Medicare recipients could be affected in debt deal

AP News
Posted: Jul 09, 2011 11:21 PM
Medicare recipients could be affected in debt deal

A debt-busting deal on the scale that President Barack Obama and House Speaker John Boehner had talked about would have all but guaranteed that people on Medicare would feel at least some of the pain.

But on Saturday evening, Boehner said he wouldn't seek the $4 trillion deficit reduction deal, but would seek $2 trillion in reductions.

The exact effects of that shift by Boehner weren't immediately clear.

Low-income people on Medicaid wouldn't have escaped totally under a major deal, either. If a deal ultimately led to overhauling taxes, workers and their families could be on the hook also, facing potential limits on the tax-free status of job-based health insurance.

Health care was a main ingredient on both the spending and tax sides of the elusive agreement that Obama and Boehner, R-Ohio, had been trying to reach.

The president has scheduled a meeting Sunday with congressional leaders to keep pushing for a compromise that would reduce future deficits in exchange for lifting the $14.3 trillion cap on the national debt. Action is needed so the government can keep paying its bills beyond Aug. 2.

With Congress politically polarized and skittish about next year's elections, it's unclear whether there's any combination of Democratic and Republican votes to pass major deficit reduction that cuts benefit programs and raises revenue. Boehner's shift Saturday suggested there was not.

But many of the health-care options that negotiators were considering have been available for months. Proposals have come from the Obama administration, congressional advisers and bipartisan groups, such as Obama's debt commission.

For Medicare, possibilities included higher premiums for upper-income retirees and new copayments and deductibles that affect all but the poor. For example, seniors do not currently face a copayment for home care. That could have changed if there had been a major deal.

Obama's health care law already cut about $500 billion from projected payments to providers, and some experts say there's not much fat left there.

The smaller deficit-reduction deal, could reduce the likelihood that older people will take a hit.

Although Social Security previously had been considered untouchable, one measure under discussion would bring in close to $200 billion through a tweak that reduces benefits and increases the amount collected from payroll taxes.

A major proposal that would affect Medicare beneficiaries calls for changing the current cost-sharing rules, a hodgepodge of varying copayments and deductibles.

Older people would have to shoulder more of the expense of routine care. Under one version of the proposal, all but the poor would have to pay at least $550 of their annual medical bills.

The idea is to make people think twice before they schedule that test or exam that probably doesn't add a whole lot of information to what a doctor already knows.

But they would get a new benefit from the change. For the first time, Medicare would have an annual limit on out-of-pocket spending, protection against a catastrophic illness.

Further cuts to providers, including drug companies, hospitals, home health agencies and nursing homes also are possible. One proposal calls for seeking billions in rebates from drug companies for medications used by 9 million people covered under both Medicare and Medicaid.

Advocates for the poor are concerned about possible cuts to Medicaid, a federal-state partnership that covers low-income children and parents, the disabled, and many nursing home residents.

The administration has proposed replacing an assortment of formulas for the federal share of the program with a single rate for each state. Officials say that could save $50 billion to $100 billion over 10 years, much of it from reduced administrative costs.

Governors are highly suspicious. They see a cut lurking behind the technicalities. Most of the governors believe the rate talk is budget-speak for dramatic cuts, said Washington state Gov. Christine Gregoire, a Democrat who heads the National Governors Association.

So far, Democratic lawmakers don't see much that they can support from the information dribbling out of the budget negotiations.

The explosion in federal debt was caused by the recession, the George W. Bush-era tax cuts, and the wars in Iraq and Afghanistan, not by seniors or low-income Medicaid recipients, said Rep. Xavier Becerra, D-Calif.