Tuesday, July 28, 2015

Who's really serious about controlling Medicare costs?

President Obama released his budget proposal this week. As expected, it calls for cutting Medicare to reduce future deficits. Many Democrats feel he has betrayed the party's core principles. Some Republicans see the cuts as a step in the right direction, but several of them have derided it as a trivial gesture.

Who’s really serious about controlling Medicare costs?


President Obama released his budget proposal this week. As expected, it calls for cutting Medicare to reduce future deficits.

Many Democrats feel he has betrayed the party’s core principles. Some Republicans see the cuts as a step in the right direction, but several of them have derided it as a trivial gesture.

Senate minority leader Mitch McConnell (R – Ky.) called the Obama proposal “modest.” House speaker John Boehner (R – Ohio) characterized his proposed cuts “minimal.” And House budget chair Paul Ryan (R – Wisc.), who has proposed a competing plan, said they are “not really entitlement reform.”

The GOP has rallied around the Ryan plan as an alternative. How much more in savings would it extract? The answer is none at all.

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In fact, the Ryan plan actually calls for $70 billion less in savings over the next ten years than Obama’s proposal.

In other words, the same Republicans who complain that Obama’s cuts are too mild actually support cuts that are even milder.

That’s the conclusion of an analysis reported by the Atlantic. It also finds that the Obama budget would spend $1 trillion less on Medicare over the next decade than had been projected before he took office.

To be fair, in the long-run Ryan would cut Medicare substantially by turning it into a voucher program. (Also known as premium support.)  But that wouldn’t start for another ten years.

Obama’s plan for how to cut Medicare is also different from the GOP’s. He would reduce some payments to hospitals and other providers and charge higher-income beneficiaries more in premiums. He would also penalize the purchase of overly generous private Medicare supplement policies. These can encourage beneficiaries to obtain unnecessary care.

He would also leave spending intact for Medicaid, the bedrock safety net program for poor patients and inner city hospitals.

And he would increase funding for some other desperately needed health programs. The Food and Drug Administration would receive more funds to better protect us against hazardous drugs and unsafe food. And the Centers for Medicare & Medicaid Services would gain support to help those with low incomes afford coverage on the new insurance exchanges that will operate under health reform.

How does Ryan propose to save money? His plan would maintain across-the-board sequester cuts, repeal health reform, and slash Medicaid. This would leave several vital health programs to wither.

So while Obama would apply some Medicare savings to enhancing our health care infrastructure, Ryan would threaten part of the foundation on which our health care rests. And he would make smaller cuts than Obama to address Medicare’s financial sustainability.

The laws of arithmetic pose a serious challenge for supporters of the Ryan plan. But his colleagues face even deeper questions about their commitment to consistency. As they try to outdo one another in stridency over the urgency of cutting Medicare, one of them, Rep. Greg Walden (R- Oregon), is singing a very different tune. Speaking as head of the House Republicans’ campaign committee, he called Obama’s proposed cuts “a shocking attack on seniors.”

Apparently, logic is not the main tool they plan to use in this debate.

Professor, School of Law & Drexel School of Public Health
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The Field Clinic reports and analyzes health care laws, government policies, and political trends that are transforming the care we receive and the way we pay for it. Read more about our panel of bloggers here.

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Robert I. Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
Jeffrey Brenner, MD Founder of the Camden Coalition of Healthcare Providers, Medical Director of the Urban Health Institute at Cooper University Healthcare
Andy Carter President & CEO, The Hospital & Healthsystem Assoc. of Pa.
Robert B. Doherty Senior Vice President of Governmental Affairs & Public Policy American College of Physicians
David Grande, MD, MPA Assistant Professor of Medicine at the University of Pennsylvania
Tine Hansen-Turton Chief Strategy Officer of Public Health Management Corporation
Drew A. Harris, DPM, MPH Director of Health Policy Program at the Jefferson School of Population Health
Antoinette Kraus Director of the Pennsylvania Health Access Network
Laval Miller-Wilson Executive Director of the Pennsylvania Health Law Project
David B. Nash, MD, MBA Founding Dean of the Jefferson School of Population Health
Mark V. Pauly, Ph.D. Professor of Health Care Management, Business Economics and Public Policy at The Wharton School
Howard J. Peterson, MHA Managing Partner of TRG Healthcare, a national healthcare consulting firm
Paula L. Stillman, MD, MBA Healthcare consultant with special expertise in population health and disease management
Elizabeth A. W. Williams Senior Vice President & Chief Communications Officer for Independence Blue Cross
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