Posts Tagged ‘debt ceiling’

The Insider: Leave the money in small, unmarked bills…

Monday, May 21st, 2012

Last week Speaker of the House John Boehner delivered a ransom note to the American people. The note said: “Give me tax breaks for the rich and benefit cuts for the elderly, people with disabilities and low and moderate income families or I’ll wreck the global economy. You have until December to pay up.” OK that isn’t exactly what Boehner’s statement said, but that is what his insistence that the House will not authorize the U.S. to pay its debts after December means in effect.

Remember the last time House Republicans held the full faith and credit of the US government hostage? We got a rating downgrade on U.S. government debt as well as the “Super Committee” process that resulted, after that committee deadlocked, in an across the board cut scheduled to go into effect in January 2013. Mr. Boehner and House Republicans have proposed a noxious stew of proposals—retain tax cuts for the rich (set to expire in January 2013), cancel scheduled cuts in military spending and replace them with deeper cuts in health care, social welfare, environmental protection and education. Then they require still further cuts in domestic spending equal to the amount the debt ceiling is raised—that would result in draconian cuts to Medicare and Medicaid, a move that would be a disaster for ordinary Americans and would probably trigger another recession.

In a case of listen to what I say, don’t watch what I do, a particularly interesting feature of the House Republican proposal is that notwithstanding their incessant attacks on the Affordable Care Act for reducing Medicare spending, they actually propose to retain all of the cuts in Medicare assumed in the ACA and in the sequester. Then they cut even deeper.

What to read while you are waiting for SCOTUS

As the clock ticks down toward a Supreme Court ruling on the constitutionality of the ACA, the tension is mounting. How to pass the time? Read this piece in the New York Review of Books by New York University law professor Ronald Dworkin. It may not convince you that the Supreme Court will uphold the ACA but it clearly lays out why they should.

 – Michael Miller, Director of  Strategic Policy

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Debt-Ceiling Compromise Kicks Medicaid Fight Down The Road

Wednesday, August 3rd, 2011

Yesterday, the president signed a bill that ended months of intense negotiations over lifting the country’s debt-ceiling. But for the fate of Medicaid – and the millions of seniors, people living with disabilities, and low-income children who rely on the program – the negotiations are just beginning.

What’s the deal?
In short, the final compromise lifts the debt ceiling enough to last until after the 2012 election and puts in place two stages of cuts in government spending.

In the first stage, caps are immediately placed on discretionary spending, saving $917 billion over 10 years.

In the second stage, a bipartisan joint committee is tasked with developing legislation to reduce the deficit by another $1.2 – $1.5 trillion over 10 years. Failure by the committee to produce an agreement by Thanksgiving or by Congress to enact their plan by December 23 would trigger automatic across-the-board cuts in federal spending to achieve $1.2 trillion in savings. If the Committee agrees on – and Congress enacts – less than $1.2 trillion in deficit-reduction, the across-the-board cuts will be triggered to make up the difference.

Let’s start with some good news
Medicaid and Medicare were spared any immediate cuts in the first stage. That said, the first stage cuts include significant short-run spending reductions; any serious economist will tell you that cutting federal spending in the midst of an economic downturn will only worsen the nation’s employment outlook. These larger economic forces certainly have implications for state budgets and Medicaid, but that’s a blog for another day.

The picture is murkier in the second stage. While Medicaid and Medicare are very much at risk for major cuts in a compromise that the joint committee might broker (more on that below), Medicaid is completely exempt from the automatic across-the-board cuts that would be triggered if the committee fails to achieve $1.2 trillion in deficit-reduction. Medicare benefits are also largely protected: across-the-board cuts to Medicare are limited to 2 percent of the programs’ costs and can only come from cuts to providers and insurers.

This is an important victory. Inside reports suggest that Republican negotiators demanded that Medicaid be added to the mix of programs that could face cuts in the event of the trigger, but the Obama administration refused to budge on this point. Consumer advocates deserve credit: they worked tirelessly over the past few months to send a strong message to Congress and to the White House that Medicaid matters. It’s clear that Obama took that message to heart.

Now the bad news – we’re not even close to out of the woods
Relief that Medicaid will escape unscathed should across-the-board cuts be triggered must be tempered by the understanding that the trigger may not be pulled, and that committee members will consider deep cuts to Medicaid in their efforts to broker a deal.

