This week’s failure of the deficit super committee may have saved Medicare and Medicaid from spending reductions for now, but don’t kid yourself: These programs remain squarely in the fiscal bulls-eye.
As part of last August’s deal to extend the federal debt limit, Congress agreed that if the super committee was unable to reduce the deficit by $1.2 trillion over 10 years, spending would automatically be cut more than a year from now, in January, 2013. Those cuts specifically excluded Medicaid, including the one-third of Medicaid that funds long-term care services for the frail elderly and adults with disabilities. However, they do hit almost everything else, including all non-Medicaid aging services such as transportation, subsidized housing, and information services. They also include a 2 percent reduction in Medicare spending, which must come from payments to hospitals, doctors, nursing homes, and other providers and not in benefits.
It is impossible to know whether those automatic spending reductions will take place. My own guess is Congress will find some way to put them off. Powerful Republican senators, who are mostly worried about defense spending, vow to rewrite the rules, although for now President Obama says the cuts should take place as scheduled.
Those decisions probably hinge on the 2012 elections, however. As a result, the outcome of the presidential and congressional races will determine the fate of funding for elder care. Here are some of the issues to watch:
Medicare: All Republican presidential candidates would replace the existing Medicare system with cash subsidies, which seniors would use to buy health insurance on the individual market. They disagree on how big those subsidies should be and on how much of those insurance costs would shift to seniors themselves. Obama would retain the system as it is, but is likely to both cut payments to providers and require more out-of-pocket costs for beneficiaries.
Medicaid. Already, most medical care for moms and kids (who represent three-quarters of Medicaid beneficiaries) is provided through managed care companies. Now, states are beginning to shift their elderly and disabled enrollees to managed care as well. Obama is likely to grant states more flexibility to expand those programs, as well their home and community based services. Republicans would go much further. They’d fundamentally remake Medicaid by capping the annual federal contribution to the program.
Non-Medicaid services. These programs receive little attention compared to Medicare and Medicaid, but they may suffer the most immediate cutbacks. Many, which are funded through the Older Americans Act, were cut or frozen in the 2011 budget and more spending reductions are in store. Just this week, Kathy Greenlee, who heads the Administration on Aging, said, “If my budget remains flat, I would consider that a success.”
The CLASS Act. The White House abandoned the national long-term care insurance program that was included in the 2010 health law, but CLASS remains on the books. There is a good chance, however, that Congress will move to repeal CLASSin 2012, when budget rules make this possible without adding to the deficit (long story, don’t ask).
The super committee’s failure may have delayed the inevitable, but medical care, long-term care, and supportive services for seniors remain prime targets in an era of tight budgets. Supporters would do well to use their reprieve to plan for how they’ll respond to cuts that are sure to come.
That was a great summary of the recent changes in healthcare funding. Thanks Howard