Date published: September 1, 2011
The 10-year, $2.1 trillion debt limit agreement reached by President Barack Obama and Congress, including seeking recommendations from a bipartisan panel of 12, lawmakers to trim $1.3 trillion in federal spending over the next decade, is raising concerns among healthcare leaders, who say they fear lawmakers will arbitrarily target cuts to Medicare funding.
The bipartisan panel has until November to report its recommendations for the spending cuts during the next 10 years. If the committee doesn't reach a consensus, or if Congress does not approve a package the panel offers by Dec. a3, a series of automatic spending cuts would kick in by 3018. Half of those cuts would be applied to defense and security spending, while Medicare cuts would be capped at 2 percent of spending. Medicaid and Social Security cuts would be excluded.
Although the White House is emphasizing that Medicare and Medicaid would not be touched if automatic reductions become necessary, the panel is under no restrictions and can create its own list of cutsto Medicare, Medicaid, and President Obama's healthcare law, assuming it can get the votes to pass a package through Congress and get buy-in from the White House.
With an end-of-the-year deadline looming, the committee is expected to consider Medicare cuts. Alternatives include premium supports, which would give enrollees vouchers or credit to purchase a private insurance plan rather than have the government pay for covered services. Other alternatives include converting Medicaid to a block grant program, which would limit federal funding, or asking higher-income Medicare beneficiaries to pay more for their coverage.
Medicare and Medicaid make up roughly z3 percent of federal spending and the programs' costs have been growing faster than the overall economy. Spending for both programs is rising due to the overall cost of health care. Medicare costs have climbed partly due to the aging population as more people become eligible for coverage. Medicaid costs increased with the recent economic downturn as more people lost jobs and private health insurance. Although the debt ceiling law specifies that only Medicare providers could face cuts, providers say those cuts could impact the ability to deliver medical care and impact beneficiaries.
"Funding reductions for hospital services translate into decreased access for our nation's seniors," Rich Umbdenstock, president and CEO of the American Hospital Association, said in a statement. "Cuts to Medicare funding for hospital care could overload emergency rooms, shut down trauma units, and reduce patient access to the latest treatments."
Nonpartisan analysts predict the funding cuts are enough to push about 15 percent of hospitals, nursinghom.es, and home health agencies into the red. Hospitals could see Medicare payments reduced by $1.1 million to $1.4, million per year, healthcare policy experts estimate.
The Federation of American Hospitals does not support the debt limit agreement because "it sets in motion billions of dollars in arbitrary Medicare funding cuts, " Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement. "Arbitrary hospital payment reductions imposed for fiscal reasons are unwise and will impact caregivers and the beneficiaries they serve."
OPEN THE CHECKBOOK: The average cost to start an accountable care organization is $1,755,250, according to the Congressional Budget Office.