It is difficult to predict whether the committee will succeed. On the one hand, the terms of the process were constructed specifically to put immense pressure on both parties to avoid the across-the-board cuts. If committee fails to reach a compromise, all $1.2 trillion in deficit-reduction would come from program cuts – violating Democrats’ vows to ensure revenue increases are part of any deficit-reduction package. And 50 percent of the triggered across-the-board cuts must come from the defense budget – a painful prospect for Republicans.

On the other hand, competing pressures may prevent the committee from reaching a compromise. Republicans may prefer cuts in military spending to a compromise that includes tax-increases. And if they can’t broker a deal that includes tax-increases, Democrats may prefer to allow the across-the-board cuts to be triggered since at least Medicaid and Medicare benefits are protected from those cuts.

While there is considerable debate about the likelihood that the committee will succeed, the prospects for Medicaid are grim if a deal is brokered. Having already slashed discretionary spending by nearly a trillion dollars in the first stage, it will be difficult for the committee to find more savings in those programs. That leaves revenue increases and entitlement spending as the only real options for significant deficit-reduction.

Both parties have already drawn lines in the sand around revenue increases, with Democrats insisting on including them as part of a final deal, and Republicans vowing to vote against any package that includes them. But if significant revenue increases are not part of the solution, for the committee to succeed the cuts required to Medicaid and Medicare would absolutely devastate these programs. According to a statement by Robert Greenstein, president of the Center on Budget and Policy Priorities: “The deal that President Obama and Speaker Boehner were negotiating several weeks ago would have raised Medicare’s eligibility age, raised Medicare cost-sharing charges, shifted significant Medicaid costs to states, modified cost-of-living adjustments in Social Security and other benefit programs (and in the tax code), and instituted other entitlement savings. Those steps would have saved $650 billion to $700 billion over ten years. The joint committee would have to produce cuts twice as deep.”

And even if Democrats succeed at ensuring revenues are part of a deal, Medicaid would still likely sustain very significant cuts, such as the ones that were already on the table during earlier negotiations. Those cuts would jeopardize the health and financial security of millions of seniors, people living with disabilities, and low-income children who rely on Medicaid, and they would shift new cost burdens onto already-strained state budgets.

Making a dark picture worse, Congress needs to act this December to avert an automatic cut in Medicare doctor reimbursement rates (the “doc-fix”). While this is unrelated to the debt-ceiling negotiations, Congress will need to offset the costs of the doc-fix – about $300 billion for a 10-year fix – and they will likely look to find these savings in Medicaid and Medicare. These savings would be in addition to whatever cuts the deficit-reduction committee enacts.

Where does that leave us?
Medicaid lives to fight another day, and we should celebrate this success. But let’s celebrate while we roll up our sleeves. The fight starts anew today, and it’s not going to be easy.

– Katherine Howitt, Senior Policy Analyst

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Medicaid and the Media: Sharing Stories for Good

Friday, July 29th, 2011

The past few months have been rife with intense debate over our nation’s budget and the debt ceiling. Predictably, entitlement programs, especially Medicaid, have been on the chopping block in these conversations. While legislators were proposing plans that would put the health of children, people living with disabilities, and seniors at risk, advocates across the country have organized to send a clear message: Medicaid matters.

Advocates have sent this message and garnered vital media attention by holding events, writing letters to the editor and op-eds, contacting their representatives, and most importantly, sharing the stories of the people in their communities whose lives would be at stake without Medicaid. Here are just a few success stories of advocates achieving positive media coverage for Medicaid:

