Shots - Health News
5:07 pm
Wed November 14, 2012

Health Care Cuts Are Coming: Here's Where Liberals Say You Can Slice

Originally published on Wed November 14, 2012 8:12 pm

A liberal think-tank closely allied with the Obama administration is proposing a health care spending plan it says could save hundreds of billions of dollars in entitlement spending without hurting middle- and low-income patients.

The plan from the Center for American Progress comes as Congress prepares for a battle royal over the so-called fiscal cliff. That's the combination of tax increases and spending cuts that happen automatically unless lawmakers and the president can reach a deal before the end of the year.

Democrats have been demanding higher taxes on the rich, while Republicans say they won't budge without big changes to programs like Medicare and Medicaid.

Senate Minority Leader Mitch McConnell didn't mince any words in his first floor speech of the lame-duck session Tuesday afternoon: "Republicans like me have said for more than a year now that we're open to new revenue in exchange for meaningful reforms to the entitlement programs that are the primary drivers of our debt."

And meaningful reform is exactly what the authors of the CAP plan said they are proposing.

"If entitlement reform is simply code for dismantling Medicare and Social Security, we're not at the table, and we should oppose that with everything we've got," said Ezekiel Emanuel, a senior fellow with the group who helped put the proposal together. "On the other hand," he added, "if entitlement reform is, 'We're going to transform the system, modernize it so it can deliver high-quality, lower-cost care,' that's where we are. And that's what we think we've got here."

Now, the Center for American Progress isn't just any group. It's considered something of the White House's reserve corps. Emanuel, for example, is the brother of former White House Chief of Staff Rahm Emanuel and a former White House health staffer himself. CAP President Neera Tanden is also a former White House health staffer.

And this new plan is notable not just for potential savings of a half-trillion dollars but for what some of those savings are. They include many things that build on savings included in the Affordable Care Act, like cutting waste and encouraging more efficient care, as well as lowering payments to some providers. But there are also some controversial items. Like asking wealthier Medicare beneficiaries to pay more out of pocket for their care. And limiting the tax-free status of health insurance for people who earn more than $250,000 a year.

"These are not easy proposals," said Tanden. "They are definitely not easy proposals for the progressive side."

Indeed, tampering with the so-called tax exclusion for employer-provided health premiums in even the most minor way in the Affordable Care Act caused some major heartburn for organized labor, whose members tend to negotiate for more generous, tax-free benefits rather than taxed wage increases.

But they are things that both liberal and conservative economists agree would start to rein in health spending as 78 million baby boomers start to migrate onto Medicare. And Emanuel says they weren't included in the plan just to try to win Republican votes for a budget deal.

"The [U.S.] health care system is the fifth-largest economy in the world — $2.8 trillion. It's as big as the French economy," he said. (It's slightly bigger, actually.) "You're not going to transform it overnight. You need, however, to put in place the structures that will transform it over a decade. That's what we've tried to do, and I think this is the legacy for the president."

But will the plan really impress any of those Republicans who are clamoring for entitlement reform?

Early indications suggest not.

"The idea that you can shoot at everyone in a crowd and not hit a beneficiary is ridiculous," scoffed Tom Miller, a resident fellow at the conservative American Enterprise Institute and a former Republican congressional staffer. Miller suggests that by cutting payments to health care providers, the plan can't help but result in some care disruptions for patients.

"It's just a continuing combination of further payment reductions — relatively arbitrarily," he said. Rather than letting the market determine how the health care system works, "you're going to see what "command and control" really looks like for the health care system," he said.

And there are some places even the liberal Center for American Progress wouldn't go. For example, raising Medicare's eligibility age to 67 — as some have proposed — is a nonstarter.

"We believe raising the Medicare age simply shifts costs to states, seniors and private employers," Tanden said.

Likewise, the plan rejects most cuts to the Medicaid program. Reducing funding for Medicaid right now "would undermine the very strong case the administration is making each and every day for governors to ... do their Medicaid expansions" under the Affordable Care Act, Tanden said.

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Transcript

MELISSA BLOCK, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

AUDIE CORNISH, HOST:

And I'm Audie Cornish.

As the White House and Congress debate taxes and entitlement reform, an influential liberal think-tank is offering what appears to be an olive branch. It comes at a time when many Democrats are trying to protect entitlements, such as Medicare. At the same time, Republicans say those entitlements are too expensive in their present form.

NPR's Julie Rovner tells us more about this latest attempt to find common ground.

JULIE ROVNER, BYLINE: Senate Minority Leader Mitch McConnell didn't mince any words in his first floor speech of the lame duck session, Tuesday afternoon.

SENATOR MITCH MCCONNELL: Republicans like me have said for more than a year now that we're open to new revenue, in exchange for meaningful reforms to the entitlement programs that are the primary drivers of our debt.

ROVNER: And meaningful reform is exactly what the Center for American Progress says it's putting forward in a new plan unveiled today. The proposal would reduce health care spending by nearly a half trillion dollars over the next decade, but without asking middle-and low-income patients or their families to pay more.

Zeke Emanuel is a senior fellow with the group and helped put the policy together.

ZEKE EMANUEL: If entitlement reform is simply code for dismantling Medicare and Social Security, we're not at the table and we should oppose that with everything we've got. On the other hand, if entitlement reform is we're going to transform the system, modernize it so it can deliver high quality, lower cost care, that's where we are. And that's what we think we've got here.

ROVNER: Now, the Center for American Progress isn't just any group. It's considered something of the White House's reserve corps. If Emanuel's voice sounds familiar, that's because here's the brother of the former White House Chief of Staff Rahm Emanuel and a former White House health staffer himself. And this new plan is notable not just for savings half a trillion dollars, but for what some of those savings are.

They include many things that build on savings included in the Affordable Care Act, like cutting waste and encouraging more efficient care. But there are also some controversial items, like asking wealthier Medicare beneficiaries to pay more out of pocket for their care and limiting the tax free status of health insurance for people who earn more than $250,000 a year.

Neera Tanden, the group's president, said she knew there might be some liberal pushback for those.

NEERA TANDEN: These are not easy proposals; they are definitely not easy proposals for the progressive side.

ROVNER: But they are things that both liberal and conservative health economists agree would start to rein in health spending, as 78 million baby boomers start to migrate onto Medicare. And Zeke Emanuel says this is not just something intended to please Republicans.

EMANUEL: The health care system is the fifth largest economy in the world - $2.8 trillion dollars, it's as big as the French economy, right. You're not going to transform it overnight. You are, however, need to put in place the structures that will transform it over a decade. That's what we've tried to do and I think this is the legacy for the president.

ROVNER: But will this plan really impress any of those Republicans who are clamoring for entitlement reform? Early indications are maybe not.

TOM MILLER: The idea that you can shoot at everyone in a crowd and not hit a beneficiary is ridiculous.

ROVNER: Tom Miller is a resident fellow at the conservative American Enterprise Institute and a former Republican congressional staffer. He's suggesting the plan still cuts payments to health care providers too deeply to protect patients from care disruptions.

MILLER: It's just a continuing combination of further payment reductions - relatively arbitrarily - higher taxes on top of the previous taxes, and very much a now-we're-dropping-the-veil, you're going to see what command and control really looks like for the health care system.

ROVNER: And there are some places even the liberal Center for American Progress wouldn't go. Tanden said raising Medicare's eligibility age to 67 is a non-starter. All it would do it shift costs, the group says. She also said reducing Medicaid at a time when the administration is trying to get governors to expand the program would send the wrong message.

Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.