Super Committee likely to target Medicare in deficit reduction
WASHINGTON – Healthcare industry watchers are bracing for cuts to government sponsored healthcare programs once the so-called “Super Committee” begins working on ways to slash another $1.5 trillion from the budget over the next ten years.
Even President Barack Obama has indicated that all items, including Medicare and Medicaid, should be on the table.
“We will not be able to sustain (Medicare) no matter how much taxes go up,” Obama said in late July in the midst of the debt ceiling debate. “I mean, it's not an option for us to just sit by and do nothing.”
With Medicare, Medicaid and CHIP accounting for roughly 20 percent of the annual budget, it is a logical target for the committee.
"Times New Roman"">“The super committee cannot avoid looking at Medicare, Medicaid or Social Security,” said Marc Goldwein, policy director for the bipartisan Committee for a Responsible Federal Budget. “Those programs are responsible for our continued debt problems.”
With a tight time frame to work on a package, the 12-member committee likely will look for recommendations contained in the plans of a number of bipartisan deficit reduction groups that have worked on deficit reduction over the past couple of years.
Potential areas for savings include:
• Extending drug rebates to Medicare-Medicaid dual eligibles similar to those paid to Medicaid beneficiaries, which could yield savings of $49 billion over ten years.
• Cuts to nursing home care or home care would save $50 billion.
• Eliminate CLASS, the long-term care voluntary insurance program passed as part of the Affordable Care Act for a potential savings of $86 billion.
Industry groups are already lining up to fight changes that affect their sector of the industry and that is part of the problem, according to Roland Goertz, MD, president of the American Academy of Family Physicians.
“We need to take down the silos (in healthcare),” Goertz said. “Allow all of where premium dollars are paid –whether it is insurance companies, pharmaceutical companies, hospitals, doctors, you name it – open the whole thing up and stop treating them as silos.”
Goertz noted the elephant in the room will be the badly broken sustainable growth rate formula (SGR) for Medicare physician payments. In January SGR is again scheduled to cut doctor payments by as much as 29 percent. A long-term fix was included in the Gang of Six deficit proposal, but estimates of the ten-year cost to fix the problem range between $300 and $400 billion dollars.
For hospitals, the news could be equally dire, according to Ken Perez, senior VP of marketing for healthcare performance management company MedeAnalytics, which regularly publishes healthcare cost and reimbursement studies.
“We don’t know exactly what the super committee will recommend, but we took a stab at predicting what the affect would be for Medicare IPPS,” said Perez.
According to its research contained in the report “Medicare Zero,” MedeAnalytics estimates the committee will recommend between $150 and $200 billion in overall cuts to Medicare over ten years. IPPS, which represents roughly a third of Medicare spending, would absorb a reduction of between $50 and $65 million.
“That represents a reduction of between $1.5 to $2 million per hospital every year for ten years,” Perez said. “And that doesn’t even take into account scheduled reductions for IPPS contained in health reform.”
“If one considers that two basic goals of health reform were to reduce costs and increase access, these levels of cuts could cause some smaller hospitals to fail and that would reduce access to healthcare,” said Perez.