  • – Highlighting stories of people whose lives have been improved by Medicaid: Health Care for All Massachusetts recently held a rally outside of Senator Scott Brown’s Boston office. Medicaid recipients provided moving testimonials about how the program has supported their families during difficult times and has helped them live independent lives. They urged Senator Brown to put his constituents above party politics and to stand up for Medicaid.
  • – Finding a creative news hook: After Paul Ryan was spotted sipping a $350 bottle of wine, Citizen Action of Wisconsin capitalized on the news coverage to highlight his hypocrisy. They held an impromptu wine tasting outside of Ryan’s office in Racine, WI to protest the contrast of the massive cuts to Medicaid and Medicare in his plan and the lavishness of his personal spending. Their efforts gained national attention when it was the center-piece of a Mother Jones blog post .
  • – Partnering with and featuring the voices of other stakeholders: Rhode Island KIDS COUNT shared their research with Dr. Maggie Kozel, a Rhode Island pediatrician, adding statistical weight to her personal experiences with Medicaid and CHIP. In an opinion piece on Huffington Post, Dr. Kozel argued that cuts to Medicaid are a misguided and alarming attempt to cut the budget and would result in harm to children and no savings.
  • – Writing op-eds: Sara Gagne-Holmes from Maine Equal Justice Center thanked the state’s delegation for promising to protect Medicaid in an op-ed to the Bangor Daily News. She reminded Mainers that their federal delegation would need continued support in their efforts to defend vulnerable people reliant on Medicaid to live independent, healthy lives.
  • – Encouraging legislators to step up their support for Medicaid: Many elected officials have stood up for Medicaid, knowing how much the program improves life for many of their constituents. Maryland Citizen’s Health Initiative approached Chris VanHollen about writing an op-ed in support of Medicaid. His strong piece was published the Baltimore Sun.

The above are robust examples of interacting with media to share how vital Medicaid is to the health and prosperity of our communities. As the budget frenzy reaches its height, there is still more work to do to keep this message at the forefront and protect Medicaid and the health of children, people with disabilities and seniors who need long-term care.

– Christine Lindberg, communications associate

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The Insider: “Win or go home.”

Thursday, May 5th, 2011

Looming vote over debt ceiling is next critical hurdle for ACA & other health programs
Getting the ACA implemented is like playing in the NCAA basketball tournament—reformers face multiple hurdles, and in each case, failure to clear them could mean the inability to implement the ACA. In some cases, such as the current debate over raising the debt ceiling, there’s more than the fate of the ACA at stake: the future of Medicare and Medicaid are also on the line. Although many Democrats have called for a “clean vote” on the debt ceiling, others have joined many Republicans in saying they won’t vote to raise the debt cap unless they get “concessions” (i.e. cuts) on entitlement spending (i.e. Medicare and Medicaid). Members of the Obama administration have essentially already conceded.

From a health care point of view, cap proposals that establish an arbitrary ceiling on federal health spending as a specific percentage of GDP are just as bad as specific proposals for Medicaid block grants or Medicare vouchers. Block grants and vouchers become the inevitable mechanism to enforce a cap, shifting costs onto states, providers and beneficiaries. A cap is also a bad idea because it undermines the “countercyclical” effect of federal health spending. Public health spending rises during an economic slowdown as more people qualify for Medicaid (and in the future for ACA tax credits). This natural increase in public health care spending during tough times stabilizes the health care system and the economy. A cap would interfere and make the health and economic consequences of recession much worse.

Battle for hearts and minds—untangling the polls
As the debate unfolds over the future of federal health programs, there are questions about where the public stands. For example, a recent Kaiser poll seems to indicate that the public is very malleable on the issue of Medicare changes. But what results really show is that it is possible to mislead the public with incomplete information. A NPR analysis of the Kaiser polling found the devil is in the details, or how polling questions are framed. Pollsters gave supporters of a voucher program an anti-voucher talking point and were able to move most of them to opposition. Those who opposed vouchers also moved to pro-voucher in response to a pro-voucher point, though not as much. But here’s the rub – the anti-voucher point did not go far enough. It did not point out that the amount of savings from health care cuts was essentially equal to cost of tax cuts for wealthy Americans, and they didn’t offer alternative debt reduction plans for people to choose from. IF people understand the plan, they overwhelmingly oppose it. The question is not whether the public supports Medicare cuts (they don’t). It’s how effective the disinformation campaign will be in fooling the public and how strong the defense of health programs will be.

With that defense in mind, it’s encouraging to see organizations such as AARP getting into the fray. The reaction at town hall meetings from the recent Congressional recess is also encouraging. And public pushback seems to be having an effect. Even Tea Party darling Rep. Michele Bachmann (R-Minnesota) has waffled on her position, and Republicans seem to be losing their appetite for a showdown over Medicare.

– Michael Miller, Policy Director

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The Insider: Putting Things in Perspective

Tuesday, February 1st, 2011

Putting the Florida Legal Ruling in Perspective
The media is full of stories this morning about the ruling yesterday of Judge Vinson, not only that the Individual Responsibility Requirement (IRR) of the ACA is unconstitutional, but also that the entire law must fall as a result. While this sounds dramatic, there is rather less than meets the eye.

