Senate GOP Unveils Budget Plan With $430B in Medicare Cuts

On Wednesday, Senate Budget Committee Chair Mike Enzi (R-Wyo.) released a fiscal year 2016 budget plan that calls for more than $400 billion in Medicare savings over 10 years but does not provide many specifics on how those savings would be achieved, Politico reports.

Instead, the plan tasks individual Senate committees with jurisdiction over Medicare to find such savings (Min Kim, Politico, 3/18).

Background

The release of the Senate plan came one day after House Budget Committee Chair Tom Price (R-Ga.) released his own budget proposal (California Healthline, 3/17). According to the Wall Street Journal, the proposals outlined in the budget plans are not binding and many would face obstacles to becoming law while President Obama is in office. However, the budget plans provide an indication of Republican priorities (Hook/Peterson, Wall Street Journal, 3/18). According to The Hill, the Senate Budget Committee aims to reach an agreement on a joint budget proposal with the House GOP by April 15 (Shabad, The Hill, 3/18).

House vs. Senate GOP Budget Plans: Medicare and Medicaid

The two GOP budget proposals differ in their approaches to Medicare and Medicaid.

The House GOP plan would transition Medicare to a "premium support" model that would make the program like a voucher system for future beneficiaries. Specifically, the Medicare premium support model would provide funds for beneficiaries who join Medicare after 2023 to purchase private coverage.

Under the House plan, the federal government would give states a lump sum to run their individual Medicaid programs (California Healthline, 3/17).

Meanwhile, the Senate plan proposes reducing Medicare spending by about $430 billion over the coming decade, which matches the spending reductions included in President Obama's proposed budget. The Senate proposal does not call for Medicare to follow the "premium support" model (Politico, 3/18).

Further, unlike the House Republicans' plan, the Senate GOP plan would not convert Medicaid into a block grant program (California Healthline, 3/17). Instead, it calls for states to have more flexibility in running Medicaid programs by administering Medicaid in a similar manner as the Children's Health Insurance Program.

Meanwhile, the Senate GOP budget calls for about $400 billion in Medicaid savings over a decade.

House vs. Senate GOP Budget Plans: Reconciliation

The Senate budget plan would task the Senate Finance and Senate Health, Education, Labor and Pensions committees with proposing at least $1 billion in savings by July 31 for legislation that could be passed via reconciliation. Budget reconciliation allows budget bills to be passed by a simple majority of 51 votes, which would avoid Democratic hurdles that Republicans would typically need 60 votes to bypass.

According to Senate budget committee sources, the $1 billion target was set intentionally low to provide for flexibility based on whether the Supreme Court strikes down subsidies to help U.S. residents purchase coverage through the federal exchange in King v. Burwell (Politico, 3/18). The high court heard oral arguments in the case earlier this month and is expected to release a decision by the end of June (California Healthline, 3/5).

The Senate budget document states that because a ruling striking down the federal exchange subsidies "could significantly alter the levels of spending in the budget resolution ... the Senate Republican budget includes reconciliation instructions for health care, but the actual contours of that legislation are unknowable at this time" (Ferris [1], The Hill, 3/18).

However, the Senate budget reconciliation measure would not necessarily be used to pass an Affordable Care Act-related measure, according to The Hill. Instead, it includes intentionally broad language that could allow reconciliation to be used for other issues, such as tax reform or increasing the debt limit (Shabad, The Hill, 3/18).

By contrast, the House budget measure calls for 13 House committees to draft reconciliation measures and gives the committees until July 15 to submit their bills (Ferris [1], The Hill, 3/18). Price on Tuesday said that the House would attempt to use reconciliation to repeal provisions of the ACA "in their entirety."

The House and Senate would need to pass a joint budget measure in order to use the reconciliation process to allow a measure to pass in the Senate with a simple majority (Politico, 3/18). However, even if passed, the measure could still face a presidential veto (California Healthline, 3/17).

Dems Question 'Double Counting'

Several senators yesterday criticized the House and Senate budget plans for calling for a complete repeal of the ACA while maintaining some savings from the ACA.

In a budget hearing on Wednesday, Sen. Angus King (I-Maine) noted that the Senate plan assumes the "same level of federal revenue," including revenue from ACA provisions. He asked, "How can a budget engage in double counting of this kind?"

Meanwhile, Sen. Sheldon Whitehouse (D-R.I.) said that the Senate GOP's combination of calling for repeal of the ACA and "leav[ing] in a trillion dollars in Obamacare revenues ... seems to be an unusual combination" (Ferris [2], The Hill, 3/18).