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.


Hospital Government Payment Losses Could Reach $218 Billion by 2028

A recent study concluded that hospitals can expect to lose about $218 billion in federal Medicare and Medicaid payments between 2010, when the latest round of major cuts began, and 2028.

Among those cuts cited in the study, which was commissioned by the American Hospital Association and the Federation of American Hospitals, are:

  • $79 billion for DRG documentation and coding adjustments
  • $73 billion for Medicare sequestration
  • $26 billion for Medicaid disproportionate share payments (Medicaid DSH)
  • $11 billion in cuts associated with the American Taxpayer Relief Act of 2012

Other cuts came, or will be coming, through regulatory changes, the introduction of value-based payment programs, and other means.

Learn more about these cuts and their potential implications in this Healthcare Dive story.


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.

Medicare Cuts May be Part of Budget Deal

The agreement between the White House and congressional negotiators on a two-year budget deal and an increase in the federal debt ceiling will be paid for in part with reductions in Medicare payments.

US Capitol DomeUnder the reported agreement, negotiators agreed to increase federal spending $80 billion over two years, and that increase will almost certainly need to be offset by spending cuts. The New York Times has reported that “The Medicare savings would come from cuts in payments to doctors and other health care providers.”

The budget agreement reportedly did not include specific spending cuts beyond extension of the current two percent Medicare sequestration cuts, although the publication The Hill reports that site-neutral Medicare outpatient payments may be part of the agreement; the additional cuts will need to be negotiated within Congress.

The National Association of Urban Hospitals has long opposed the introduction of site-neutral Medicare outpatient payments and wrote this week to members of Congress urging them not to reduce Medicare payments to hospitals to offset budget agreement spending increases.

To learn more about the budget agreement and its possible implications for health care providers, see this New York Times article and this report from The Hill.

Responding to Budget Deal, NAUH Urges Congress Not to Cut Medicare Payments

In the wake of the agreement between the White House and congressional leaders on a two-year budget deal and an increase in the federal debt ceiling, the National Association of Urban Hospitals has written to Congress asking members not to pay for the agreement with reductions in Medicare payments to hospitals.

NAUH LogoAs part of the agreement, negotiators agreed to raise federal spending $80 billion over the next two years. That spending increase will almost certainly need to be offset with corresponding spending cuts, and amid reports that Medicare cuts will be among those reductions, NAUH has asked members of Congress not to reduce Medicare payments to the nation’s private safety-net hospitals.

See NAUH’s message to members of Congress here.

NAUH Asks Congress to Reject Sequestration Increase

The National Association of Urban Hospitals has contacted every member of Congress to ask that they reject a proposal to increase future Medicare sequestration cuts to pay for a trade bill.

NAUH LogoCurrently there is interest in Congress in adding 0.25 percentage points to the FY 2024 Medicare sequestration to help pay for the trade bill. In its message, NAUH noted that private safety-net hospitals already have experienced significant Medicare cuts in recent years and that those cuts will be continuing well into the next decade.

See NAUH’s message to Congress here.

Don’t Extend Medicare Sequester, NAUH Urges Senate

With the Senate considering extending Medicare sequestration for another year to pay for an extension of emergency unemployment compensation payments, the National Association of Urban Hospitals (NAUH) has conveyed its opposition to such a proposal.

NAUH LogoPrivate safety-net hospitals, NAUH noted in its message, have already endured a number of Medicare cuts, including a two-year extension of sequestration cuts enacted just last month.

Read NAUH’s message to senators here.

Budget Talks Could Focus on Sequestration

Upcoming federal budget talks may very well focus on addressing what are perceived to be the more damaging cuts resulting from sequestration – the two percent across-the-board cut in federal spending required under the 2011 Budget Control Act.

While Medicaid was not affected by the sequester, all Medicare payments have been cut two percent since January 1, 2012, and other health care-related funding has been affected by the law as well.

Surgical InstrumentsThe nation’s private, non-profit urban safety-net hospitals have unquestionably felt the effects of this reduction in Medicare revenue.

Now, participants in the budget conference committee created as part of the deal to end the federal government shutdown are suggesting that instead of pursuing a major reordering of federal spending, they may very well focus on addressing the most damaging cuts required by the federal budget sequester.

Learn more about what the participants in the upcoming negotiations expect in this Washington Post article.

Senate Committee Talks Entitlement Reform (Cuts)

Higher Medicare Part B and Part D premiums for wealthier beneficiaries.   Reduced Medicare bad debt reimbursement.  Raising the Medicare eligibility age.  Reducing the scope of Medigap policies.

These were among the entitlement “reforms” discussed when Treasury Secretary Jacob Lew testified recently before the Senate Finance Committee.

Congress ChamberMany of the potential Medicare cuts lawmakers are contemplating would be especially damaging to the nation’s private, non-profit urban safety-net hospitals, including the reduction in Medicare bad debt reimbursement discussed at the hearing.

Learn more about Mr. Lew’s testimony and the potential Medicare cuts discussed by committee members in this CQ HealthBeat article presented by the Commonwealth Fund.

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.