Fiscal Cliff


Fiscal Cliffnotes: Deal Preserves Physician Pay — But Cuts Hospital Payments

By Mary Agnes Carey, Kaiser Health News

(Photo: Alex Wong)

As part of the “fiscal cliff” deal, Congress stopped a scheduled cut in Medicare payments to doctors. But hospitals will be picking up a big chunk of the tab, and they’re not happy.

The bill would require that, over the next decade, hospitals pay nearly half of the approximately $30 billion cost of stopping a 26.5 percent payment cut for Medicare physicians, scheduled to begin today. Figuring out a way to pay for this payment cut is known around Washington as the “Doc Fix.”

Some background: The 26.5 percent reduction for doctors comes from a payment formula created in a 1997 deficit reduction law. For the first few years, doctors received modest pay increases. But in 2002, doctors reacted with fury when they came in for a 4.8 percent pay cut under that plan. Every year since, Congress has staved off the scheduled cuts until now, when all those delayed cuts add up to a total 26.5 percent cut.

The new law pays for the Doc Fix by reducing hospital payments in two ways: cuts to hospitals from Medicare AND cuts to hospitals from Medicaid.

First, Medicare. The Fiscal Cliff deal would cut $10.5 billion from projected Medicare hospital payments over 10 years for inpatient or overnight care through a downward adjustment in annual base payment increases. Next, Medicaid. The Senate measure would reduce Medicaid disproportionate share payments to hospitals by an additional $4.2 billion over the next decade. These cuts are on top of those made to hospitals in 2010 as part of the Affordable Care Act.

Groups representing hospitals said the new plans for reductions will hurt their ability to care for patients.

Robbing Peter to Pay Paul? Continue reading

Fiscal Cliffnotes: Is That Tax Break on Your Job-Based Health Insurance on the Table?

(Karl Eisenhower/Kaiser Health News)

(Karl Eisenhower/Kaiser Health News)

Then-presidential candidate Mitt Romney made headlines when he asserted that 47 percent of Americans were “victims” dependent upon government assistance. I’m guessing he wasn’t thinking of people who receive employer-based health insurance as being the beneficiary of government largess. But, the government loses a lot of money in the benefit.

Here’s how: First, people who receive employer-based health insurance do not pay taxes on its cost. Second, employers deduct the cost of the policies as a business expense.

As the fiscal cliff approaches, some policy wonks are saying the U.S. can’t afford that tax break any more.

As Julie Appleby reports for Kaiser Health News, it’s the largest cost to the U.S. Treasury, “an estimated $246 billion annually, according to Congress’ Joint Committee on Taxation, dwarfing the second-largest break, the mortgage interest deduction, which costs an estimated $98 billion.”

That is a lot of money. Continue reading

Fiscal Cliffnotes: If Medicare Eligibility Age Goes Up, People of Color Hit Hardest

While we all wait to see if President Obama and House Speaker John Boehner will hash out a deal on the fiscal cliff, one item getting a lot of discussion is raising the Medicare eligibility age, as I wrote about on Friday. Today, I was checking out Sarah Kliff’s twitter feed, and she pointed to UC Berkeley grad student Owen Zidar’s blog. Zidar’s post includes some eye-opening charts from economists David Card, Carlos Dobkin and Nicole Maestas writing in the American Economic Review.

Embedded in these wonky charts is an illustration of disparity:

And that disparity plays out in people not getting health care because of cost. Another snapshot of disparity:

This data was compiled before the Affordable Care Act was passed. We’ll have to wait and see how coverage and access change once the ACA is fully implemented in 2014.


Fiscal Cliffnotes: 6 Health Care Questions, Answered

By Mary Agnes Carey, Kaiser Health News

(Graphic: Kaiser Health News)

(Graphic: Kaiser Health News)

The so-called “fiscal cliff” is a package of automatic spending cuts and tax hikes set to kick in next month unless President Obama and Capitol Hill agree on a way to stop them.

Negotiations to avert the cuts are ongoing and both sides have exchanged offers. On one side, the president and congressional Democrats have said they will reduce spending on entitlements, including Medicare, if Republicans will agree to increase tax rates on the highest earners.

And on the other side, Republicans have agreed to more revenue — but by closing loopholes and eliminating some deductions. They oppose raising tax rates.

Here are answers to six questions about what could happen in health care before the end-of-year deadline.

Q: If no deal is struck, how would that affect Medicare patients as well as the hospitals and physicians and other providers who care for them? Continue reading

No Matter Who Wins, We’re Still Heading for A Cliff

By Julie Rovner, Kaiser Health News

(Su-Lin: Flickr)

(Su-Lin: Flickr)

Whatever the outcome on November 6th, officials in Washington will still have to deal with a looming “fiscal cliff” before the end of the year.

What’s coming is a perfect storm of expiring tax cuts, scheduled budget cuts, and various other spending changes scheduled to take place Jan. 1 unless Congress and President Obama (who, no matter what, will still be president until next Jan. 20) agree on a way to avert them.

As two of the largest spending items in the federal budget, the Medicare and Medicaid health programs are expected to play a role in how the deal gets done. Under the provisions of the law that created the budget deal Congress will attempt to undo, Medicare is subject to a two percent cut in provider payments, while Medicaid is exempt.

But two new studies and a proposed class action lawsuit settlement suggest a lot of dollar signs could change as lawmakers start to think about how to address the impending mess. Continue reading