Consumer Power Report #455
On Capitol Hill yesterday, House Republicans released their latest budget, which includes reforms to Medicare and Medicaid as well as the repeal of Obamacare:
The plan envisions a remaking of the federal government. Future recipients of Medicare would be offered voucherlike “premium support” to pay for private insurance rather than government-provided health care.
Spending on Medicaid would be cut substantially over 10 years, with the money turned into block grants to state governments, which in turn would have much more flexibility in deciding how it is allocated.
The budget “repeals all of Obamacare,” Representative Diane Black, Republican of Tennessee, said the same day the Obama administration announced that the law had provided coverage to 16.4 million previously uninsured people.
One of the key tensions on Capitol Hill at the moment is what Republicans should aim to do via the budget process – essentially, whether they should try to get things done through reconciliation, or whether they should force the president’s hand to save his signature domestic policy. Senate Republicans seem inclined to wait and see what the Court does first:
Republicans plan to use a powerful parliamentary maneuver known as reconciliation as part of their annual budget – though lawmakers are not yet sure for what.
When Senate Republicans unveil next week their 2016 tax-and-spending plan, they won’t specify how they intend to use the procedure, their deputy leader said on Thursday.
Senate Majority Whip John Cornyn (R-Texas) said that lawmakers want to keep their options open in case they need reconciliation to respond to a pending Supreme Court case that threatens to blow a hole in the Affordable Care Act …
The court is slated to rule in late June on a challenge to the legality of Obamacare health care subsidies provided in states that did not set up their own exchanges. A ruling against the administration could cut off financial assistance to as many as eight million, creating chaos in the program and demanding a quick legislative response from Congress.
In the meantime, Senate Republicans have other reforms they intend to include in the budget. But it is important that the step of actually sending the Obamacare repeal to the president’s desk is taken by Republicans in Congress, simply to prove to the media and the populace that the law can be repealed via that method. It will clarify the matter for voters, and turn 2016 into a clear-cut election which will decide whether the law stands or falls.
— Benjamin Domenech
IN THIS ISSUE:
SGR AND REAL ENTITLEMENT REFORM
An earlier Congress, led by former speaker Newt Gingrich, decided to cut payments to physicians in Medicare to help balance the federal budget. That was in 1997, but even that Congress postponed the cuts until a future date. And because access to physicians would be jeopardized for millions of seniors if the cuts took effect, every Congress since then has postponed the Medicare cuts – a total of 17 times.
The policy didn’t work, and Congress now is ready to consider permanently repealing it while bringing much-needed structural reforms to Medicare. That is the right course. Republicans and Democrats from both houses of Congress have been working on the deal for months, with cooperation from the administration. For those who want to move beyond what they consider a “broken” Congress, this is the place to start.
The current doc-fix extension expires on March 31 when physician reimbursement will be cut by 20% if Congress doesn’t enact yet another patch. It’s clear that #18 is not going to be a magic number.
Virtually no one believes that Congress ever will allow the cuts to take effect, especially because they get bigger and bigger over time. Even Medicare’s Board of Trustees builds the expected fix into its baseline projections, assuming Congress will continue to override the annual “Sustainable Growth Rate” (SGR) cuts to the Medicare physician fee schedule.
Conservatives are criticizing the deal because it is not fully paid for in the 10-year budget window, but the structural Medicare reforms built in to the deal would yield much larger savings over time. This is an investment today to begin to gain control over a program that by the year 2020 will constitute more than one-third of the nation’s total debt accumulation.
Continuing to play the Medicare doc fix shell game only makes it harder to get control of federal spending, and it keeps Congress from focusing on real and desperately-needed entitlement reform.
Congress sometimes delays the cuts for a year, sometimes for only a few months. Physicians say they will be forced to further limit the number of new seniors they allow into their practices, and some say they may be forced to stop seeing Medicare patients altogether. Campaign coffers are filled, lobbyists are paid handsomely, and the game of crony collusion continues – all at the expense of taxpayers and future Medicare recipients.
