What a difference three weeks makes! Before the election, Republicans said they wouldn’t consider tax hikes, and Democrats insisted that they wouldn’t touch entitlement programs. Suddenly both sides are hedging their bets, to the point where the second-ranking Democrat in the Senate said Sunday, “Bring entitlement reform to the table” in the fiscal-cliff standoff:
Sen. Dick Durbin said today that his Democratic colleagues in the House and Senate should be willing to address entitlement programs like Medicare and Medicaid in deficit reduction negotiations.
“From my side of the table, bring entitlement reform into the conversation,” Durbin said on “This Week with George Stephanopoulos.” “Social Security — set aside … doesn’t add to the deficit. But when it comes to Medicare and Medicaid, protect the integrity of the program, but give it solvency for more and more years.”
James Carville went even farther last night, telling CNN’s Erin Burnett that entitlement cuts would inevitably take place in a fiscal cliff deal:
On CNN’s “Starting Point” Monday night, CNN contributor James Carville said Democrats will have to concede some significant cuts to Medicare to avert the so-called fiscal cliff.
“They have to negotiate something on Medicare,” Carville said. “There’s no doubt about that. Remember, the person doesn’t get the Medicare payment. The hospital or doctor, the pharmaceutical, whoever it is, gets that. … It’s obvious that there are going to be some kind of entitlement cuts that come out of this.”
Both parties seem a little shocked that neither gained or lost serious ground in the last election, and that might be making them at least temporarily willing to make a quick deal with some serious concessions in order to get this off the table. Medicare is really the biggest driver of future debt; a serious reform that resolves the unfunded-liability avalanche to a significant degree is worth some concessions to achieve, assuming (a) those reforms are real, and (b) they can’t be undone — like the bipartisan welfare reform work requirements Obama mooted a few months ago.
National Journal thinks that a revived Medicare Advantage competition plan from the liberal group Center for American Progress might be a good starting point:
The future of Medicare was a potent issue during the campaign, with Democrats and Republicans offering sharply different views. Romney and other Republicans pushed to have Medicare compete with private plans in an open marketplace, betting that consumers’ power of the purse would drive down the ever-growing costs of the programe. Democrats strongly opposed that plan, saying it would not actually reduce spending and would instead end up costs seniors thousands more than the traditional Medicare coverage they have today.
But just a few weeks after the election, the liberal Center for American Progress issued a report proposing $385 billion in health care savings over 10 years. Finding money in the mammoth federal health program is important in the “fiscal cliff” talks, as Republicans are demanding cuts to entitlement programs in exchange for tax increases on the wealthiest Americans in working out a deal to put off $1.2 trillion in automatic cuts to government spending.
One of the center’s proposals? Adding competition into Medicare. Specifically, the group wants companies that make Medicare equipment to offer bids on prices, as opposed to the current practice of paying those companies a formulaic rate. The Affordable Care Act established a bidding system for “durable medical equipment”—things like hospital beds and oxygen tanks. The program has wrung savings of $200 million from Medicare so far.
But beyond bidding on goods, CAP also proposed having private Medicare plans, known as Medicare Advantage, offer bids for covering seniors. The federal government would then pay plans an average amount of the bids. That method would differ the current Medicare Advantage system. Now, the feds pay plans at a rate based on the expected cost of Medicare in their region of the country. It ends up costing the federal government on average 112 percent of traditional Medicare.
Republicans have cautiously applauded the effort, NJ’s Meghan McCarthy reports, but not without some reservations:
“On the face of it, the idea sounds reasonable enough – encourage plans to lower premiums by offering a variety of choices. But the catch here – as in the rest of the CAP proposals – is that ‘competition’ is government-defined, government-mandated, and government-prescribed,” wrote Chris Jacobs, a senior policy analyst for the Sen. Jim DeMint, R-S.C., on the Joint Economic Committee.
Perhaps it is too early in the process of avoiding the fiscal cliff and finding a grand bargain to reach common ground. But Medicare Advantage may just be the place where Democrats and Republicans find it possible to inch closer toward compromise.
Perhaps in this case, the third time running up to the fiscal cliff will be the charm.