note: While the Health on the Hill video was taped before the bill was signed by President Barack Obama, we have updated this text as of today to reflect additional detail.
KHN’s Mary Agnes Carey talks with Jackie Judd about the lack of Medicare and Medicaid cuts in the initial round of cuts tied to the debt ceiling increase, and about what sort of cuts the programs could be open to later in the year.
JACKIE JUDD: Mary Agnes, Medicare is not touched in this first part of the deal, the $900 billion in savings, but there is a possibility under certain circumstances that Medicare could be affected later this year. What are those potential circumstances?
MARY AGNES CAREY: As part of the deal, there is a committee — bipartisan, bicameral committee of lawmakers — that is charged with reducing the deficit, coming up with cuts for another $1.5 trillion. Medicare and Medicaid could be on the table then. If the committee does not agree or they produce a package that Congress doesn’t pass, a series of automatic cuts to Medicare would kick in starting in 2013. But there is a little bit of protection there, that Medicare would not be touched by more than 2 percent. So Medicare is open, but it is protected to some extent.
JACKIE JUDD: And 2 percent of what?
MARY AGNES CAREY: It’s 2 percent of what the spending would be in that fiscal year. So, while no provider likes a cut at all, ever, if you look at some of the numbers in 2010, the federal government spent $520 billion on Medicare. That’s expected to grow to $970 billion by 2021. So you’re looking at a 2 percent cut in a particular fiscal year of spending.
JACKIE JUDD: And it’s a slowdown in the projected growth. It’s not as if the program won’t continue to grow.
MARY AGNES CAREY: No, it will continue to grow every year. But then again, if you allow a 2 percent cut [in growth], that would be a reduction. Providers will certainly complain about it. They’ll say it might impact beneficiaries’ access to care. Whether or not Congress is in the mood to hear these arguments, we’ll have to wait and see. But it definitely would be a reduction of the 2 percent.
JACKIE JUDD: And the provision is that it would impact the providers.
MARY AGNES CAREY: That’s the thought, exactly. But that’s where the providers will step up and say: Now wait a minute — if you impact us it will impact the beneficiary.
JACKIE JUDD: Mary Agnes, as you know more than most, there is this annual ritual in Washington called the “doc fix.”
MARY AGNES CAREY: That’s exactly right.
JACKIE JUDD: How does the “doc fix” get impacted if there is this 2 percent cut.
MARY AGNES CAREY: Well, let’s look and let’s say, for example, that the commission produces its particular cuts in Medicare or you have this automatic across-the-board cut to obtain those savings. That would be happening right near the end of the year. Congress, for example, has to have an up or down vote on these recommendations by December 23. The current physician payment fix for Medicare expires December 31. So you’re going to have lawmakers looking for money in Medicare in a variety of areas. They’ll have the pressure of either producing this report and having it passing, or if it’s not, the across-the-board cut. And no one wants to see a Medicare physician payment cut they’re facing cuts of something like 29 percent if another “doc fix” isn’t passed. So you can imagine what December is going to be like on Capitol Hill.
JACKIE JUDD: But it’s possible in that scenario that the doctors would face a more than 2 percent reduction in reimbursement rates if the “doc fix” becomes too tangled up in the politics of everything else Congress has to do.
MARY AGNES CAREY: Right, they could certainly face a hit. If Congress can’t find money to offset it, then they will face a payment cut.
JACKIE JUDD: Let’s move onto Medicaid. The conventional wisdom in Washington is Medicare can’t be touched because it has such a powerful constituency behind it. Medicaid is more vulnerable because it does not have nearly as powerful a constituency — and yet Medicaid is not part of either the first stage of the deal or the second. How did that happen?
MARY AGNES CAREY: I think it’s a variety of forces. Obviously, the governors were very upset about any more Medicaid cuts. They’d had additional money through the stimulus program that stopped on July 1. They were very concerned about that.
The economy has been really bad. You’ve had people grow on the Medicaid rolls, that’s been a pressure. The groups of people who represent the Medicaid folks were pushing Congress to not make cuts. But let’s not forget about the health care law. [States will] be adding 16 million people to the Medicaid program starting in 2014. It didn’t make a lot of good policy sense to cut that starting in 2013 just a year before you have the Medicaid expansion of the health law.
JACKIE JUDD: And is it explicitly stated in the deal — as we now know it to be — that Medicaid is off limits?
MARY AGNES CAREY: Yes, absolutely, when it comes to the across-the-board cuts. While the so-called ‘super committee’ could consider changes to Medicaid, we have to remember that many Democrats have been active in protecting the program and are likely to continue to do so.
JACKIE JUDD: Okay, very good. We will return to this undoubtedly. Thank you very much, Mary Agnes Carey of Kaiser Health News.
MARY AGNES CAREY: Thank you.