SOURCE: Grace Marie Turner, Forbes
DOC FIX DEAL HAS A LONG WAY TO GO
House Speaker John Boehner and Minority Leader Nancy Pelosi are close to an agreement on the substance of a permanent “doc fix” – but they’re still scrambling to sell the plan to skeptics in their own caucuses, the health care industry, and the Senate.
The leaders are fighting intense political battles aimed at both keeping prominent groups such as the AARP and Heritage Action on the sidelines while carving out a wide enough middle ground in the House to pass a bill certain to alienate partisans on both sides.
“I think it’s going to be a pretty tricky balancing act,” said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.
The plan, which Boehner is expected to pitch to his caucus Tuesday, would replace Medicare’s payment formula for doctors, which has become a perennial – and expensive – annoyance for lawmakers and doctors alike. If they cannot come to an agreement by the end of the month, lawmakers will need to pass yet another short-term patch, at a cost of roughly $20 billion, to prevent a cut of more than 20 percent in doctors’ Medicare payments.
Democrats have consistently hammered Republicans over proposed cuts in Medicare benefits, but aides are now pressing groups like Adcock’s – as well as AARP, the powerhouse seniors’ lobby – not to oppose the doc fix deal, even though it includes at least two provisions that would pass more health care costs on to seniors.
“They want everybody to give this deal a chance. They’re saying it’s better to do this now rather than fight it during budget reconciliation. Or if we wait, the cost of the doc fix will be higher. Those are the kinds of things they’re pitching on,” Adcock said. “That is what they’re saying: ‘If you can’t support it, don’t oppose it.’ But their primary message is that people should withhold judgment until they see the final deal.”
On the right, Boehner and his allies are trying to quell conservative members’ skepticism. The conservative advocacy group Heritage Action came out swinging against the doc fix proposal, angry that Boehner had started off by negotiating with Pelosi and frustrated that the bulk of the package – about $130 billion – would not be paid for under the Congressional Budget Office’s normal 10-year window.
Boehner is leaning instead on strong support from Americans for Tax Reform, the anti-tax group headed by Grover Norquist.
Ryan Ellis, ATR’s tax policy director, said CBO is expected to release a letter Tuesday clarifying that, while the doc fix deal might not reduce the deficit over the next 10 years, it would lead to considerable savings in the long run.
SOURCE: Sam Baker, National Journal
CBO: OBAMACARE WILL INSURE FEWER PEOPLE THAN EXPECTED
The Congressional Budget Office’s new report shows updated cost projections for the insurance coverage expansion in the Affordable Care Act. With the debate over the ACA remaining so intensely polarized, advocates moved aggressively to spin this routine update as reflecting favorably on the law. A front-page article in the Washington Post referred to the new findings as showing “savings,” quoting a supporter as saying, “I can’t see how people can continue to say … that Obamacare had no cost containment in it.” Such comments in the wake of CBO’s update are flawed interpretations of the new estimates and what they signify. The following explains what CBO has actually projected: basically that the ACA will do less to expand coverage than previously estimated.
Specifically, CBO has re-estimated the costs of providing subsidies (tax credits) for participants in the ACA’s health insurance exchanges, as well as the law’s Medicaid expansion and small-business tax credits. Against this CBO has netted out some of the ACA’s measures designed to offset a portion of the costs, including penalties paid by individuals who fail to carry insurance, penalties paid by employers who fail to offer sufficient coverage, and an excise tax on high-premium health insurance plans. The re-scored provisions taken together are not by any stretch “savings,” but rather represent significant federal costs created by the ACA.
For the most part, press coverage has reflected good understanding of this point. As the aforementioned Post article states, “the law is still expensive,” and the headline of that article refers correctly to what the law “will cost taxpayers.” CNBC’s headline also refers to “Obamacare costs,” and even MSNBC’s refers to the “cost of the Affordable Care Act.” It is certainly good news when something costs less than we formerly thought it would, but the ACA still embodies costs that taxpayers did not face until its passage.
