Politics and Policies Rowland-Hite Health Planning Seminar May 6, 2011 2012 Presidential • Obama polls improving – 50% threshold – Tax deal in December – Move to the center – Unhappy base, but no challenger • Republicans – No clear front runner (historic) – Late starting – Significant divisions Political leverage…Senate • What‟s at stake? – 33 seats 23 Democrats 10 Republicans • Democratic vulnerabilities – States where John McCain won in 2008 Joe Manchin (D-WV)…+13 Claire McCaskill (D-MO)…+0.1 Ben Nelson (D-NE)…+14.9 John Tester (D-MT)…+2.3 – States where GOP flipped Senate seats this year Sherrod Brown (D-OH)…Rob Portman (R) Bob Casey (D-PA)…Pat Toomey (R) [Kent Conrad (D-ND)]…Jon Hoeven (R) Herb Kohl (D-WI)…Ron Johnson (R) Political leverage…House 31 new GOP (of 62) representatives who represent districts won by President Obama • FLORIDA • NEW HAMPSHIRE • TEXAS – Daniel Webster – Charlie Bass – Francisco Canseco – Allen West – Frank Guinta – Blake Farenthold • ILLINOIS • NEW JERSEY • VIRGINIA – Robert Dold – Jon Runyan – Scott Rigell – Adam Kinzinger • NEW YORK • WASHINGTON – Randy Hultgren – Ann Marie Buerkle – Jamie Herrera – Bobby Schilling – Chris Gibson • WISCONSIN – Joe Walsh – Richard Hanna – Sean Duffy • KANSAS – Nan Hayworth – Reid Ribble – Kevin Yoder • NORTH CAROLINA • MICHIGAN – Renee Elmers – Dan Benishek • OHIO – Tim Walberg – Steve Chabot • MINNESOTA – Steve Stivers – Chip Cravaack • PENNSYLVANIA • NEVADA – Lou Barletta – Joe Heck – Mike Fitzpatrick – Pat Meehan Multiple opportunities for reducing spending Legislative Platforms • Continuing resolution(s) on appropriations • Debt limit extension(s) • Congressional Budget Resolutions Congressional Budget Resolution • Not a law…does NOT require Presidential signature • Congressional work-plan… guides committees with Rep. Ryan Sen. Conrad jurisdiction over spending and revenues – Does not come up with specific legislation (policy) • Congress sometimes does NOT agree on a budget resolution – This year likely to be very difficult to resolve House and Senate versions • Significance: – Vehicle for using reconciliation process Senate rules (50 votes) – Key marker for framing long-term issues Medicare and Medicaid = 22.6 percent Debt limit extension(s) Updated Version Commitment to American Prosperity Act S. 245 COSPONSORS Lamar Alexander (R-TN) Richard Burr (R-NC) Saxby Chambliss (R-GA) Mike Crapo (R-ID) Jim Inhofe (R-OK) Johnny Isakson (R-GA) Mark Kirk (R-IL) Jon Kyl (R-AZ) Joe Lieberman (D-CT) Joe Manchin (D-WV) Bob Corker Claire McCaskill John McCain (R-AZ) (R-TN) (D-MO) Corker-McCaskill • Limits total federal spending to no more than 20.6 percent of GDP – Phase-in to that level 2023 • Automatic, across-the-board cuts (sequester) to close gap if Congress does not act to reach targets − Revenue increases not included − Impact of sequester over first nine years: Social Security (-$1.3 trillion) Medicare (-$856 billion) Medicaid (-$547 billion) Key issues Caps and Enforcement Mechanisms • What is the goal? – Balanced budget – Percent of deficit/debt as proportion of GDP – Percent of government spending as proportion of GDP • How will sequestration work? – Defense – Social Security – Medicare – Medicaid – Revenues Another option… Gang of Six • Democrats – Kent Conrad (ND)* – Dick Durbin (IL)* – Mark Warner (VA) • Republicans – Mike Crapo (ID)* – Tom Coburn (OK)* – Saxby Chambliss (GA) “I can‟t wait for the blood bath in April…when debt limit time comes, they‟re going to look around and say „What the hell do we do now? We‟ve got guys who will not approve the debt limit extension unless we give „em a piece of meat, real meat‟, meaning spending cuts. And boy, the blood bath will be extraordinary…there will be hair and eyeballs all over the floor” Alan Simpson “We‟re going to have to deal with it as adults…whether we like it or not, the federal government has obligations, and we have obligations on our part.” Rep. John Boehner (R-OH) Speaker of the House House Budget Resolution Chairman Ryan’s Proposal • Reduces spending $6 trillion over 10 years • Federal spending as percentage of GDP: – 20.25 in 2022 – 20.75 in 2030 House Budget Resolution “Assumptions” in Chairman’s Proposal • Repeal of ACA (-$1.4 trillion) – Medicaid expansions – Subsidies for individuals to purchase private insurance in exchanges – But keep the provider payment cuts • Extension of Bush (Obama) tax cuts • Medicare premium support • Medical liability reform • Medicare physician payment fix • Eliminates Independent Payment Advisory Board • Enforcement mechanism • Medicaid block grants with reductions and 2 percent increase per year (-$750 billion) President’s Proposal (1.0) Health Care • $62 billion for two year patch on Medicare physician payment reductions – Funded by specific