What The Chairmen Of The Debt Commission Want To Do With Health Care

Earlier today, the two chairmen of the President’s Fiscal Commission — former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles — released their draft recommendations for how Congress can to achieve “nearly $4 trillion in deficit reduction through 2020” while reducing “the deficit to 2.2% of GDP by 2015.”

On the health care side, the proposal strengthens some existing provisions in the Affordable Care Act, calling for the expansion of successful payment reforms and a far stronger Independent Payment Advisory Board (IPAB), which will advise Congress on how to control health care spending. The proposal also embraces the oft-repeated GOP idea of tort reform and throws progressives a bone by recommending that a public option be inserted into the exchanges along with an all-payer rate setting system.

Beyond this, the chairmen call for a fix to the Sustainable Growth Rate (SGR) formula that is responsible for the coming pay cuts to doctors participating in Medicare and reform in program’s cost-sharing rules. One health policy wonk I spoke to lavished particular praise on the idea of replacing “existing cost-sharing rules with universal deductibles,” describing the program’s current structure outdated and too complicated.

As TIME’s Kate Pickert points out, one of the most interesting and significant proposals is capping the tax exclusion “for employer-provided health care at the amount of the actuarial value of FEHBP standard option.” By contrast the health law establishes relatively high caps — $10,200 for individual coverage and $27,500 for family coverage — that don’t got into effect until January 1, 2018.

For longer-term savings, the chairmen recommend setting a “global target” for total federal health expenditures after 2020 (Medicare, Medicaid, CHIP, exchange subsidies, employer health exclusion),” keeping growth at GDP plus 1%.

“What I see as a problem in a lot of this is that it seems to ignore the connection between Medicare and the rest of the health care system,” the Urban Institute’s John Holahan told me, noting that he had just given the report a cursory review. “If you really try to keep Medicare down that close to GDP you’re going to have to do things to provider payments that will make Medicare unattractive.” He argued that the proposal to cap the ESI tax exclusion “helps” but said, “with the increases we’ve seen in provider concentration, it is probably necessary to do something about payment rates as well.”

These proposals are not the final report of the commission. That will require the support of 14 of the 18 members, which many consider unlikely.


Another health wonk e-mails in to me: “I find the idea that malpractice reform would be an offset for the doc fix repugnant. Sounds like the AMA did an excellent lobbying job on the commissioners to get such a two-fer (with relatively modest scoreable savings — their staff estimate is a little high versus CBO’s previous work on this).

And the other offsets are basically deeper reimbursement cuts on top of the ACA — which is hard to imagine happening when the GOP just ran against the cuts in the ACA, but maybe in a deficit-reduction proposal that would fly after all.”

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,To clarify, the chairmen propose paying for the doc fix by “asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth” and paying providers less while improving efficiency, and rewarding quality. They’re also using savings from tort reform.

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