Back and Forth: Automatic Cuts or Not?
Back and Forth is a new feature on AHLAlerts that examines both sides of an ongoing debate relating to health care policy.
According to the recent debt deal, a bipartisan, bicameral 12-member debt panel — known as the “supercommittee” — is tasked with developing recommendations for cutting $1.5 trillion over the course of 10 years. Its recommendations are due by Thanksgiving. If panel members cannot agree on recommendations or if Congress fails to pass them, automatic cuts to various programs will take effect, including a 2% cut to Medicare reimbursements for hospitals.
Among members of the health care industry, lobbyists, lawmakers and commentators, there is a divide between those who think the automatic cuts are preferable to presumably deeper cuts that the supercommittee would develop and those who believe the automatic cuts — without any option for leeway — are more dangerous for health care stakeholders.
SUPPORTING AUTOMATIC CUTS:
Lobbyists and health care groups last week said the industry wants the debt panel to allow the automatic cuts — known as sequestration – to take place. 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 … 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 (American Health Line, 9/7).
AGAINST AUTOMATIC CUTS:
Some members of the health industry are too wary of the potential 2% cuts to Medicare reimbursements to support their implementation. Certain providers are warning that the cuts could trigger job losses in the industry, which remained one of the strongest during the economic recession. One group protesting the 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. AHA said the automatic cuts would cause a $41 billion loss in the industry.
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.
OUR TAKE:
Since the debt panel’s fallback is 2% cuts to Medicare reimbursements, the obvious intent behind creating the panel was to take an even bigger chunk out of program spending. This makes those who say the automatic cuts are too dire seem already on the losing end of the argument. Critics of the 2% reductions, however, seem to have presented a viable alternative that gradually would increase the eligibility age. However, it was not incorporated into the recent budget agreement, so it would have to be vetted and bargained with conservatives, who are seeking bigger changes in the program. The committee likely will not have time to do this by Thanksgiving. If the panel gave adequate consideration to this proposal but could not come to an agreement in time, the 2% cuts would be implemented anyway.
Opponents of the reimbursement cuts might consider this a defeat, but it’s really all they can hope for. If the panel succeeds in developing a cost-cutting plan of any kind, the opponents surely will find an even harsher fiscal climate. Unless critics are secretly pushing the eligibility age proposal to stall the panel’s work and guarantee that the lesser of two evils (for them, at least) comes to pass, they are making a moot argument. Their best chance is advocate for the lowest cuts possible under current arrangements.
– by Matthew Wayt, Senior Writer