SOURCE: Charles Blahous, e21
GOP LOOKS AT MEDICAID AND FOOD STAMPS OVERHAUL
Senate Republicans are preparing to reprise their long-standing efforts to achieve major savings in Medicaid and federal food stamps by turning the programs over to the states in the form of block grants.
Under that approach, the federal government would pay the states a lump sum instead of a portion of the programs’ cost. The states would then have more control over setting standards for the programs and would assume more of the overall cost.
The Wall Street Journal first reported on Thursday that Senate Budget Committee Chair Mike Enzi of Wyoming and other Republican leaders will include the plan in their fiscal 2016 budget proposal that will be unveiled sometime next week. Republican Sen. Lindsey Graham of South Carolina, a member of the Budget Committee, told The Journal that the plan offers more flexibility on the ground.
The proposals for overhauling two of the premier social safety-net programs are certain to touch off another major fight between the GOP and the Democrats over domestic spending policies as the 2016 presidential campaign begins to heat up.
Sen. Bernie Sanders (I-VT), the new ranking member of the Senate Budget Committee, vowed yesterday to do “everything in my power to make sure we pass a budget that does not harm the most vulnerable Americans.”
Although the food stamp caseloads dropped 11 percent last year as the economy continued to improve, some GOP lawmakers see the potential for further cuts to the $74 billion program, which has increased more than 45 percent since President Obama took office.
The committee’s new chair, Rep. Mike Conaway (R-TX), said, “We have seen the overall unemployment rate fall, yet the number of long-term unemployed remains high.” Senate Republicans agree with this assessment, and hope to embed an overhaul of the vital nutrition program in the upcoming budget document.
House Republicans sought to convert the food stamp program to a block grant for the states as part of last year’s budget process, but failed to make any headway with the Democrats still in charge of the Senate and President Obama and advocates for the poor opposed to such a change.
If that proposal had been implemented, it was projected to save $125 billion between 2019 and 2029, according to the Wall Street Journal. It is not clear whether the Senate Republicans will embrace a similar reduction target – and whether they would try to impose it over the coming decade or in a shorter period of time.
SOURCE: Eric Pianin, Fiscal Times
WHAT CAUSED THE MEASLES OUTBREAK?
Although epidemiologists have not yet identified the person who brought measles to Disneyland, a new analysis shows that the highly contagious disease has spread to seven states and two other countries thanks to parents who declined to vaccinate their children.
Using some simple math, a team of infectious disease experts calculated that the vaccination rate among people who were exposed to the measles during the outbreak was no higher than 86%, and it might have been as low as 50%.
In order to establish herd immunity, between 96% and 99% of the population must be vaccinated, experts say.
“Even the highest estimated vaccination rates from our model fall well below this threshold,” the researchers reported Monday in the journal JAMA Pediatrics.
The analysis underscores that, in preventing outbreaks, “it’s not just about policy but about compliance,” said Erez Hatna, an infectious disease modeler at Johns Hopkins University Medical School who wasn’t involved in the study.
“It’s a compelling analysis,” added Dr. Mark Schleiss, a pediatric infectious diseases expert at the University of Minnesota who didn’t work on the study either. “In light of its findings, it’s surprising we don’t see more of an outbreak.”
The research team, from MIT and Boston Children’s Hospital, calculated the range of likely vaccination rates based on a few key data points. Based on historical data, infectious disease experts know that in the absence of any vaccination, a single person infected with measles can spread it to between 11 and 18 other people. They also know that it takes 10 to 14 days for one measles case to lead to another.
SOURCE: Karen Kaplan, Los Angeles Times
Benjamin Domenech is the founder and publisher of The Federalist and a senior fellow at The Heartland Institute.
