In July of 2011, President Obama offered Republicans cuts to Medicare, Medicaid, and Social Security. The written offer is HERE.
Last week, President Obama, made a similar offer to Speaker Boehner. The paper of record described this as a bold set of demands. Republicans rejected it as insufficient. This writer’s initial rejection consisted of a rejection of the secrecy about President Obama’s proffered cuts to Medicare and other entitlements of about 400 billion dollars. Why be mysterious, Mr. President?
The July 2011 offer included 150 billion dollars in cuts to providers. If this is part of yesterday’s offer, will doctors refuse to take new Medicare patients, if their payments are cut? Will they go and work in foreign countries, or take early retirement? The July 2011 offer included 150 billion dollars in cuts in Medicare premiums, copays and deductibles. If this is also part of yesterday’s offer, will patients forego food, rent for premiums. Will patients forego seeing the doctor to avoid copays and deductibles? Both of these two cuts directly impact the quality of healthcare for Medicare recipients and possibly their quality of life. Is that why President Obama has been mysterious as to the cuts and their specifics?? These cuts would represent broken promises made to Medicare recipients.
The July 2011 offer included 125 billion dollars in cuts to Medicaid, in a reduction to “Medicaid FMAP“. Since low-income folks who depend upon Medicaid will be impacted by those cuts, will these also be included in the 2013 cuts/deal with the Republicans? Because if they are, they represent a betrayal of the promise to provide equality of access to healthcare for people of all social and economic classes.
In July 2011, President Obama offered to alter the age of eligibility for Medicare. In addition, he offered to adjust premiums collected for services, and benefits currently covered under Part B and Part D. These offers represent broken promises. Is that why President Obama does not discuss the specifics of 400 billion dollars in cuts to Medicare and entitlements? The paper of record says that the proposed cuts are the same as offered in 2011. What are we to think then? Why of course they are. A President can save a hundred billion dollars by raising the Medicare age to 67. (148 Billion dollars between 2012-2021.)
Back in 2011, the President and his staff refused to be specific about the cuts they had proposed to Medicare, Medicaid and Social Security. In hindsight, I could guess that they might have felt ashamed to have offered to cut into timbers of the remaining social safety net superstructure. The failure to be transparent and specific about the nature of the cuts proffered to the Republicans now makes sense. Why discuss openly such shameful acts?
But what does it mean that we have such inequality? ……..That we would nick the super wealthy for 160 billion a year and the middle class for 40 billion a year and call that fair? ……….They will trade us half a yacht for a whole, life-saving Medicare surgery! And you can wait two more years to be eligible for the surgery!
Updated, Sunday, December 2nd, 2012:
A Republican counter-offer and a note about the Democrats’ key strategist, Jack Lew.
In response to the President’s offer of 400 billion dollars in cuts to Medicare and other entitlements, the Senate Minority Leader has offered to raise Medicare’s eligibility age 2 years, to means test Medicare, and to institute a benefit cut to Social Security through applying a chained CPI. This is basically the Democrat July 2011 final offer! They also demanded to block grant Medicaid.
In a hint at where this is headed, a NYTimes article, Aide to Obama Faces Big Test In Fiscal Talks, we learn that Jack Lew is the strategist. Unfortunately, in the past, he was responsible for offering to raise the Medicare eligibility age from 65 to 67. Here is the quote:
“The challenge now for Mr. Lew — and for Mr. Obama — is to forge an agreement that does not cut too deeply into the entitlement programs that Democrats cherish. Like Mr. Obama, Mr. Lew is a pragmatist; one person familiar with his thinking said he had previously expressed willingness to raise the Medicare eligibility age from 65 to 67, a move that many liberals oppose.”
We also learn in the same article that Mr. Lew was involved in the July 2011 negotiations over the debt ceiling and that he was an aide to Tip O’Neill during the 1983 deliberations which resulted in raising the Social Security age of eligibility from 65 to 57. He worked for Citigroup before being asked to serve in President Obama’s administration. In my opinion, I expect a repeat performance from Mr. Lew. (Wealthy family=>Harvard=>cuts to SS in 1983 w/Tip O’Neill=>Wealth=>White House budget advisor 1990s=>Citigroup=>White House Key Strategist for long term deficit reduction cuts.)
Meanwhile, to scare all of the buffalo into the White House trap, Plouffe sent out a really scarey email:
And in a message to the millions of people subscribed to the White House e-mail list, David Plouffe, a senior adviser to Mr. Obama, urged supporters to keep the pressure on lawmakers and warned of the dire consequences if the negotiators were unable to find common ground.
“Unless Congress acts, 114 million middle-class American families are staring down a tax increase starting January 1,” Mr. Plouffe wrote in the e-mail.
The real victims are the unemployed who stand to lose their UI at the end of this year. This phoney crisis is becoming more UI hostage taking, and income tax hike blackmail. But this phoney crisis, if it becomes a powerful lever for long-term cuts to important programs, will have negative impacts too. Negative economic projections , which are the basis for deficit hysteria, can become a self-fulfilling prophecy.
