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Re­peal would un­leash sav­age cuts in pro­grams

Modern Healthcare - - Front Page - By Karen Daven­port

Re­peal­ing the ACA would be a dis­as­ter for the fed­eral bud­get

Be­fore pas­sage of our nation’s new health re­form law, the pro­jected growth in the Medi­care and Med­i­caid pro­grams dwarfed other as­pects of our long-term fed­eral bud­get out­look. The two pro­grams, which rep­re­sent 34% of the fed­eral bud­get and 5.6% of gross do­mes­tic prod­uct, were ex­pected to out­pace the longterm growth of So­cial Se­cu­rity by a fac­tor of three. Much of this growth is re­lated to en­roll­ment. As the baby boomer gen­er­a­tion turns 65, it be­comes el­i­gi­ble for Medi­care cov­er­age. It also will be­gin to need long-term care, which is the most ex­pen­sive com­po­nent of the Med­i­caid pro­gram.

But that’s not the en­tire story. A sig­nif­i­cant por­tion of this growth is at­trib­ut­able to across-the-board growth in over­all health­care costs. Medi­care and Med­i­caid ex­ist within the broader health­care sys­tem and are pum­meled by the same cost dy­nam­ics that af­fect em­ploy­ers and fam­i­lies who pur­chase pri­vate health in­surance. Ris­ing health­care costs were clearly a key com­po­nent of long-term fed­eral bud­get short­falls.

Our new health re­form law, the Pa­tient Pro­tec­tion and Af­ford­able Care Act, ex­pands health in­surance cov­er­age through two ma­jor ap­proaches—pre­mium sub­si­dies that mod­er­atein­come fam­i­lies can use to pur­chase health in­surance in the new Health In­surance Ex­change, and ex­panded el­i­gi­bil­ity for Med­i­caid cov­er­age, which will en­sure that all low-in­come in­di­vid­u­als will qual­ify for this pub­lic health in­surance pro­gram. The new law also helps small busi­nesses pro­vide cov­er­age to their em­ploy­ees through tax cred­its that off­set the cost of cov­er­age.

At the time the Af­ford­able Care Act was en­acted, the Con­gres­sional Bud­get Of­fice pro­jected that, all told, these cov­er­age pro­vi­sions would cost $794 bil­lion through 2019. To pay for these new fed­eral ex­pen­di­tures, the new law takes two ap­proaches.

First, it re­duces pro­jected Medi­care spend­ing, largely by re­duc­ing sched­uled in­creases in provider pay­ments. This tried-and-true ap­proach to re­duc­ing Medi­care’s growth, the CBO es­ti­mated, will save $424 bil­lion through 2019. (It also adds 12 more years of sol­vency to the Medi­care trust fund.)

Sec­ond, the new law cre­ates some new taxes, such as an ex­cise tax on very-high-pre­mium in­surance poli­cies, and ex­pands other taxes, such as the Hos­pi­tal In­surance pay­roll tax, which will now ap­ply to some types of un­earned in­come. Al­to­gether, the com­bi­na­tion of re­duced Medi­care spend­ing and new tax re­ceipts ex­ceeds pro­jected new spend­ing un­der

If the CBO erred, it

was by be­ing too con­ser­va­tive

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