Could A Deal Be Near to Avert the Fiscal Cliff?
Negotiations between President Obama and House Speaker John Boehner, R-OH, seem to be gaining momentum as each side has made offers and counter offers that have moved from their original positions. Speaker Boehner recently declared that he was willing to raise taxes on the top earners provided that the president agrees to some entitlement reforms. The president countered with an offer that he would be willing to raise rates on those earning $400,000 and over, up from his stance of $250,000. Obama also offered a deal that would include $800 billion in spending cuts, half of which would come from federal health programs and $122 billion of which would come from changing the way the federal government calculates inflationary updates to Social Security benefits. Some Democrats have indicated that they would be open to this change in Social Security provided that it is part of a larger package of spending and tax reform.
Obama’s offer would also prevent the nearly 30 percent cut in Medicare physician reimbursements scheduled for Jan. 1, 2013, but at this time it is unclear how long the fix would be and at what rate. We have been hearing that a one year freeze to the physician cuts would cost around $25 billion over ten years. Some of the “pay fors” initially discussed for the physician fix were causing some heartburn in the physician community and among hospitals. For example, one idea was to equalize evaluation and management payments in the hospital setting, which is estimated to save $15 billion over ten years. However, the hospitals are adamantly opposed to this, as are primary care physicians.
The physician community has been emphasizing that the Medicare cut needs to be prevented, but that we oppose cutting physicians to pay for physicians. Since the physician doc-fix will likely be part of a larger deficit reduction package, the cost of the fix will need to be offset and Congress will likely look for savings within the Medicare program. So, the physician community again faces a scenario in which Congress will “rob Peter to pay Paul,” and is even discussing eliminating an increase in primary care reimbursement in Medicaid — a telling sign of the times since both sides have been empathetic to primary care’s plight for increased reimbursement at the expense of other specialties. Having said that, it will be nearly impossible for one specialty to receive a bigger increase at the expense of another given Congress’ reluctance to weigh in on deeming values to particular procedures and services.
The speaker has announced that he will also push a “plan B” measure, absent a deal with the president, to ensure that taxes do not go up on households earning below $1 million. The speaker has indicated that he will continue to negotiate with the president, but this plan may give some members of the Republican party cover as a larger package is being ironed out.
The AGA continues to closely monitor this extremely fluid process and will keep you up to date on the latest developments. In the interim, it is not too late to contact your legislators to encourage them to stop the cuts to Medicare physician reimbursements and NIH. We thank those members who have taken the time to reach out to Congress and urge you to continue to do so until a deal is reached that prevents the cuts. You can contact your legislator either via email or through the AGA toll-free hotline at 1-855-806-2387. Learn more about the AGA Virtual Advocacy Campaign.
Stay tuned for more developments on the AGA Washington Insider and AGA eDigest.