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Brace for Larger Deficits as Lawmakers Rethink Health Care Law's Medicare Cuts

Posted By Kathryn Nix On April 12, 2011 @ 6:00 pm In Obamacare | Comments Disabled

Obamacare will cost Americans trillions of dollars [1] in the decades to come. To help pay for its new coverage provisions, the plan makes sweeping cuts to Medicare [2]. But as it turns out, serious doubts exist about the likelihood of these cuts actually occurring, and evidence has already shown that lawmakers may shy away from some of the cuts. If the planned savings don’t materialize, the health care overhaul will add even more to deficit spending than already expected, further jeopardizing the nation’s fiscal future.

Both the director of the Congressional Budget Office (CBO) and the Medicare Chief Actuary warn that Medicare cuts made by Obamacare will be difficult to sustain in the long term. In January [3], CBO Director Douglas Elmendorf wrote:

“Current law now includes a number of policies that might be difficult to sustain over a long period of time. … If those provisions would have subsequently been modified or implemented incompletely, then the budgetary effects of repealing [the law] and the relevant provisions of the Reconciliation Act could be quite different—but CBO cannot forecast future changes in law or assume such changes in its estimates.”

Soon after Obamacare was passed into law, Medicare Chief Actuary Richard Foster wrote that seniors’ access to care would be threatened as a result of reductions in payment updates included in the new law. Foster wrote [4], “[P]roviders for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program.”

Now, lawmakers have already begun to squirm under the political pressure to prevent the planned cuts to seniors’ care. In a recent article, The Hill [5] highlighted the fact that Senators on both sides of the aisle promised to fight proposed cuts to the home health care industry under the new law. According to Senator Susan Collins (R-ME), “Deep cuts in access to home healthcare takes us in completely the wrong direction at a time when we’re trying to control costs.” Collins, along with Senator Maria Cantwell (D-WA), plans to introduce legislation that would require the Secretary of Health and Human Services to justify her reasons for cutting payments to home health care.

Obamacare’s cuts to home health care agencies are projected to generate $39.7 billion in savings over the next decade. Since “savings” in the new law are dedicated to covering the expense of new coverage provisions—not to addressing Medicare’s $30.8 trillion in unfunded obligations—if they don’t materialize, more of the cost of Obamacare will be added to the federal deficit.

Medicare spending must be restrained to ensure its long-term viability, so any savings found should be used to extend the solvency of the program itself. Instead, Obamacare relies on savings from Medicare to offset an expansion of Medicaid and hefty new subsidies for low- and middle-income Americans. Repealing or delaying the cuts used to pay for the unpopular new law will only speed up the process by which Obamacare will add to federal deficit spending.

This post was co-authored by Amanda Rae Kronquist.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/04/12/brace-for-larger-deficits-as-lawmakers-rethink-health-care-laws-medicare-cuts/

URLs in this post:

[1] cost Americans trillions of dollars: http://www.foundry.org/2011/04/06/new-analysis-reveals-obamacare-will-cost-more-than-expected/

[2] cuts to Medicare: http://www.heritage.org/Research/Reports/2011/01/Obamacare-and-Medicare-Provider-Cuts-Jeopardizing-Seniors-Access?query=Obamacare+and+Medicare+Provider+Cuts:+Jeopardizing+Seniors%E2%80%99+Access

[3] In January: http://www.foundry.org/2011/01/06/take-cbo-report-with-a-grain-of-salt-obamacare-repeal-would-not-increase-deficits

[4] Foster wrote: https://www.cms.gov/ActuarialStudies/Downloads/PPACA_2010-04-22.pdf

[5] The Hill: http://thehill.com/blogs/healthwatch/health-reform-implementation/152447-bipartisan-senators-decry-health-reforms-home-health-cuts?tmpl=component&print=1&page=

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