In a Politico article, “No Medicare Hit For Seniors? Good Luck with that.” (By Jennifer Haberkorn & Paige Winfield Cunningham.), the authors reviewed possible significant cuts to Medicare which might approximate the cuts demanded by the Republicans and proffered by the Democrats, although undefined by the latter. Their basic theme is that if either party claims that Medicare can sustain significant cuts without reducing benefits to recipients, they are being unrealistic. (I cannot access a link to their article because it is behind a paywall.) There is another document available on the internet which does outline cuts to Medicare: The Senior Protection Plan by the Center for American Progress. The Orwellian title (Those sound like ’broken promises’ to seniors to me.) belies facts regarding the billions of dollars involved in each of the proposed cuts. The 49 page “deficit hawk” document is worth reading, if only to convince you that the Beltway wizards think they have a real plan. However, Haberkorn & Cunningham demonstrate the long-range implications for these proposed cuts: either beneficiaries are hit with higher copays, deductibles, premiums, and have difficulty finding insurance coverage if eligibility age is raised; or providers are zapped with reduced payments for doctors services and hospital services. In addition, in another significant cut, pharmaceutical companies would have to agreed to significant cuts around 112 billion dollars. The largest cut would come from raising the Medicare retirement age from 65 to 67, cutting 148 billion dollars between 2012-2021. Other smaller cuts to Medicare cuts would reduce payments for training future doctors (residencies) and payments to hospitals serving special underserved zone hospitals, such as those in rural areas. The CAP plan makes cuts sound all so painless, but the healthcare analysts show that cuts have real consequences for patients and providers.
Update: December 4th, 2012
The most significant change to Medicare found in the Orwellian “Senior Protection Plan” was a strategic move to place Medicare patients into a form of HMO managed care. While advertised as more care for less money, I would describe this as “least amount of healthcare imaginable”, especially as the organization receiving the total payment can skim 60% of the savings of not providing care they were paid to offer.
Here’s a quote:
Under the Affordable Care Act, teams of providers can form “accountable care organizations” that are accountable for all of a patient’s care. Medicare sets a target for Medicare spending for each accountable care organization. If actual spending falls below the target, accountable care organizations can keep up to 60 percent of the savings. They must meet performance targets on measures of the quality of care, and can keep higher shares of savings for higher performance.”
The other insidious reduction made is to Medicaid by mandating that HMO’s in Medicaid stick to a competitive bidding process instead of receiving a fixxed payment from States (which currently sets the standard of care). Folks, this is a race to the bottom.
Reinforcing that this is the Democrat’s plan is the subsequent report, out today, from CAP, which includes 385 billion in cuts, identified as those described above. Spending cuts begin on Page 17.



15 Comments

If the goal is to control costs, there are many other ways to control or reduce medical costs besides shifting costs to the consumer or delaying access to benefits. Cost controls for hospitals would be helpful. Here’s an example of excessive costs from an article in the NYTimes:
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The problem is political. The health industry is not going to voluntarily regulate itself so that everyone can have access to affordable, quality care. Only good government can do that.
But this topic is besides the point, which is that the goal of fairness demands that we not deprive people of healthcare. And we certainly should never rationalize that it is ‘fair’ to exchange resetting tax rates to where they should be, for reducing healthcare services to any group or person.
Women would lose BIG in any grand bargain.
Excellent article in the Atlantic makes the point that this is not ‘shared sacrifice’ using concrete examples.
It’s like this. Folks in the US pay twice per person what folks in other industrialized nations do for healthcare and receive poorer results with maybe 40 million uninsured. Since the total of healthcare costs for the US is $2 trillion a year, in principle you could cut $1 trillion out and reorganize the system to provide much better results. There is a lot of waste, overcharging, and mega-salaries in the healthcare system.
In addition Medicare acts as benchmark pricing of insurance companies in holding down “usual and customary” prices. Those physicians who refuse Medicare patients either have an inflated idea of their value as specialists or are primary care physicians whose rates are shockingly low. This is a Medicare problem that can be fixed. And it will translate into some savings in non-Medicare healthcare. More extensive preventive care can save money through allowing people to avoid more serious and expensive conditions. There is a lot of room for reductions in Medicare cost without reductions in services.
The July 2011 proposal is now a dead letter. The GOP didn’t accept it, did succeed in forcing $1 trillion in cuts and an automatic sequester discretionary spending. The President has excluded Medicare and other entitlements from that sequester because they are—entitlements by law. So any $400 billion in savings from Medicare would have to come from administrative efficiencies and holding down the inflation in provider rates or from changes in the law that governs Medicare. And $400 billion over 10 years is $40 billion a year on average, which likely will be backloaded. So the reality of that amount of money actually being cut depends on the political environment of the next ten years.
And that is in place of the $716 billion of programmed savings over ten years in Medicare programmed into the Affordable Care Act, not in addition to.
Right now it looks like no grand bargain is going to happen and that the Bush tax cuts will end automatically, the sequester take place automatically, and the political environment will change come January.
