The federal government would achieve $3 trillion in savings, half of it from spending cuts, under a plan proposed this week by Democrats on the Supercommittee. This is the first time that details of the Supercommittee negotiations have become public during its two months of talks.
The plan, unveiled by Senator Max Baucus (D-MT) and supported by a majority of the panel’s Democrats, goes well beyond the $1.2 trillion in savings required by the Budget Control Act. Although the plan was announced behind closed doors and full details have not yet been released, it is reported to include about $500 billion in cuts to Medicare. It is unclear at this point whether and how Medicaid and other health programs would be affected.
Republicans Lambast Proposal, Issue Competing Plan
Republican aides lambasted the Democratic proposal for its inclusion of new tax revenues, which make up about $1.3 trillion of the total savings package. One day after the release of the Democratic plan, Republicans on the committee responded with a proposal of their own. The Republican plan relies primarily on spending cuts, which make up roughly 75% of the $2.2 billion total in savings. Most of the rest would come from non-tax revenue increases, such as anticipated economic growth and the sale of government assets. Reports indicate that the plan might also include an overhaul of the tax code, though Supercommittee members and aides have declined to comment further on the details.
Neither of these initial plans will be adopted in whole. However, these first bids shed light on important areas of conflict – and potential agreement – that could shape the Supercommittee’s final bargain. It is noteworthy that both plans well overshot the $1.2 trillion mark, perhaps indicating bipartisan support for a large deal. The proposals also suggest that Democrats may be willing to look at cuts to entitlement programs, while Republicans have not completely rejected tax reforms.
Nonetheless, the substantial differences between the two plans are a measure of how far apart the parties remain. The Supercommittee will have to come to an agreement on the details of its plan by early November if the Congressional Budget Office is to have sufficient time to produce a cost-savings estimate in time to meet the committee’s Nov. 23 deadline for submitting the plan to Congress.
Threats to Medicaid Continue on Multiple Fronts
As the Supercommittee continues its negotiations, groups from across the healthcare and public policy sectors are seeking the inclusion of their preferred policies in the final deal. Many of these policies entail substantial cuts to Medicaid or restructuring of services for its beneficiaries.
The Republican Governors Public Policy Committee (an arm of the Republican Governors Association) met this week in Washington, D.C. for a conference on implementing its 31 proposals for Medicaid reform. Under the name of enhanced flexibility and freedom for states, the majority of these proposals would allow states significant leeway to cut benefits and reduce eligibility while. The RGPPC Medicaid reform report also calls for a repeal of the 2014 Medicaid expansion. The RGPPC has called on the Supercommittee to implement its proposals for flexibility in Medicaid without shifting costs from the federal government to the states.
Meanwhile, House Appropriations Labor-HHS Subcommittee Chairman Denny Rehberg (R-MT) has written a letter to the Supercommittee urging its members to repeal both the Medicaid expansion and the Affordable Care Act’s subsidies to help consumers purchase insurance in the state-based health insurance exchanges. Rehberg’s recently introduced deficit reduction legislation (HR 3243) would also eliminate Medicaid coverage for former foster children and remove the ACA’s requirement that Medicaid benchmark plans include at least a core set of minimum essential benefits.
Proposal Would Move Dual Eligibles into Managed Care
On another front, the National Association of Medicaid Directors is urging the Supercommitte to grant states new flexibility in moving beneficiaries who are dually eligible for Medicare and Medicaid into managed care arrangements. Currently, states must first obtain a waiver from the Centers for Medicare and Medicaid Services to transition dual eligibles into managed care. Under the NAMD proposal, states would have the authority to impose managed care without prior CMS waiver approval and could share in any savings that result from the more tightly managed and coordinated approach for this population that has typically been among the most costly of beneficiaries. However, the NAMD recommendations do not include an estimate of how much those savings might be.
Republicans and Democrats alike have floated additional proposals this year to cut Medicaid, including converting Medicaid to a block grant, creating “blended” federal match rates for each state, and repealing health reform’s Maintenance of Effort requirements. With the Supercommittee still in the midst of discussions – and with few details available on how they intend to approach Medicaid – any of these proposals could be included in the final deal. If you have not already done so, the National Council encourages you to sign on to our letter to the Supercommittee in support of preserving funding for Medicaid.