Obama compromise would cut $400B from federal health programs

Plan would also avert reimbursement rate cuts set to take effect next month
Tools

Even as providers urge Congress to keep the nation from falling over the so-called fiscal cliff, President Obama made a new offer to House Speaker John Boehner yesterday that included $400 billion in cuts to federal healthcare programs, The New York Times reported.

The cuts, which would be spread out over ten years, are deeper than Democrats would like ... but not deep enough to keep Republicans from grumbling.

Obama's plan would also avert a 27 percent reduction to Medicare physician reimbursement rates, which is scheduled to take effect on Jan. 1, which Congress has staved off with temporary "doc fixes" since 2002.

It also would permanently extend Bush-era tax cuts on household incomes below $400,000 and lower 10-year tax revenue goals from the $1.6 trillion to $1.2 trillion, the article noted.

However, the new plan still doesn't satisfy the speaker as a fiscal cliff solution, according to The Washington Post.

"Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced," said Michael Steel, a spokesman for Boehner.

As negotiations continue, both sides remain divided on whether to raise the eligibility age for Medicare beneficiaries from 65 to 67--a move the White House is unwilling to make, the Post noted.

According to a November report from the Congressional Budget Office, raising the eligibility age for Medicare to 67 would cut spending by 5 percent, FierceHealthFinance previously reported.

If both sides fail to reach a deal, Medicare providers will get hit with $11 billion in cuts next year, with hospitals bearing the brunt of it with $5.8 billion in reduced payments, according to Kaiser Health News.

Without a deal, federal funding for medical research also will get slashes. The National Institutes of Health would face $2.5 billion in cuts next year, while the Centers for Disease Control and Prevention would see reductions of $490 million, noted KHN.

Some healthcare companies, such as Aetna, are preparing for the fiscal cliff by entering contingency mode and considering a hiring freeze or layoffs.

To learn more:
- read the NYT article
- read the Post article
- here's the KHN article

Related Articles:
Holiday surprise: Lame-duck Congress to bring Medicare cuts
SGR faces its own fiscal cliff
Aetna mulls layoffs to prepare for fiscal cliff
Don't let EHRs topple over the 'fiscal cliff'