NPR's Julie Rovner talks with Jackie Judd about the re-emergence of the "Gang of Six" senators in the debt-ceiling debate, what their plan means for the CLASS Act, and how missing details are likely to be filled in.
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JACKIE JUDD: Good Day, this is Health on the Hill. I’m Jackie Judd.
The proposal from the Senate’s so-called "Gang of Six" has injected some new life into efforts to raise the debt ceiling and settle on a package of spending cuts that would pass both chambers. President Obama's enthusiasm was evident at a surprise press room appearance on Tuesday, which also served as an opportunity for him to position Democrats as the party willing to compromise.
PRESIDENT OBAMA (SOUNDBITE): "We have a Democratic President and administration that is prepared to sign a tough package that includes both spending cuts, modifications to social security, Medicaid and Medicare that would strengthen those systems and allow them to move forward and would include a revenue component."
JACKIE JUDD: If the framework the "Gang of Six" developed does move forward, what might it mean for Medicare and Medicaid? Here to help us answer that is Julie Rovner, Health Policy Correspondent for National Public Radio. Welcome back, Julie.
JULIE ROVNER: Nice to be here.
JACKIE JUDD: There was some specificity and a lot of vagueness in the paperwork that came out from the “Gang of Six.” What do you divine by reading it?
JULIE ROVNER: Well, once again, the Senate – and, of course, this is a group of senators, three Democrats, three Republicans – likes to do these things by saying: Here committees, you do it. So the one specific that we know is that it would repeal the CLASS Act. This was a piece of last year's health overhaul law that would set up a long-term care program that would actually start next year, or at least start collecting premiums next year. You would have to pay in five years before it would vest and start to pay out benefits. This was sort of the last great proposal from the late Sen. Edward Kennedy, who, because – remember, Medicare doesn’t really pay any long-term care expenses. Medicaid pays long-term care expenses, but you have to divest yourself of basically everything you own to get it. So this was an idea to have the government have a self-paid long-term care plan. Now this would not cover…
JACKIE JUDD: So how would it save money?
JULIE ROVNER: That's a good question, because the way this was set up is it wouldn’t pay for nursing home care. This was - the CL part of the CLASS Act stood for Community Living – so this was to be care, basically in the home, to keep people out of nursing homes. And it would be supposedly a relatively modest premium that you would pay over your working years – it would be automatically deducted from your paycheck. But it was written so that it could not have a draw on the Treasury; that it would be self-supporting. And , in fact, it was written specifically so that it could not become – you know, a lot of people who hated it said that it was going to become a new entitlement, because it wouldn’t be self-supporting, and there were worries about that, but everything…
JACKIE JUDD: So is this an inducement to some reluctant Republicans to come on board with this?
JULIE ROVNER: That’s how I’m looking at it. I don’t think it’s a budget saver, per se. I don’t think the CBO will look at this and say it will save x amount of dollars, because I don’t think the CBO ever looked at it and said it will cost x amount of dollars. There were, as I mentioned, a lot of concerns about whether or not it would pay for itself, but I don’t think it ever was scored as having a draw on the Treasury. On the other hand, a lot of Republicans, and some Democrats, really had major doubts about this. So its repeal, I think, would be an attraction to gain some Republican votes saying: See, we’ve taken a piece away from this health law that we really didn’t like.
JACKIE JUDD: Now, the larger piece, of course, is there is a suggestion to cut $500 billion -- to get that from health savings -- but not a lot of specificity.
JULIE ROVNER: That’s right. And, in fact, the way you get to that number is that one of the things it says is that you will fix the physician fee problem.
JACKIE JUDD: The "doc fix."
JULIE ROVNER: The "doc fix," that’s right -- that we’ve spent so much time at this table talking about. You will take away this continuing Sword of Damocles hanging over the head of the nation’s doctors who serve Medicare patients. Now they’re looking at a 25 percent cut that will start next January 1. To make that problem go away, to solve the formula problem that’s been going on, basically, since 1997, but has been threatening cuts since 2001 -- cut’s I might add that have never taken effect with the exception of one year -- to fix that whole thing and start over again fresh costs about $300 billion.