savings from: Medicaid Reducing ability of states to use Medicaid provider taxes in 2015 ($18.3 billion) Rebase/extend Medicaid DSH allotments in 2021 ($4.1 billion) Limit Medicaid DME payment to Medicare levels ($6.4 billion) Pharmaceutical proposals ($12.8 billion) Program “integrity” ($13.9 billion) Program “efficiencies” ($6.4 billion) – Most savings do not go to reducing the deficit ($7.6 billion) President’s Proposal (1.0) Other Highlights • Children‟s GME ($317 million in FY 2012) • No major changes to restructure entitlement programs such as Medicare, Medicaid or Social Security President’s Proposal (2.0) • Builds on 1.0 • Reduces spending by $4 trillion over 12 years…deficits would be no more than 2.5-2.8 percent of GDP − “Failsafe” budget trigger beginning in 2014 if targets not achieved: Entitlement benefits exempt from sequester Revenues increases included • Equalizes Medicaid payments to states • Medicare Independent Payment Advisory Board scope expanded: − Limits Medicare per capita growth to GDP plus 1 percent from 2014-2017 − GDP plus 0.5 percent in 2018 and beyond (-$480 billion over 12) − Fast-track recommendations − Hospitals excluded until 2019 Gang of Sixteen? • House – Republicans Eric Cantor (VA) Majority Leader – Democrats Jim Clyburn (SC) Assistant Minority Leader Chris Van Hollen (MD) Ranking Member, Budget Committee • Senate – Democrats Max Baucus (MT) Finance Committee Chair Daniel Inouye (HI) Appropriations Committee Chair – Republicans Jon Kyl (AZ) Assistant Minority Leader Budget Enforcement Mechanisms ISSUE SIMPSON- CORKER- PRESIDENT HOUSE BOWLES McCASKILL OBAMA BUDGET (RYAN PLAN) TARGETS Budget (excluding Caps on federal Total budget: estimates Caps on federal interest) is in primary spending as a that proposal will reduce spending as a balance by 2015 OR percentage of GDP. deficits as to 2.5 percent percentage of the debt held by public has Phases down to: of GDP in 2015 and on GDP: stabilized • 22.5 in 2013 a declining path toward • 20.25 in 2022 • 21.70 in 2014 2.0 percent by end of • 20.75 in 2030 • 21.20 in 2015 decade. A trigger will • 18.75 in 2040 • 20.6 in 2023 ensure that it does not • 14.75 in 2050 exceed 2.8 percent. Medicare: limits Medicare per-capita growth to GDP plus 1 percent from 2014 - 2017; and GDP plus .05 percent in 2018 and beyond FASTRACK Reconciliation like Congress may take Yes; special procedures Yes MECHANISM process actions to avoid for Medicare using IPAB sequester under regular procedures AUTOMATIC No • Does not include • Includes revenue • Does not include ACROSS-THE revenue increases increases revenue BOARD CUTS • Includes cuts in • Includes increases entitlement entitlement • Includes cuts in (SEQUESTER) programs programs with entitlement limits (protects programs benefits) President Gang of Chairman Obama 2.0 Six Ryan • IPAB with • Repeal ACA but enforcement keep hospital cuts mechanism (Medicare) • Block grant and cut Medicaid • Restrict use of Medicaid provider • Medicare premium taxes support • Budget caps and • Budget caps and enforcement enforcement mechanisms mechanisms Our strategy • Arbitrary targets and triggers are not the answer • Already made a significant contribution (ACA) − Reductions − Performance penalties − Reforms − Other sectors deserve examination − Impact of state level reductions − Regulatory actions (coding offset) Alternatives • Liability reform • “Real” comparative effectiveness • Care at the end of life • Administrative simplification • Medicare cost sharing restructuring • Adjusting Medicare eligibility age • Revenues – Junk food taxes…obesity – Medicare (FICA) rate adjustments – Limiting deductibility of health insurance premiums Medicaid • Phase out of additional FMAP funding American Recovery and Reinvestment Act of 2009 • “Flexibility:” pressure from governors – Block grants – Maintenance of effort for eligibility • Elimination of provider taxes “If we could get Medicaid as a block grant with total flexibility to run the program as we see fit, I would be willing to take a cap on growth of 2 percent a year. Many governors feel that way.” Governor Haley Barbour (R-MS) Immediate Past Chair Republican Governors Association Medicaid alternatives • Applying ACA options – Accountable care organizations – Bundled payments – Medical homes – Pay for performance • Coordinated care for dually eligible • Coordinate care for chronic conditions • Increased use of generic drugs • Tax incentives for long-term care • Restructure copayments • Program integrity FY 2012 Medicare Inpatient PPS Proposed Rule Key Issues • Readmissions • Quality: efficiency measures and VBP • Rural floor • Coding offset Proposed Medicare Inpatient Rule: FY 2012 Our Strategy • Timetable – Comment period until June 20 – Final rule expected