Although congressional Democrats quickly rejected the White House’s budget proposals calling for about $100 billion in spending reductions in Medicare and Medicaid, the healthcare providers targeted by those cuts know they must remain wary.
Healthcare industry organizations representing sectors such as physicians, hospitals and nursing homes responded swiftly and strongly to denounce the spending cuts.
The overwhelming concern of those businesses that rely upon Medicare and Medicaid payments for their financial well-being is that even if Congress tosses aside President Bush’s budget, Democrats, too, are keen to identify budget savings that can be redirected to pay for the party’s legislative agenda.
“Just because the Democrats are in control and you have a Republican president submitting a budget doesn’t mean we can rest on our laurels and assume that nothing is going to happen,” said David Hebert, the senior vice president of policy and government relations for the American Health Care Association (AHCA), which represents nursing homes.
In a broader budgetary sense, Bush has laid down a gauntlet to the Democratic Congress by submitting a plan that he says would balance the federal budget within five years by 2012. The question is, “Will the Democrats accept the challenge to a balanced budget by 2012?” asked Chip Kahn, president of the Federation of American Hospitals.
Democrats must reconcile their competing desires to promote their legislative agenda after years out of power and to prove they can be good stewards of the federal budget.
Bush’s spending-reduction targets represent his opening gambit; Democrats will need to respond with a plan of their own. That plan also could be bad for Medicare and Medicaid providers — even if it’s better for them than the president’s.
When the Bush administration signals that it wants to cut spending in a particular area, Democrats could interpret those signs as a free pass to seek their own cuts on the same items.
Bush is “in a sense offering cover to the Democrats for some lower number,” Kahn said. “He’s put a menu on the table. This is further complicated by the pay-go question,” as Democrats have promised to offset all new spending increases or tax reductions.
“Any time the administration proposes something, Congress may turn around and say, ‘We’re going to do this because we have cover,’” Hebert agreed. Bush’s budget seeks to reduce Medicare payments to nursing homes by $9.2 billion over five years. Other, less specific budget proposals could further reduce Medicare and Medicaid payments to the facilities.
“We’ll just need to be extremely vigilant,” said Michael Reinemer, the vice president of communications for the American Association for Homecare.
Even in times of divided government like these, the annual budget presented by the president can go a long way toward framing the debate.
Industries that do business with the government need to be careful their funding is not used to pay for other priorities.
“We’ll mount a very aggressive battle to make sure that doesn’t happen,” Hebert said.
Medical providers with less political muscle, such as firms that provide and service oxygen equipment in patients’ homes, could be more vulnerable to legislative action on spending reductions.
Many lawmakers know less about oxygen services than other Medicare benefits and may be more inclined to target them for cuts, according to Chris Kane, the vice president of government affairs for Pacific Pulmonary Services and a representative of the Council for Quality Respiratory Care. Kane noted that Congress and the administration already took several actions last year to trim their payments.
Trade association executives and lobbyists understand, and must communicate to their member companies or clients, that the budget proposal does not typically serve as a clear roadmap to congressional action. “We realize that this is sort of a political document and a wish list,” Reinemer said.
Even under Republican control, Congress was unable or unwilling to enact some of the more controversial spending reductions in federal healthcare programs sought by the administration, Reinemer noted.
Nevertheless, Reinemer said, “The president’s budget is something that we can’t ignore.” The fact that Democratic leaders and committee chairmen gave a chilly reception to Bush’s Medicare and Medicaid proposals in general is no reason to let the guard down, either, he said. “I didn’t see anybody leaping to their feet to defend our particular sector,” which is made up of firms that provide medical services in patients’ homes, Reinemer said.