Health Industry Likely To Back Automatic Cuts Over New Budget Plan
The health care industry likely will push for the newly formed debt panel to allow automatic spending cuts to take effect instead of developing new budget cuts of at least $1.5 trillion, according to lobbyists and health care groups, Reuters reports (Reid/Yukhananov, Reuters, 9/6).
As part of the recent debt deal, the bipartisan, bicameral panel -- also known as the "super committee" -- must develop and pass by the end of November at least $1.5 trillion in federal spending cuts over 10 years. Failure to do so would trigger a series of across-the-board cuts.
Medicaid would be exempt from those cuts, and Medicare would be protected from deep spending cuts. However, the deficit panel is not bound by those stipulations; many observers expect the panel will suggest deep cuts to entitlement spending.
The panel is scheduled to hold its first meeting this Thursday, followed by its first public hearing on Sept. 13 (California Healthline, 9/6).
Health Care Industry Positioning
Analysts said that health care stakeholders likely will prefer the automatic cuts -- known as sequestration -- because they include only a 2% cut in reimbursement to Medicare providers, as opposed to potentially deeper cuts made by the debt panel.
Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said, "Sequestration is the devil you know and the super committee is the devil you don't."
Mark Hayes, a health care lobbyist, said health care companies actively will support the automatic cuts. He said, "The message will be communicated to â¦ members of Congress, through all the usual channels including letters, town hall meetings, phone calls and personal messages."
According to Richtman, lobbyists "are talking about ways to induce stalemate" on the panel so that no agreement can be reached and the automatic cuts take effect. Lobbyists could encourage a stalemate through various means, such as pushing Republicans on the committee to stand firm against efforts to raise taxes, a deficit-reduction strategy supported by many Democrats.
However, certain lobbyists said it is difficult to actively encourage the debt panel to fail. One lobbyist said, "You cannot say to these members, 'don't do a deal," adding, "If you lobby the committee, your message is that we have already given almost $500 billion under President Obama's health care reforms â¦ and more cuts will cause job losses" (Reuters, 9/6).
Kyl Lowers Expectations for Panel
On Tuesday, Senate Minority Whip Jon Kyl (R-Ariz.) said it will be "very, very hard" for the debt panel to reach an agreement if negotiations focus on significant changes to Medicare or the tax code. However, Kyl noted that the committee could reach a deal to cut as much as $1.5 trillion if members avoid discussing the most contentious issues (Raju, Politico, 9/6).
Kyl encouraged other members of the debt panel to shift their attention away from entitlement spending and taxes. He said, "I am going to suggest to my colleagues that we should first focus on areas where we can reach agreement because if we start asking each other to make a big compromise on principle, that is hard to do" (Friedman, National Journal, 9/6).
Panel Members Were Aided by Health Care Money
Physicians, drugmakers, hospitals and health insurers over the years have given millions of dollars to lawmakers who now make up the debt panel, according to a report by the Center for Responsive Politics, the AP/San Francisco Chronicle reports.
The analysis found:
- Health care professionals, such as physicians, rank among the top-10 sources of campaign funding for all but two panel members;
- Drugmakers and health product developers are among the top-20 sources of contributions for nine of the members;
- Hospitals and nursing homes are among the top-20 sources of campaign funds for eight panel members; and
- Health insurers are in the top 20 for five members.
The report found that four main sectors of the health care industry accounted for more than $17 million in campaign donations to the panel members since 1989 (Alonso-Zaldivar, AP/San Francisco Chronicle, 9/7).
Panel Might Draw on Previous Budget Proposals
The debt panel could consider deficit-cutting strategies already established by previous budget groups, CQ Today reports. According to CQ Today, the panel could draw on ideas developed by:
- A bipartisan group of lawmakers led by Vice President Biden earlier this year;
- The so-called Gang of Six, which finalized long-term budget proposals earlier this summer; and
- Obama's bipartisan National Commission on Fiscal Responsibility and Reform, which recommended cost-cutting strategies last year (Schatz/Krawzak, CQ Today, 9/6).