The co-chairs of President Obama’s bipartisan deficit commision have proposed a far-reaching plan to reduce the nation’s massive deficit. It includes big changes for both current and future seniors. Among them: higher Social Security taxes and reforms in the design of benefits, reduced payments to Medicare providers and greater cost sharing by Medicare beneficiaries, and, perhaps most dramatic, a fundamental change in federal payments for Medicaid long-term care.
The chairs, Erskine Bowles–who was chief of staff to President Clinton, and Alan Simpson–a former Republican senator from Wyoming–released their draft plan today. Their proposal still must win the support of 14 of the 18 members of the bipartisan commission, which will be an uphill battle. If the group can reach a consensus, the panel’s plan would be presented to Congress in early December.
The Bowles-Simpson plan makes cuts throughout government, including defense and most domestic spending programs. It also includes $750 billion in tax increases over 10 years. While much of what the co-chairs proposed will be hugely controversial, their plan shows what it will take to put the nation back on a firm fiscal footing.
In such an environment, long-term care services can’t expect to be immune from cuts. Their biggest proposed change: capping the federal contribution for Medicaid long-term care.
Today, the federal government must automatically pay its share of the cost of these services, no matter how fast they rise. The feds contribute an average of about 60 percent of the cost of Medicaid, although the share varies from state to state. Bowles and Simpson would, for the first time, place a ceiling on the federal match for this joint state/federal program, reducing the federal contribution by about $90 billion from 2012 to 2020.
This would place a tremendous increased burden on states and likely result in both lower payments to nursing homes and home health agencies, and tougher eligibility standards and lower benefits for frail seniors and younger people with disabilities.
No doubt these proposals are harsh, but, like them or not, changes such as these are inevitable. They are a big reason why we must find a way to replace Medicaid long-term care with an insurance program.