 2019 to 2028.


House to Set Sights on Medicare, Medicaid Cuts in 2018

The House of Representatives will pursue entitlement spending cuts next year, House Speaker Paul Ryan recently explained on a radio program.

That means Medicare, Medicaid, and possibly even Social Security.

Ryan said that

We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit… Frankly, it’s the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements — because that’s really where the problem lies, fiscally speaking.

Medicare and Medicaid cuts would be very harmful to the nation’s private safety-net hospitals.

Learn more about Ryan’s remarks, the administration’s priorities, and what other members of Congress are saying about entitlement cuts in this Washington Post story.

Medicaid Safe, White House Aide Says

While the Obama administration is willing to discuss further Medicare cuts as part of a broader effort to reduce federal spending, it opposes any further cuts in Medicaid, according to a White House aide.

Speaking at a Families USA conference, economic advisor Gene Sperling explained that the administration now opposes even the Medicaid cuts it proposed last year but is willing to negotiate changes in Medicare that could result in reduced spending on that program.

Read more about the White House’s emerging priorities in this articleiStock_000005787159XSmall from The Hill.

How Hospitals Staved Off Threatened Fiscal Cliff Cuts

Hospitals were spared three of the major Medicare cuts they feared most in the fiscal cliff solution – bad debt reimbursement, graduate medical education payments, and outpatient evaluation and management (E&M) fees – through vigorous lobbying of Congress.

As the fiscal cliff deadline drew nearer, according to the publication Politico, hospital associations, ad hoc coalitions of providers, and individual hospitals communicated directly with their members of Congress and deployed their lobbyists to make their case to Congress.  Consequently, while hospitals did suffer some Medicare cuts in the fiscal cliff solution, they were spared the cuts they feared the most.

And they still face the possibility of cuts later this year as part of the second half of the fiscal cliff crisis – the new March 1 deadline for the two percent sequestration cuts in Medicare payments – and if Congress and the administration take up entitlement reform, as is widely expected.

The success of the hospital industry’s lobbying on these vital issues speaks to the value of having a strong presence in Washington, D.C. and asserting that presence at the right time.  The National Association of Urban Hospitals (NAUH) provides that strong presence on behalf of urban safety-net hospitals and was very much involved in lobbying Congress during the fiscal cliff crisis – lobbying that proved successful in preventing the Medicare and Medicaid cuts that urban safety-net hospitals feared most.

The fiscal cliff crisis is not over, however, and Medicare and Medicaid will continue to be vulnerable to cuts in the coming year.  If you are concerned about the possibility of such cuts, we invite you to consider joining NAUH and helping make our voice even louder and stronger.

To learn more about how the hospital industry managed to hold off major Medicare cuts, read this Politico article.  To contact NAUH and learn more about the organization and membership, go hereCongress Chamber.

Will Fiscal Cliff Deal Make Medicare, Medicaid More Vulnerable?

The relative lack of spending cuts included in the fiscal cliff/Medicare doc fix deal passed by Congress last week could increase the pressure to reduce costs in key safety-net programs like Medicare, Medicaid, and Social Security.

Or so some policy analysts believe.

Many members of Congress supported the fiscal cliff bill only reluctantly because of it lacked the bigger spending cuts they sought, the thinking goes.  Now, with another fiscal cliff deadline looming on March 1, when the previously passed sequestration law takes effect, many who compromised last week will be demanding bigger cuts in exchange for their vote.

As a result, Medicare and Medicaid, two of the federal government’s fastest-growing expenses, are expected to be targets for those in search of cuts.  In addition, Medicare has proven to be among the first places many officials look in their search for savings.

Any attempt to implement additional reductions in Medicare and Medicaid, beyond those already scheduled to take effect through the Affordable Care Act and last week’s fiscal cliff bill, would be especially damaging to the nation’s private, non-profit urban safety-net hospitals.  The National Association of Urban Hospitals (NAUH) can be expected to lobby vigorously against any further Medicare or Medicaid cuts.

Read more about how last week’s budget solution is far from the end of the threat to Medicare and Medicaid in this Boston Globe articledollars.

NAUH Asks Congress for Help

The National Association of Urban Hospitals has again asked members of Congress to oppose any attempt to address this year’s Medicare SGR patch or the fiscal cliff challenge with still more Medicare or Medicaid cuts, noting the degree to which urban safety-net hospitals have already undergone such cuts and are awaiting others that will soon take effect.

Read NAUH’s message to Congress hereNAUH Logo.

NAUH Lobbies Congress on Fiscal Cliff Issues

With Congress and the administration now negotiating a solution to the fiscal cliff crisis, National Association of Urban Hospitals members are reaching out to their congressional delegations with the following messages:

  • Further Medicare and Medicaid cuts to hospitals should not be part of the solution.
  • Through the Affordable Care Act, sequestration, and other legislation and regulations, urban safety-net hospitals have already been asked to endure significant cuts in their Medicare and Medicaid reimbursement.
  • More cuts – including the biggest ones – have not yet even taken effect.
  • Private urban safety-net hospitals simply cannot afford any more Medicare and Medicaid cuts without jeopardizing their ability to continue meeting the health care needs of the low-income, low-income elderly, and uninsured residents of the communities they serve.
  • Please oppose further Medicare and Medicaid cuts to hospitals as part of any solution to the fiscal cliff crisis.

NAUH members are already delivering this message to their congressional delegations and will continue to do so as fiscal cliff negotiations continue.


Dental Benefits Victim of Economizing By States

Prevented by the Affordable Care Act from reducing Medicaid eligibility, many states are seeking to reduce their Medicaid spending by eliminating or cutting optional benefits – especially for dental services for adults.

Approximately half of all states have cut back on optional Medicaid dental benefits for adults in the past few years.  The cuts, moreover, have no partisan foundation:  both Democratic and Republican governors are making such reductions.

Some states cover only pain relief and emergencies; others cover preventive examinations but do not pay for any needed work those exams uncover.

Read more about how states are adjusting their Medicaid dental benefits and how they are expected to continue doing so in this New York Times articleSurgical Instruments.

Medicaid Cuts Looming in 13 States

Thirteen states either have cut Medicaid benefits, reduced provider payments, or tightened eligibility criteria or are in the process of doing so, according to a report from Kaiser Health News.

Among the states making cuts are Illinois, Florida, California, Wisconsin, and Maryland.

The cuts come less than two years before Medicaid eligibility is expected to increase significantly nation-wide as a result of the Affordable Care Act, although the extent of that expansion is now uncertain in light of the Supreme Court decision overturning the reform law’s requirement that states expand their Medicaid programs.

Some states have already indicated that they will not expand their Medicaid programs in 2014 but most are still undecided.

Read more about this year’s Medicaid cuts in this Kaiser Health News articleiStock_000005787159XSmall.

Illinois Adopts Massive Medicaid Cuts

Reduced payments to hospitals and doctors, stricter eligibility criteria, the elimination of prescription drug discounts for low-income seniors, and reduced dental benefits are among the payment and service reductions included in a $1.6 billion cut in Illinois’s Medicaid program.

Hundreds of thousands of the state’s residents are expected to lose their Medicaid eligibility when the cuts take effect on July 1.

Read more about them in this Chicago Tribune articlefinancial paperwork.