JACKIE JUDD: Which still leaves them $200 billion short.
JULIE ROVNER: That’s right -- well, no. What it says is: Fix that problem and pay for it. So that’s $300 billion. Then it also says: You will come up with $200 billion in other health care savings. It says to the Finance Committee, you will do that. Those two things together are about $500 billion. That, interestingly, is about how much they cut out of Medicare when they were doing the Affordable Care Act last year. So it’s another $500 billion in Medicare savings that they would have to find within six months. That’s a lot of money. Finding $500 billion in Medicare reductions was a big push. They got the providers to go along with it in the Afforable Care Act, because the providers knew that they’d be getting a lot more people with insurance. So there was an enticement for them. They were getting something in return. Now it’s just another $500 billion in reductions. That’s not going to be a big enticement.
JACKIE JUDD: And you mentioned: That’s a lot to do in six months.
JULIE ROVNER: Yes it is.
JACKIE JUDD: The debt ceiling, if it’s going to be resolved, needs to be done by August 2 or before. So is the idea that’s emerging that there could be a short-term agreement on raising the debt ceiling and everything else that the “Gang of Six” is proposing, this framework, would be dealt with in the coming months.
JULIE ROVNER: That’s what this deal says, that the president has endorsed. Just today the president’s spokesman, Jay Carney, suggested that the president -- who has heretofore said he would not sign any short-term extension of the debt limit -- has suggested that if there is an agreement on this package -- because remember even getting this package together in time to get it through the House, get it through the Senate and get it to the president is probably going to take more than just the week and a half we have left. Now he’s saying that the president might sign a short-term debt ceiling extension for the time it would take to get this through. But I don’t think it would perhaps for those six months that we’re talking about.
JACKIE JUDD: So it would kind of be the honor system that six months from now these serious cuts would in some form be enacted?
JULIE ROVNER: Well, that's the way this is written.
JACKIE JUDD: Okay.
JULIE ROVNER: And of course it would have to go through the House, too.
JACKIE JUDD: Whatever happens in the next six months or so, it seems to me that there possibly has been a change in the political dialogue. When you have Democrats -- when you have the president of the United States, a Democrat himself -- talking about modifications, cuts -- whatever words you want to use -- to Medicaid and Medicare seems fairly remarkable.
JULIE ROVNER: It does. But none of this has happened yet. It’s a huge give for the Republicans, for their base, to talk about revenues. Remember there’s supposedly $1 trillion of revenues in this package. There’s a lot of money in revenues in this package. And to have Democrats, who have really been going to political town on the Medicare cuts that were proposed by the Republicans, particularly House Republicans in House Budget Committee Chairman Paul Ryan’s budget -- Democrats don’t want to give up that advantage they have on Medicare. Republicans don’t want to give up the advantage they have on no increases in revenues. So to have either side come back toward the middle on that is a big give. And that has been the standoff all the way along.
Then again, as we have talked about many times: There are revenues and revenues. You can get tax rate increases, or you can close loopholes. Same thing is true with Medicare and Medicaid. You can have cuts that truly effect beneficiaries -- you can raise premiums, you can raise co-payments, you can raise the age of eligibility -- or you can do things that simply make the program more efficient -- or you can nick providers but not cut them so much that they’ll stop serving patients. You can do things to reduce the amount of spending that the program does without actually impacting in a negative way the people that it serves. So you can reduce the amount that Medicare spends without necessarily hurting the people that it serves. Not so easy, but possible.
JACKIE JUDD: Well, we will still have to wait to find out from that menu that you just laid out what Congress and the president choose. Thank you Julie Rovner of National Public Radio.
JULIE ROVNER: You’re welcome.