Scully Walkout Highlights ‘Fiscal Reality’ of Medicare

CMS Administrator Tom Scully's decision last week to defy a subpoena to appear before a House committee highlights the "collision between tax cut myths and fiscal reality, with Medicare caught in the middle," columnist Paul Krugman writes in a New York Times opinion piece. Medicare payment rates have become "increasingly inadequate," and Scully -- whom the House Small Business Committee had called to testify about whether the rates hurt small businesses that market medical devices -- "walked out" when he "discovered that he would have to face some of those service providers," Krugman notes. He adds, "You can't blame him. ... After all, he's under orders to keep" Medicare reimbursements down. According to Krugman, "there is intense pressure" within the Bush administration to "underestimat[e] future spending -- health care spending in particular" -- in order to "reconcile" plans for more tax cuts. Robert Greenstein of the Center on Budget and Policy Priorities has said that the administration's budget "assumes an extraordinarily low rate of growth in Medicare costs"; Krugman states that "since it would be hard to justify low projections of future cost growth if current costs are surging, there is also intense pressure to keep actual Medicare payments low, despite rapidly rising costs in the private sector." Scully's decision not to testify last week indicates that the "downside" of the policy has "already begun," Krugman states. He concludes, "There is a direct link between the administration's affluent-friendly tax cuts and the growing crisis of Medicare underfunding; it really is a case of their wealth versus your health" (Krugman, New York Times, 4/19).