Cantor Plays Up List of Proposed Cuts to Medicare, Medicaid

July 13, 2011

CQ

Joanne Kenen

House Majority Leader Eric Cantor outlined Tuesday up to $355 billion in potential cuts to Medicare and Medicaid that he said had been identified in bipartisan budget negotiations.

Options included major cuts to federal matching payments to Medicaid, the federal-state health program for the poor, and higher out-of-pocket costs for some beneficiaries in Medicare, the federal health program for the elderly and disabled.

GOP aides said the proposal was not new and Cantor told reporters Tuesday that the possible cuts had been identified previously during bipartisan talks among congressional leaders and Vice President Joseph R. Biden Jr. Several others, however, described it as a Republican proposal. Cantor, R-Va., walked out of the Biden talks because of what he called an impasse over raising revenues, which Republicans oppose.

In a speech at the U.S. Chamber of Commerce, Cantor said the Biden group had identified $2 trillion to $2.3 trillion in savings, including changes to entitlements. But Cantor said, “there was a walk back,” with Obama saying he could live with cuts between $1.7 trillion and $1.8 trillion, but no more unless Republicans agreed to tax increases.

The list of more than two dozen potential changes to the two entitlement programs ranged from tweaks to how Medicare pays for diabetes testing strips, to higher co-pays for home care, to dramatic changes in how Washington calculates its matching payments to states for Medicaid, which a document released by Cantor’s office says could save up to $100 billion over 10 years. The National Governors Association has objected to shifting costs to states, particularly without eliminating mandates.

Cantor told reporters after the speech that Obama had also said he was “willing to consider” raising the eligibility age for Medicare, which has been 65 since the program was created in 1965. Cantor said no specifics had been reached on how quickly it would be raised or who would be affected.

In the document, Cantor tells House Republican colleagues that Senate Majority Leader Harry Reid wants to leave Medicare and Medicaid basically untouched, and that Obama was open to a “modest increase” in co-pays and means testing in Medicare, which would require more affluent older Americans to pay more.

The document notes there could be $38 billion in savings from means testing. There also would be changes to the supplemental insurance many seniors have, known as Medigap, so that they would have to pay more themselves before the insurance kicked in. A similar suggestion was offered by the president’s fiscal commission late last year.

Some of the ideas on the list for trimming federal health programs are small-ticket items that still would guarantee an uproar among health care advocacy groups and lobbyists. They include, for example, prepayment review for power wheelchairs in Medicare, prior authorization for high-cost imaging services in Medicare and unspecified savings in rural hospital programs.

Other savings could come from phasing out Medicare payments to hospitals to cover bad debt when the facilities cannot collect a patient’s share of their care; making cuts to the public health and prevention fund created in the health law; instituting higher co-pays for lab tests; and requiring patients to get prior authorization for certain high-cost imaging services.

After seeing an item on the list that calls for $50 billion in savings from reductions in post-acute care payments or cost sharing for skilled nursing facilities and home health services, Georgia Gov. Nathan Deal sent a letter to Cantor on Tuesday afternoon objecting to the proposal and urging him to instead adopt a plan developed by the industry to curb fraud and abuse. Deal, a Republican, is a former House member.

Not on Cantor’s list were some of the changes proposed by Democrats, including prohibiting states from imposing certain taxes on Medicaid providers and requiring pharmaceutical companies to give rebates for “dual eligibles” who are on both Medicare and Medicaid. Drugmakers already pay rebates for drugs purchased through Medicaid.

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