Sebelius says reform law takes steps toward entitlement reform

Health and Human Services Secretary Kathleen Sebelius framed controversial pieces of the new healthcare law as first steps toward entitlement reform as Republicans asked why the administration hasn't put forward more aggressive cuts.

Sebelius criticized Rep. Paul Ryan's (R-Wis.) proposal to convert federal Medicaid funding into block grants for states during a House Education and Workforce Committee hearing Thursday. When Republican lawmakers pressed her to articulate the Obama administration's alternative proposal to rein in entitlement spending, Sebelius pointed to two provisions of the new law.

The law created a new board of independent experts that will recommend cuts in Medicare payments. Its recommendations will take effect automatically unless Congress votes to block them — and comes up with equivalent savings. Many Republicans oppose the board, and some Democrats have been lukewarm about handing over rate-setting authority to an unelected board.

Sebelius said the panel represents "a big step in terms of entitlement reform that actually doesn't potentially cause harm to our seniors." She also noted an HHS effort to create new systems for dealing with people who are eligible for both Medicare and Medicaid. Those patients represent a disproportionate share of the programs' costs.

Opponents of Ryan's Medicaid plan have said services for the so-called "dual-eligible" beneficiaries would likely be the first place states would look to cut under a block-grant program.

Better care for dual-eligibles would also be more effective than allowing states to cut Medicaid eligibility, Sebelius told reporters after the hearing. Republicans have introduced a bill to repeal a provision of healthcare reform that blocks states from making cuts until 2014. The effect on patients wouldn't be worth the "very small" savings projected by the Congressional Budget Office, Sebelius said.

CBO estimated that the bill would save $2.8 billion over five years and $2.1 billion over 10 years.