And President Obama has shifted tactics from offering spending cuts to demanding that the GOP put on the table what the want as spending cuts. That breaks the “only a Democrat can end the New Deal” expectations and puts the political onus on the GOP. For now, it looks like elections have consequences.
Simpson and Bowles have been charging $40,000 each a speaking engagement to go talk up the Simpson-Bowles recommendations. Grifting on their public service is not going down well with the public as that becomes known (based on my limited sample for Facebooking folks from across the political spectrum).
Finally, any material cuts to actual Medicare healthcare services, would produce a political backlash that could very well propel a Medicare for All system into being.
David Dayen has a chart from Think Progress.
Oh, those kids and their tents!
https://www.facebook.com/events/521369424540062/
The biggest driver of health care costs that absolutely no one ever addresses is the unreimbursed costs of caring for the uninsured. All that so-called “free” healthcare available at the friendly emergency room.
Here in Montana, each year our hospitals report to the Governor the amount of “free” care they provide to indigent/uninsured patients. The amounts are staggering. In my city, Missoula, our two hospitals report amounts of around $10-$12 million each. Per year. The hospitals in our other cities also report amounts in this amount more or less as well. Montana is a state with a small population and our cities are small. Our hospitals are first-rate, but they are not large either.
This is why the cost of an aspirin is $10 each. Why it costs so much for every little thing. These hospitals have to keep their doors open for everyone – including all those uninsured patients they are required by law to provide care for. $10 million per year! And do they are forced to pass those costs along to whoever they can to get those costs covered.
Having more people with health insurance – however that happens – will slow the growth in costs simply because there will be fewer people showing up at the ER as their primary health care, and more people who have some way to actually pay for the care they get. Slowing the growth of the costs of care will be what eventually results in better and more accessible care for everyone. That is the ultimate win for the ACA – getting more people covered. Yes, it’s messy. Yes, it doesn’t do the job completely. It’s only a first step. We can fix the bad parts.
So let’s just not throw the baby out with the bath water already!
Folks, thanks for helping out on this.
I am responding strongly because of the July 2011 proposed cuts to Medicare, Medicaid, and Social Security. And, as recently as this week, we have Plouffe referring to Medicare and Medicaid as “the main drivers of our deficit” when truth is, we had this economic crash in 2008 which is the driver of our current deficit. And, he is insisting that these cuts are part of solving the fiscal cliff too. So, this morning’s announcement of 400 billion in future cuts to Medicare and entitlements is the inspiration for this post.
Tarheel Dem, I would be happy to be wrong about the relevance of the 2011 cuts.
marym in Il, I will check out that chart. Thanks.
Go Durbinville, yeah!
At current rates, $12 milllion is the Medicare rate for 48 month-long end-of-life hospital stays, plus physicians, x-rays, and everything. Are the hospitals basing this on their costs or their lost revenues?
I hope they get a lot of folks out for that. Those Chicago folks are keeping the pressure on.
While I agree that raising the eligibility age isn’t a good way to save money out of medicare, I haven’t heard that being offered yet. I’ve heard a virtually endless parade of pundits speculating that it might be offered up but let’s face it: that is so unpopular among all voter demographics and there is so little payoff for it, I just don’t see that happening. Too big a risk for too small a return. Even if Obama can’t run again, he requires Congress to enact a plan. There are many overcharges, double payments and so forth that would save money. Negotiating drug prices would save enormous amounts of money. I don’t think it’s time to panic yet.
If you are familiar with Obama’s record, it is past time to panic. He has taken and expanded all of Bush’s bad economic policies. For verification with about 350 references see
Economy – http://newprogs.org/blog/2011/11/10/economy-under-democraticrepublican-uni-party and
Economic Graphs – http://newprogs.org/blog/2012/03/02/economic-graphs
In addition to Obama in 2011 putting raising the retirement age on the table, Durbin has been saying this week that he just wants to wait a few years to do it till they can throw seniors
under the busonto the exchanges for a few years. (ACA – “first step” to privatizing Medicare?).Why give them that time to keep chipping away at the whole idea of Medicare? We should start the pushback now, demanding no raising of the eligibility age, and be bold enough to start the conversation about lowering the age.
Was in reply to Margaret @ 11
The between-the-lines insidiousness of these cuts is apparently the 10 year to 20 year timeline. Who are these wizards who can predict the economy (we will all be peasants) in the distant future regarding healthcare? No jobs programs in the works either.
Durbin in Mary’s link at #13 is saying he is just waiting for the ACA to kick in before switching out 65 for 67 year eligibility for Medicare. Most polls show majorities opposing this kind of cut for Medicare. Apparently, we don’t ‘count’, and we are quietly receiving the ‘contempt’ of these leaders.
Mary. We need to protect ourselves by creating our own autonomous,caring communities. i.e., ‘If my kids cannot find work or fund their future retirement because this government won’t provide jobs and Social Security, then I need to make up the difference in whatever way I can.’ Don’t let them break up the generations by letting them create artificial, differences and divisions.