Essentially the ruling has no immediate practical significance other than providing fresh ammunition for the attack dogs who were quick to seize on it. It doesn’t really change the calculus with regard to implementation. Federal regulators will certainly move ahead and the situation is not much different in the states. Since all or most of the ACA that pertains to states is likely to survive the legal challenges, the consequences of inaction are too significant for state government to sit back and do nothing while the court cases play out. For example, state administrations politically opposed to the ACA who want to use this ruling as an excuse for inaction risk turning over the operation of the Exchange (and the keys to Medicaid eligibility) in their state to the federal government.

The main concern about the ruling is that it opens up new ground on the far right, moving the Virginia ruling — which struck the IRR while upholding the rest of the law — into the center. This could create cover for the Supreme Court to follow suit in dumping the IRR while upholding the rest of the law.

If it comes, a Supreme Court ruling along the lines of the Virginia decision would create a major challenge for ACA backers. If the law, minus the IRR, remains intact, there could be significant adverse selection in private insurance pools. Technically, there are a number of alternatives that could be put in place to allow ACA implementation to move forward without major disruption.

The challenge is political. Bipartisan cooperation would be needed to enact an alternative. Republican opponents of the ACA could demand other major changes in return for an agreement to enact an alternative mechanism to prevent adverse selection.

During the debate on expiring tax cuts, Congressional Republicans showed themselves willing and able to avail themselves of this type of “hostage taking” opportunity to preserve tax breaks for the wealthy. They seem likely to attempt a similar strategy both with regard to completing the work on the FY’11 budget and the upcoming vote to raise the federal debt ceiling (see below). During the tax debate, neither the Obama administration nor Democrats in Congress were willing to play hardball. It remains to be seen whether the same dynamic plays out with respect to health care.

Stay tuned for more detail on the Vinson ruling.

The Next Dragon in the Road
The much-hyped House vote on ACA repeal is already fading into the rearview mirror. While Senators Reid and McConnell jockey over scheduling a similarly symbolic Senate vote, far more significant threats loom ahead that advocates must be prepared to meet. One critical fight that is rapidly approaching is a likely vote on whether to amend or repeal the Medicaid Maintenance of Effort (MoE) requirement contained in the ACA.

The ACA prohibits states from reducing Medicaid eligibility or putting in place new administrative enrollment barriers for most adults prior to 2014 and for kids until 2019. Recently, Republican Governors sent a letter to President Obama and Congressional leaders calling for repeal of the MoE. Even more recently, the National Governors Association (which includes all of the nation’s governors — Democrats as well as Republicans) sent another letter that, while less explicit in calling for repeal, also took a stance in opposition to the MoE requirement.

Medicaid is the foundation on which the ACA rests. The repeal attempt on the MoE is the opening move in what will be a sustained effort to undermine both the ACA coverage expansion and the entitlement nature of Medicaid itself, which is why we can be sure that Congressional opponents of the ACA will push it.

MoE repeal would not only lead to an increase in the number of uninsured, it would also create new barriers to full expansion in 2014. States that rolled back coverage would have to reinstate that coverage at their regular Medicaid match rate, making the 2014 expansion more difficult. Politically, moderate Senate Democrats, especially those up for reelection in 2012, may be reluctant to hold the line on eligibility given the poor fiscal condition of states and the looming expiration of enhanced federal Medicaid matching dollars. MoE is an especially hard vote for ACA supporters because, unlike total repeal, MoE repeal, will be scored by CBO as a budget saver, making it attractive to Senators eager to burnish their credentials as deficit cutters or for use as a “pay for” for another priority that has a price tag attached.

They just can’t help themselves
Although posing as defenders of Medicare helped Republican candidates rack up positive vote margins with older voters, some members of the House GOP caucus seem eager to cough up those gains. Republican House leaders are considering a measure to convert the Medicare program into a voucher system as part of the House budget proposal, which could take shape within a month. The proposal being considered would convert Medicare into a voucher by 2021 and would also raise the eligibility age for Medicare to 69 (a change that would add substantially to employer health costs). The same idea is likely to be advanced during the debate over an increase in the debt ceiling expected to occur this spring.

