Bowles, Simpson Unveil Deficit-Reduction Plan To Avoid Sequester Cuts
Erskine Bowles and former Sen. Alan Simpson (R-Wyo.) -- former co-chairs of President Obama's deficit-reduction commission -- on Tuesday unveiled a $2.4 trillion deficit-reduction proposal, which includes $600 billion in federal entitlement savings over a decade, in hopes of staving off the automatic cuts under sequestration that take effect in March, Modern Healthcare reports (Zigmond, Modern Healthcare, 2/19).
The automatic cuts involve nearly $1 trillion in across-the-board reductions, including a 2% reduction to Medicare reimbursement rates (California Healthline, 2/19).The Simpson-Bowles proposal would replace and double the savings in the sequester, on top of the $2.7 trillion in deficit reduction enacted by the fiscal cliff legislation Obama signed in January (Klein, "Wonkblog," Washington Post, 2/19).
The plan would achieve the $600 billion in Medicare and Medicaid savings by decreasing provider payments, raising premiums for higher-income beneficiaries, reducing prescription drug costs and making "adjustments to account for an aging population." The plan also includes $600 billion in savings from tax code reforms and eliminating tax breaks, with the remaining savings coming from a mix of mandatory spending cuts and stricter limits on discretionary spending (Becker/Easley, "Blog Briefing Room," The Hill, 2/19).
In addition, the plan calls for "modernizing civilian and military health and retirement programs," as well as "reforming cost-sharing" in health care. According to the Washington Post's "Federal Eye," the plan includes few specifics but appears to be similar to previous recommendations by Simpson and Bowles -- proposed in 2010 -- that called for realigning the federal employee retirement benefits with those offered in the private sector and changing the cost-sharing arrangement in the Federal Employees Health Benefits Program to shift more costs to the employee over time (Yoder, "Federal Eye," Washington Post, 2/19).
However, "Wonkblog" notes that the new plan is not meant to be an update to Simpson-Bowles' original plan, but rather to bridge the gap between Obama and Republicans and show that a bargain to avoid the sequester still is achievable ("Wonkblog," Washington Post, 2/19).
Simpson and Bowles indicated they will unveil a more detailed plan in the coming weeks, after lawmakers have had a chance to review and comment on their proposal. The plan is more ambitious than the $1.5 trillion in savings Obama called for in last week's State of the Union address but is significantly smaller than the estimated $4 trillion House Republicans are seeking to reduce the deficit over a decade.
Simpson and Bowles acknowledge that their deficit-reduction proposal contains "more health care than Democrats would like and more revenue than Republicans support," but they believe it is the minimum necessary to "put the debt on a clear downward path" (Modern Healthcare, 2/19).
In an interview with CNBC, Bowles called the looming mandated cuts under sequestration "stupid" because they are indiscriminate. In order to avoid those, he said, "We're going to have to push the White House on entitlement cuts. We're going to have to push the Republicans on revenue" (Puzzanghera, Los Angeles Times, 2/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.