‘Trigger’ in debt deal might be lesser evil for health sector

The political divisions over cuts to healthcare programs could be even sharper during the next round of deficit-reduction talks.

The debt negotiations that wrapped up this week centered on a single legislative package. But next time there will be two potential outcomes — targeted cuts crafted by a special “supercommittee” of lawmakers, or an across-the-board 2 percent cut in Medicare payments to hospitals and other healthcare providers.

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Although the trigger in the debt deal sparked an initial panic among healthcare stakeholders, some groups might well prefer it to the supercommittee’s more tailored — and potentially deeper — cuts.

The divide could be especially stark between Medicare and Medicaid, where tensions were already on full display during the last round of talks. Medicaid advocates worried for months that they were at a higher risk for cuts as Democrats focused their energy on Medicare.

The trigger mechanism in the debt-ceiling law doesn’t affect Medicaid, but the supercommittee is almost sure to examine many of the same cuts that were on the table over the past several months. 

Medicaid advocates acknowledge that the trigger, while seen broadly as a scary way to cut spending, could be the better outcome for them.

There are several proposals on the table to cut Medicaid spending, including one that President Obama has endorsed. It would blend various rates of federal support into a single percentage — which states say would simply shift costs to them. And Republicans want to eliminate a provision of the healthcare reform law that prevents states from cutting their Medicaid eligibility levels until 2014, when the program is set to expand.

Some stakeholders more concerned with Medicare might also prefer to take their chances with the trigger.

Alexander Vachon, a consultant with Hamilton PPB, said the trigger’s 2 percent cut to Medicare spending could serve as a “starting point” for the supercommittee; if the trigger will lead to an across-the-board cut of 2 percent, there’s little incentive for the committee to aim much lower.

Lobbyists said some medical specialties could face bigger cuts from the supercommittee than they would from a 2 percent reduction in total Medicare spending. That could pit certain specialties, such as home healthcare, against other doctors who have already taken major cuts and would probably be spared by the supercommittee.

The dynamic is further complicated by looming cuts to help pay for another short-term patch in Medicare’s payments to physicians. Doctors are slated to take a cut of more than 20 percent in January, and delaying that cut costs about $25 billion per year. Congress usually pays for those short-term fixes by cutting Medicare payments to providers, meaning another round of cuts is on tap shortly after whatever comes out of either the supercommittee or the trigger.