Eyes of the Beholder
Did CMS Actuary Richard Foster validate the supporters or opponents of the ACA (or some of both)? Both Democrats and Republicans claim that Foster’s testimony before the House Budget Committee bolstered their views of the ACA. Democrats say that Foster agreed that the ACA would reduce the budget deficit. Republicans point to his statements relating to overall health costs and whether people could stay on their current plans as support for their criticism of the ACA. Let’s take a closer look at these two latter statements.

First, Foster said the claim “if you like what you have, you can keep it” is not true in all cases. Given the way he qualified his statement, on this point, he seems obviously correct. Although Foster may have had changes to Medicare Advantage in mind, conceding that the ACA will force junk insurance off the market isn’t anything that ACA supporters should apologize for. Sooner or later (and generally speaking the sooner, the better) plans that take subscribers money without offering them either reasonable value or adequate financial protection in the event of a serious illness will be forced off the market. People who have them now and like them only like them because they are cheap, and will only like them as long as they don’t get really sick. Just because it’s cheaper to have cars without working brakes or airbags does not mean they should be allowed on the streets.

The more serious contention is that the ACA will not contain health care costs. The statement rests on the Office of the Actuary’s (OACT) projection of total health spending under the ACA and whether the Medicare cost containment provisions will actually be implemented.

The OACT is quite pessimistic about the cost containment potential of the ACA relative to other analysts like the CBO or Council of Economic Advisors. This is a general tendency of the office, not unique to the ACA. For example, the OACT overestimated the cost of Medicare Part D by 25 percent. Nonetheless, their analysis concludes that the ACA will expand coverage to over 30 million uninsured people with virtually no net increase in health spending. Since uninsured people get only about half the care of the insured, this large coverage expansion with a negligible increase in cost is actually an endorsement, rather than a rejection of the ACA’s cost containment effect.

Most importantly, Foster is making a political rather than analytic judgment that the Medicare cost containment provisions won’t be sustained. The endless replay of the drama around how to prevent the cuts in physician fees mandated by the Medicare Sustainable Growth Rate would seem to bolster his view, but, as Paul Van de Water of CBPP points out, the SGR is the exception rather than the rule when it comes to Medicare cost containment efforts. Notwithstanding the routine fee increases approved by Congress, savings from reductions in Medicare physician fees still exceed the levels projected at the time of SGR passage.

Don’t hold your breath
While the repeal and harass parts of the repeal, replace and harass strategy seem well underway, replace seems to be lagging and the likelihood of a coherent replace strategy emerging is much lower. The problem is that most of the ideas previously advanced by House Republicans don’t actually work—having at most a modest effect on health spending and even less on coverage, while failing to adequately protect those with preexisting condition exclusions. Even McCain advisor Douglas Holtz-Eakin, a vociferous critic of the ACA says, “If it’s all they do, it’s not a serious effort.”

Nonetheless the old Boehner bill constitutes too much government intervention for some in the incoming class of freshman Republicans. As a result, coming up with an alternative to the ACA is likely to prove much harder than trying to unravel it by picking at the less popular provisions. In addition, an alternative acceptable to the House majority may not be very popular with the American people who like most of the provisions of the ACA.

In their own little corner
The health care debate in the rest of the country may be focused on repeal, replace, defund and harass or on the fiscal challenges facing state budgets, but a different story is unfolding in Vermont. Newly elected Governor Shumlin campaigned on single payer, and he is taking the issue seriously. Shumlin contracted with William Hsiao, who, among other things, helped design the national health system in Taiwan, and Jonathan Gruber, who modeled coverage expansion costs in Massachusetts and for Congress during the ACA debate, to help design a single payer plan for Vermont. Their report, released a week ago, showed that a single payer system would significantly lower health care costs and create jobs while covering more people with coverage at least as good as offered by the ACA. (They also modeled the ACA and found that it too would create jobs and lower health care costs relative to the status quo, but not as much.)

Even with a supportive governor and a Democratic legislature, there are still many legal, operational and political challenges ahead. How the plan is received by the provider community, whether there would be a role for the state’s Blue Cross plan (which now has a 75 percent market share), and the distribution and reaction of winners and losers among employers in the proposed shift from premiums to payroll taxes, are all likely to play a large role in the ultimate fate of the effort. To date, the national news media have paid relatively little attention to the Vermont effort, but if the state succeeds in establishing a single payer plan, VT could become the mouse that roared in health policy terms.

– Michael Miller, Policy Director

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