Obama’s 2012 budget proposal has Dems, GOP rehashing old arguments
Democrats and Republicans went back to the future last week after President Barack Obama released a fiscal 2012 budget the administration says will help build a healthier and more fiscally responsible America, but that the GOP says will only worsen the nation’s massive debt problem. Similar to last year’s debate over the Patient Protection and Affordable Care Act, Obama’s budget showed again that the parties can’t find much common ground on what will improve the country’s physical and fiscal health and longevity.
The White House released its fiscal framework for next year at the start of the same week House Republicans considered legislation— known as a continuing resolution—that seeks to cut billions in federal spending (See chart, p. 9) for the remainder of fiscal 2011, which ends Sept. 30. Obama’s budget projects some relatively small decreases for both Medicare and Medicaid largely because of expected returns from $8.6 billion in “program integrity proposals,” which include expanded anti-fraud efforts.
Although the president avoided any major reforms of either entitlement program, the budget projects its savings initiatives will reduce Medicare 0.7% to $485.8 billion in fiscal 2012 from $489.3 billion in fiscal 2011. Similarly, Medicaid spending would drop 2.6% to $269 billion in fiscal 2012 from $276.2 billion in fiscal 2011. The third major entitlement program, the Children’s Health Insurance Program, would increase about 8.9% to about $10 billion from $9.2 billion.
The cuts in the two biggest healthcare programs are largely attributed to reduced spending on fraudulent claims and increased recoveries of falsely obtained federal funds through more federal prosecutions, according to administration officials.
Specifically, the proposal counts on anti-fraud efforts recovering or preventing the loss of $32.3 billion Medicare and Medicaid funds over 10 years, Tony West, an assistant attorney general in the Justice Department, told the Senate Appropriations Committee last week.
More Medicaid reductions are expected from states implementing some of the $100 billion in cuts to optional services that HHS Secretary Kathleen Sebelius suggested in a Feb. 3 letter to the nation’s governors. Her suggestions were in response to a Jan. 24 request from the National Governors Association that the federal government waive cuts in funding to states that reduce their Medicaid rolls to close their estimated $175 billion in budget gaps through 2013. The approach suggested by Sebelius would not allow such Medicaid enrollment drops.
“We will give states plenty of leeway in changing their state plans to do things such as limit optional benefits and re-evaluate cost sharing,” Chris Stenrud, a deputy assistant secretary at HHS, wrote in an e-mail.
And additional Medicaid reductions would come from the administration’s proposal to cut the allowable tax on providers, including hospitals and physicians. States use such taxes, which are automatically reimbursed to providers as part of their Medicaid payments, to increase their overall spending on the program and draw proportionally greater federal funding under mandatory ratios established between the federal and state governments.
Sen. Orrin Hatch (R-Utah) was among Republicans who attacked the proposal to curtail the tax as “placing a further strain on already stretched state budgets.”
The nation’s healthcare providers had their own concerns with the president’s budget. In a statement, Bruce Siegel, CEO at the National Association of Public Hospitals and Health Systems, said his organization is “disappointed that the administration proposes to reduce Medicaid provider taxes—a legitimate source of revenue which states use to finance the nonfederal share of Medicaid costs. With Medicaid consuming ever larger portions of state budgets,” Siegel’s statement continued, “reasonable financing tools like provider taxes, which ensure access to care for our nation’s most vulnerable citizens, should not be limited.”
Richard Umbdenstock, president and CEO of the American Hospi-
Sebelius told senators the CLASS Act provision of the reform law will have to be self-sustaining before HHS starts it.