How Much Should We Care About Obama’s Budget?

President Obama’s latest budget, released on Wednesday, includes several significant changes to Medicare and other health care reforms. 

But barring an act of God — or at least, a legislative move that turns nearly 40 years of budgeting politics on its head — it will be the fifth Obama budget in five years that fails to pass Congress.

So does the White House’s budget, which Democrats already are championing as a political compromise intended to force a deal with Republicans, really matter to the health care sector?

Yes and no.

“The president’s budget is required by the Budget Act,” said Don Taylor, a public policy professor at Duke University, “but it is probably not that useful as a governing tool and maybe never has been.”

Budget Process as Much About Politics as Policy

The current budgeting process traces back to President Nixon, who in 1974 — politically weakened by the Watergate scandal — signed a law that essentially empowered Congress to come up with its own budget.

“Every president since has regretted Nixon’s action,” Bruce Bartlett wrote in 2010 in Forbes. “Whereas [the president’s budget] was once the necessary starting point for all budget discussion, since that was the only place the numbers even existed, now it is just one proposal among many.”

Under the post-Nixon approach, the president submits a budget request early each calendar year — kind of a “wish list for Congress to consider,” as Josh Hicks recently noted at the Washington Post. (This year’s White House budget is roughly two months late.) Meanwhile, both chambers of Congress separately work up their own budgets and try to enact them into law through reconciliation.

However, a political stalemate has prevented the Democrat-led Senate from passing a budget since 2009, partly because House Republicans’ own budget proposals “were not designed to reach a compromise with the Senate” the American Enterprise Institute’s Norman Ornstein told Hicks, but “extreme proposals intended to make a political statement.”

As a result, Congress has been forced to pass a series of continuing resolutions to keep the government running.

And because of this disjointed process, the numbers thrown around in federal budgeting have steadily crept away from reality.

“The national budget process has become completely dysfunctional,” according to Linda Bilmes, a professor of public policy at the Harvard Kennedy School.

“The executive branch undergoes an annual farce in which government officials prepare detailed estimates of how much it will cost to run their organizations,” Bilmes recently wrote in the Boston Globe. “Congress ignores most of this effort, and instead, tapes together budgets based on the previous year’s spending.”

So how much stock should one put in the White House’s budget announcement?

Perhaps the best way to think about the process is “it’s where the president is right now — [and] where he’s comfortable to go,” Jason Peuquet, research director for the Committee for a Responsible Federal Budget, told California Healthline.

Health Care Provisions

And seeking a compromise with Republicans, Obama appears willing to go further on health care cuts than in years past.

While the White House’s budget proposals since the Affordable Care Act have mostly tinkered around the edges of the health care system, Wednesday’s budget request contains $370 billion in new Medicare savings.

As Brett Norman reports at Politico:

• Wealthier seniors would be called on to pay a larger share of their Medicare Part B and D premiums;
• Low-income seniors would receive mandatory drug rebates through Medicare Part D; and
• Hospitals would see reimbursement cut by $30 billion, and post-acute care providers would see a $50 billion cut in pay.

Some of these proposals aren’t new, or explicitly draw on Republican ideas. Obama had floated Medicare means-testing in his debt negotiations with House Speaker John Boehner last year, in hopes of reaching a compromise over the deficit ceiling.

And other provisions are seen as the fulfillment of political promises. As Sarah Kliff reports at the Washington Post, the budget also includes $235 million in new mental health spending, a direct legacy of Obama’s pledge to do more to prevent gun violence in the wake of the Newtown shootings.

Ramifications: How ‘Serious’ is Obama?

Budget experts reiterate that this year’s budget should be seen as the latest gambit in the broader debate over the federal debt ceiling — and in many ways, the president’s health care proposals will play an outsized role in that.

“What the president is doing on health, and specifically what he’s doing on cost-sharing reforms and Medicare premiums, is one of the first things I’m going to check — given that those categories have the potential for serious bipartisan deficit reduction,” Peuquet said.

Those proposed changes to Medicare are “kind of a litmus test for how serious [the president] is” on striking a deal with Republicans, he added.

And while there does appear to be more momentum for a compromise, “I don’t think the president’s budget per se will be passed,” Duke’s Taylor told California Healthline.

“However, I think [including provisions like] the chained CPI, and increased means-testing of Medicare … represent the president officially embracing items that Republicans have said in the past would be evidence that the president was serious.”

Weekly Roundup

What else is happening around the nation? Here’s a quick look.

Why it’s hard to change Medicare’s payment scheme: Reflecting on this week’s budget news, NPR’s Julie Rovner takes a look at why so many efforts to streamline how Medicare beneficiaries pay for their care have been so unsuccessful.

Readmissions program is flawed: A new study suggests that Medicare’s much-debated effort to improve hospital safety is missing key data on discharged patients who return to the emergency department, Jordan Rau writes at Kaiser Health News.

Worries emerge over insurance exchanges: Also writing at Kaiser Health News, Jenny Gold details the practical and logistical concerns over enrolling as many as 27 million consumers in the ACA’s marketplaces later this year.

One insurer tries to avoid Obamacare’s rules: With a slew of ACA provisions looming, Aetna is advising insurance brokers on “how to evade new mandates and benefits” that take effect in 2014, Jeffrey Young writes at the Huffington Post.

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.