President Obama Urges Debt Panel To Offset Cost of New Jobs Plan
President Obama wants the bipartisan, bicameral debt panel to offset the cost of his new $450 billion jobs plan, on top of the $1.5 trillion in savings the committee already is tasked with finding, Politico reports (Raju, Politico, 9/9).
Obama suggested panel members cut entitlement programs, such as Medicare and Medicaid, to address the cost of the jobs plan, among other strategies (AP/Washington Post, 9/8).
As part of the recent debt deal, the 12-member panel -- also known as the "super committee" -- must develop and pass by the end of November $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. As a result, many observers expect the panel will suggest deep cuts to entitlement spending. The panel held its first meeting last week, and will have its first public hearing on Tuesday.
Concerns About Automatic Cuts to Medicare
Analysts have said that health care stakeholders likely would prefer the automatic cuts because they include only a 2% cut in reimbursement to Medicare providers, as opposed to potentially deeper cuts made by the debt panel.
Health care lobbyists said health care companies actively will support the automatic cuts, with some potentially going as far as encouraging a stalemate among panel members (California Healthline, 9/7).
However, some members of the health industry are concerned about the potential 2% cuts, according to The Hill's "Healthwatch" (Baker, "Healthwatch," The Hill, 9/12).
Certain health care providers are warning that the cuts could trigger job losses in the industry, which remained one of the strongest during the economic recession. The Obama administration even credited some of the job growth in health care to the federal health reform law (DoBias, Politico, 9/11).
One group that is concerned about the 2% cuts is the American Hospital Association, which on Friday said that such a reduction in Medicare reimbursements for hospitals could cause up to 194,000 job losses through 2021 (Evans, Modern Healthcare, 9/9). AHA based its predictions on a report by the consulting firm Tripp Umbach. AHA said the automatic cuts would cause a $41 billion loss in the industry.
AHA President and CEO Rich Umbdenstock said, "As Congress looks for ways to cut the deficit, we urge lawmakers to first, do no harm." He added, "Reject cuts to hospital services that could create devastating job losses to communities," noting, "The impact of cuts to hospital care would have ripple effects throughout the nation's economy" (Politico, 9/11).
AHA spokesperson Marie Watteau said the group recommends that the debt panel consider a gradual increase in the Medicare eligibility age from 65 to 67. Previous research indicates that the proposal could cut Medicare spending by $125 billion over 10 years (Reichard, CQ HealthBeat, 9/9).
Medicaid Cuts in Question
In related news, children's hospitals and advocates said the panel should avoid recommending deep cuts to Medicaid, The Hill's "Healthwatch" reports.
The advocacy group First Focus has released a new report investigating the negative consequences of GOP proposals to turn Medicaid into a block grant system, under which states would receive fixed amounts to use at their discretion. According to the report, such an overhaul would "end Medicaid as we know it, causing states to reduce enrollment, limit benefits, cut provider payments, and shift more costs onto the children and families who rely on the public programs."
Meanwhile, the National Association of Children's Hospitals in a letter to the panel opposed turning Medicaid into a block grant program. The group said that while children's hospitals account for fewer than 5% of U.S. hospitals, they provide almost half of all inpatient hospital care for children enrolled in Medicaid.
The group said the committee should "pursue policies with respect to Medicaid that would help to control the growth of clinical costs through improvements in the quality and integration of health care, rather than policies and spending cuts that simply shift costs to states, patients, providers and other payers" (Pecquet, "Healthwatch," The Hill, 9/9).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.