This Is Why It’s So Hard To Cut Medicare

Have you ever had a friend who
is chronically about to start a diet? Yes, he admits, he needs to
reduce his calorie consumption, and he has for a while. That’s why
he’ll be starting a new eating regime tomorrow, or maybe next week.
And because he knows how hard it is to cut back—he’s tried
before—he’s not planning on making major changes, just trimming a
little bit over time until he hits his goals. But tonight, he’s
hungry, and his stomach is grumbling rather loudly, so why not
feast a bit more before the fast?

Even if you’ve never met someone like that, you can get a
similar experience just by following various attempts to cut
Medicare spending. Yesterday, for example, the Centers for Medicare
& Medicaid Services (CMS)
announced that a proposed 1.9 percent cut to Medicare
Advantage, which allows seniors to get Medicare benefits through
privately run plans,
would not go into effect. Instead, the new rates for the
program will likely result in a 0.4 percent spending increase.

This is not the first time that Medicare Advantage cuts have
conveniently transformed into increases. Last year, CMS initially
proposed a 2.2 percent cut—which, over the course of a few months,

evolved into a 3.3 percent hike.

In both years, what happened between the initial proposal and
the final was the same: an intense lobbying campaign by insurers
who get paid by the program, as well as heavy political pressure
from both sides of the aisle.

Insurers began their campaign in January this year,
before the proposed cuts were even formally announced. A
bipartisan group of 40 senators, led by Sen. Mike Crapo (R-Idaho)
and Sen. Chuck Schumer (D-N.Y.), sent a
letter to CMS head Marilyn Tavenner expressing concern about
the cuts. “Given the impact that payment policies could have on our
constituents,” the letter said, “we ask that you prioritize
beneficiaries’ experience and minimize disruption in maintaining
payment levels for 2015.”

The stomach grumbled, and CMS listened.

The Medicare Advantage reversals in many ways recall the
long-lived saga of the Sustainable Growth Rate (SGR), a formula put
in place in the late 1990s to keep Medicare payments to physicians
in check.

The original thinking was that the formula, which is designed to
keep physician payments on a steady trajectory in line with the
overall economy, wouldn’t require cuts. But in 2002, when the
economy didn’t keep growing at late-90s rates, and the formula
began to call for cuts, Congress balked, replacing the cuts with
short-term increases—a pattern it has repeated over and over again,
for more than a decade. Indeed,
yet another one-year patch to the SGR, overriding a large
scheduled cut, was passed just last week—in a deal worked out
between Republican Speaker of the House John Boehner and Democratic
Senate Majority Leader Harry Reid.

The fast can always come later.

This is a debate that sometimes scrambles easy assumptions about
party roles in the entitlement fight: Republicans, from
presidential candidate Mitt Romney down to Florida special election
victor David Jolly have been quite successful at hammering the
Obama administration for cutting Medicare in order to pay for
Obamacare. 

At the same time, it exposes the hollowness of both parties’
claims to fiscal responsibility. The Obama administration is
counting on
$156 billion in Medicare Advantage cuts by 2022 in order to
help finance Obamacare; but the strength and influence of the
opposition, which includes more than a few prominent Democrats,
means no cuts to the program are ever a sure thing. Republicans,
meanwhile, make the already treacherous path to Medicare reform
even more difficult with their constant complaints about Democratic
cuts to the program. For both parties, the time to feast is always
now. The time to diet, or cut Medicare, is always later.