Deficit Cutters Seem Uninterested in Cutting Medicare Spending

Last Updated Nov 8, 2010 1:14 PM EST

The Tea Party "revolt" against the Obama Administration is ostensibly about fiscal responsibility: the movement is anti-stimulus, anti-TARP, anti-government spending. Yet, as former White House budget chief Peter Orszag points out in the New York Times, Republicans are targeting the cost-cutting provisions of the Affordable Care Act.

Whether it's the mandated cuts in Medicare provider payments, lower payments to Medicare Advantage plans, the Independent Payment Advisory Board, or a new Medicare unit designed to find ways to make the program more cost-effective, the Republicans are against it. So inquiring minds are left to wonder: Do Tea Partiers and other GOP politicians really want to restore fiscal balance to the government, or do they want to protect the special interests that the reform legislation threatens?

Take the new Medicare Center for Medicare and Medicaid Innovation (CMMI), which CMS Administrator Don Berwick has called the "jewel in the crown" of the Affordable Care Act. The purpose of the CMMI, which will have a $10 billion budget over the next eight years, is to test new approaches to health care delivery, payment and quality improvement. The center will try to eliminate unnecessary services and figure out how to deal more effectively with chronic diseases, medical errors, and safety issues.

The casual reader might ask, "Who could be opposed to a government office with these goals?" Even the American Medical Association supports the idea of the CMMI, which will be headed by family physician Richard Gilfillin. But there are other powerful healthcare interests that might be threatened by changes in the status quo, including pharmaceutical firms and device makers.

The AMA and the American Hospital Association oppose the Independent Payment Advisory Board (IPAB), which could make changes in Medicare reimbursement without Congressional approval (although Congress could still override the IPAB). Some Democrats might join with Republicans to defund this new board, the members of which will be nominated by the President and confirmed by the Senate. But the IPAB is one of the main brakes on runaway Medicare spending in the legislation.

The reform law also reduces the projected growth in Medicare payments, principally to hospitals. But the hospitals agreed to those cuts as part of President Obama's negotiations with healthcare players, prior to the passage of the Affordable Care Act. So if the Republicans take back those cuts, they'd be reneging on an agreement that hospitals have already accepted. But if they don't try, they'd have to admit that their campaign rhetoric about reform damaging Medicare was a lie -- and a very effective one, judging by the number of seniors who voted Republican.

Finally, GOP leaders want to reverse planned cuts in payments to Medicare Advantage plans, which cost Medicare 14 percent more per beneficiary than traditional Medicare does. While some seniors would benefit, the insurance companies would continue to rake in the bucks from these plans.

So what's going on with the GOP pols? Have they already given up on fiscal restraint, or are they prepared to see Medicare bankrupted rather than retreat on their opposition to reform?

According to Orszag, the reform law would cut the U.S. government's "long-term fiscal imbalance" by 25 percent, and would reduce Medicare's projected deficit by 75 percent. That's not going to happen if the Republicans defund the key cost-cutting mechanisms. But if they do, their hypocrisy will stand revealed for all to see.

Image supplied courtesy of Wikimedia Commons.
Related:

  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.