The Gang of Six and Health Care

Today’s Managing Health Care Costs Indicator is  Six

The “Gang of Six,” Chambliss (R-GA)Coburn (R-OK), Conrad (D-ND), Crapo (R-ID), Durbin (D-IL), Senators Warner (D-VA), presented their comprehensive plan to raise the debt ceiling, overhaul the  tax code, and balance the budget.   The group has only published an executive summary  –and there is a lot about health care in this proposed arrangement.

  • The Sustainable Growth Revenue (SGR)  mandatory cuts of physician fee schedules are eliminated.  This costs $300 million, and is a nod to reality since the SGR has been legislatively eliminated every year since the first cuts would have been implemented.
  • An additional $200 million in health care spending would be identified – including reducing waste, fraud and abuse, while “maintain[ing] the essential health care services that the poor and elderly rely on.” It sounds to me like this means that Medicare cuts won’t be in the form of higher patient premiums or cost sharing , although others disagree.   No one is in favor of fraud, although rooting it out is pretty hard in practice.    
  • The CLASS (Community Living Assistance Service and Supports) Act is repealed.  This doesn’t save any money over the next decade, when workers would voluntarily contribute and have little opportunity to get benefits. There’s been little employer interest in participation, though, and it would be hard to make this insurance program actuarially stable. If premiums for CLASS were expensive, only those who bet they would need it would participate.  If premiums were inexpensive, it would be hard to cover the bill’s costs.  Therefore, over a 20-year time horizon this repeal does save money. It could also increase Medicaid costs, since that state-federal program picks up much of the cost of those who are not able to stay in the community and move to nursing homes.
  • The Congressional committees overseeing health, education, labor and pensions would have to identify an additional $70 billion in savings
  • The proposal would require the President and Congress to take unspecified action if federal health care costs per beneficiary increased by more than GDP growth plus 1%.   This language is especially important – because it allows for increased federal spending for the aging of the population and for increased Medicaid enrollment.  It’s also similar to the SGR formula – in that the remedy for increased cost growth is unspecified.
  • Unspecified federal savings from malpractice reform are included in the proposal.  Malpractice savings to the federal government from tort reform are likely to be low –but lack of tort reform was a notable omission in the Affordable Care Act. 

The lack of specificity of the plan makes it more likely to gain support – and this does appear to me to include substantial “gives” on all sides.