By Gail R. Wilensky
Although the new session of Congress has barely begun and President Obama has only just released his budget for fiscal year 2012, already as much attention is being given to positions being developed for 2012 as for legislation being readied for the current session. In large part, that should come as no surprise, given a new House of Representatives with a majority elected on promises to roll back government spending to 2008 levels as well as repealing the Affordable Care Act. Of course, with a Democrat-controlled Senate and a Democratic president, both of these remain highly unlikely in the current Congress. Thus, focus on the next Congress and the presidential election comes even sooner than normal.
The Spending Bill
The House of Representatives is currently debating spending amendments to the $1.2 trillion bill that will fund the government for the rest of the current fiscal year. By looking at the amendments offered, some of the differences in priorities between the parties are clearly evident.
The Republicans have proposed reducing spending in the bill by approximately $60 billion. Reducing spending is clearly a major priority for the House Republicans, whereas the Democrats have questioned whether the reductions will imperil job creation and with it, the recovery. Given that we are already five months into fiscal year 2011, $60 billion is not a small reduction, although smaller than the most aggressive conservative Republicans and tea party representatives would like. The reductions are primarily in domestic areas like police and fire protection and low-income heating subsidies, as well as foreign aid, like tuberculosis programs in Africa. A few cuts are more ideologically-driven—like the reductions in spending for Planned Parenthood—but most reflect reductions where a majority of support could be crafted.
It is unclear what will happen when House bill reaches the Senate. It is even less clear what will happen if this or a similar bill reaches the White House. This uncertainty would not be as urgent if the government were not in a position to run out of spending authority after March 4, unless the funding bill is signed into law or a continuing resolution (CR) bill is passed that allows the government to continue spending at current levels. The time crunch becomes even clearer with the pledge made by House Speaker John Boehner (R–Ohio) that he will not support a CR that doesn't contain reduced spending—suggesting a potential redo of the confrontation and subsequent government shutdown that occurred in 1995.
By most accounts, the 1995 shutdown of government did not play out well politically for Republicans. But it is not clear that the same would be true now. Unlike in 1995, when Republicans held both houses of Congress, Republicans now hold only the House with Democrats controlling both the Senate and the White house. It is unclear whether the public would assign political blame, as it did in 1995.
Physician Payments Yet Again
The physician fee schedule under Medicare has been stabilized for 2011 but the current "fix" runs out at the end of the 2011. President Obama has proposed further stabilizing the physician fee schedule for an additional two year in his 2012 budget. But already questions have been raised about the seriousness of the funding sources for the more than $50 billion this would cost.
While it must be frustrating for the physicians who care for Medicare beneficiaries not to know whether their fees will at least continue at current levels or be slashed by 20 percent or more, it is unlikely we will see more than short-term fixes for at least the near term. First, fixes that extend more than one year are difficult to credibly finance; second and more important, there is no agreement yet about the reimbursement system that should take its place. It would be more reassuring if there were ongoing pilots testing new physician reimbursement methods. But as of now, that is not occurring despite widespread concerns that fee-for service reimbursement rewards volume rather than value.
The Elephant in the Room
The amendments by House Republicans to the spending bill and the president's 2012 proposed budget have been criticized for focusing only on discretionary spending when there is widespread agreement that the most serious challenges to fiscal solvency are related to entitlement spending—most especially Medicare. House Republicans have promised to release details about what they will be proposing to rein in Medicare spending some time over the next few months—a process, which if done unilaterally, is fraught with political danger.
More recently, news has been reported about a small bipartisan group of Senators who are meeting to craft legislation that would trigger new taxes and spending cuts if Congress failed to meet specified spending goals and other targets aimed at reducing the deficit. Their plan focuses on four areas of deficit reduction: reform of the tax code, cuts in discretionary spending, changes to health care entitlements and changes to Social Security. The spending targets follow proposals from the president's deficit commission (which the president himself has seemed to ignore) and would go into effect if the targets in the various areas were not met.
It is reported that some House Republicans are already concerned about whether these efforts would make them politically vulnerable. Several Senate Democrats have already taken Social Security reductions or other changes in benefits off the table before the discussions have even started.
There may be widespread agreement that we will never resolve our deficit problems without taking on entitlement spending, but doing so will clearly remain a political challenge to both parties. Nothing that is happening currently suggests this is likely to change anytime soon.
This blog post is a commentary on Health Care Opinion Leaders’ Views on Congressional Priorities.
Gail Wilensky is a Senior Fellow at Project HOPE. She was previously the administrator of the Health Care Financing Administration (now the Center for Medicare and Medicaid Services) and chair of the Medicare Payment Advisory Commission.