August 15th, 2011

From Kaiser Health News:

Why does the debt ceiling deal give liberals so much heartburn? Many reasons, obviously. But a big one is the possibility that it will trigger automatic cuts to Medicare, the jewel of the Great Society and the program on which virtually every senior citizen depends for health insurance.

Under the terms of the debt deal, which President Obama reached with Republican leaders in late July, a bipartisan “super committee” has until Thanksgiving to come up with at least $1.2 trillion, over 10 years, in deficit reduction proposals. But if this committee can’t agree on recommendations or if Congress fails to pass them – two very distinct possibilities – then a series of across-the-board spending reductions would take effect. Some of them would take money from Medicare.

The fear is that those cuts would leave the elderly without adequate financial protection or access to medical care. It’s a rational fear but, perhaps, not a necessary one. Talk to policy analysts, industry lobbyists, or advocates for the elderly, and you’ll detect an emerging, if tentative, consensus: The impact of automatic cuts would be relatively modest and, most likely, less severe than whatever that super committee would devise as an alternative.

By design, the actual benefit structure of Medicare would be exempt from the automatic cuts. That’s a critical distinction given some of the ideas under discussion in the past few months. At various points, negotiators from the administration and Congress talked about raising the age at which people become eligible for Medicare, charging higher premiums to beneficiaries with higher incomes, and forcing holders of supplemental Medigap policies to face bigger out-of-pocket charges for routine medical care. For better or for worse, or maybe for both, all of these changes would have meant less insurance coverage for seniors.

Read more from Kaiser Health News