Committee likely to recommend 'super' cost cuts for Medicare

September 1, 2011

The debt ceiling legislation finalized last month calls for significant reductions in federal spending over the next decade.

WASHINGTON-The debt-ceiling legislation finalized last month calls for significant reductions in federal spending over the next decade. A 12-member Joint Select Committee on Deficit Reduction is charged with identifying $1.5 trillion in spending cuts for the next 10 years by late November.

Tax increases and cuts in Medicare, Social Security and other key federal programs are on the table.

If this "super" committee cannot agree on a savings plan, the debt legislation calls for automatic budget cuts to go into effect in 2013, half from defense outlays and half from domestic spending. Medicare would face a 2% across-the-board reduction, which would hit hospitals and doctors as well as Medicare Advantage and prescription drug plans.

Some of the yet-to-be-distributed funds could disappear, including those set aside to start up new, not-for-profit Consumer Operated and Oriented Plans (CO-OPs) to compete in the exchange market. Many believe the CO-OPs will ultimately default on 40% of the government grants and loans.

While Congress was squabbling over the debt ceiling plan, officials in the Department of Health and Human Services (HHS) rolled out new requirements for preventive benefits. The latest list of benefits includes birth control, health screenings and counseling services specific to women. These requirements build on a list of services, such as mammograms, all required under PPACA without any co-pays or deductibles.

Insurers object that offering benefits without cost-sharing will lead to higher healthcare spending and steeper premiums. Critics note that the new mandates won't help women who lack insurance, and don't extend to existing health plans with "grandfathered" status. Catholic church officials and pro-life groups strongly oppose free birth control. And the growing list of benefit mandates raises concerns among plans and payers about the scope of "essential" benefits that HHS is finalizing for all plans sold on state exchanges.