Healthcare reform to be gutted: cost-sharing subsidies NOT EXEMPT from debt deal's automatic cuts

nashville_brook

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Thu Aug-04-11 07:07 PM
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Healthcare reform to be gutted: cost-sharing subsidies NOT EXEMPT from debt deal's automatic cuts

Those among us still rooting for an Obama win in 2012 should be very concerned about this. Written into the debt deal the mechanism to defund and dismantle Obama's signature policy victory, the Affordable Care Act, otherwise known as healthcare reform (or the offensive, "Obamacare"). Between Thanksgiving and Christmas 2011, well before the program is slated to be implemented, the Supercongress must *successfully* agree to $1.5 TRILLION in cuts or else the ACA gets cut right along with everything else.

The Affordable Care Act doesn't have room for cuts, as the subsidies are far too small as it is. Interestingly, Digby points out that Obama might be willing to ax ACA anyway b/c supposedly it's not polling well among Independents.

Just in case anyone's wondering, health care reform will be the next hostage taken in Obama's Grand Capitulation, er, Grand Bargain. All the GOP has to do is stand in the way of raising revenues and the ACA is history. So, remind me again, what incentive they have to negotiate in "good faith." :rofl:

What's worse, it might actually be that THE DEMOCRATS are hoping for the automatic cuts instead of engaging in another street fight with the Republicans.

Stay tuned.

http://www.tnr.com/blog/jonathan-cohn/93129/debt-ceiling-deal-sequester-automatic-cut-affordable-care-act-subsidies#.Tjl803JDMqM.twitter

Gaming Out the Debt Deal: Will It Hurt Obamacare?

The emerging, if still tentative, conventional wisdom about the debt ceiling agreement is that Democrats may ultimately prefer the plan’s automatic spending cuts to whatever cuts the new super-committee proposes. As you probably know, the agreement calls for what’s basically a two-step process: A bipartisan, 12-member committee will consider ways of reducing the deficit. If the committee fails to make recommendations that would reduce the deficit by $1.5 trillion over ten years, or if makes recommendations but Congress fails to enact them, then the law calls for automatic, across-the-board cuts reducing deficits by $1.2 trillion.

Why would Democrats prefer the automatic cuts? President Obama and the Democrats largely shielded the big entitlements and programs from the poor. Media reports have suggested that Budget Director Jack Lew and National Economic Adviser Gene Sperling were particularly adamant about protecting Medicaid. The super-committee, by contrast, would surely look to these programs for cuts, perhaps substantial ones. Ideas like reducing federal funding for Medicaid or raising the eligibility age for Medicare, both of which figured into earlier negotiations between Obama and House Speaker John Boehner, are sure to get a close look.

But don’t kid yourself: The automatic cuts will still hurt, because they’d still affect plenty of important programs. And among them may be the administration’s signature legislative accomplishment, the Affordable Care Act. The new health care law will make insurance more affordable by providing subsidies to people who buy insurance on their own. And these subsidies come in two forms. There are tax credits, which people can use to offset the cost of their premiums. And there are subsidies to defray cost-sharing: In other words, the government will help reduce people’s out-of-pocket costs. Under the debt ceiling deal, the tax credits are exempt from automatic reductions, because they are a tax credit and not a form of spending.

But, as both administration and congressional sources are confirming, the cost-sharing subsidies are not exempt. They will decline. And that’s worrisome because the subsidies were already pretty low. In fact, many of us were hoping that, over time, lawmakers would see fit to raise them rather than reduce them. I can't be sure how much the subsidies would decline, as nobody I’ve contacted seems to have run the numbers yet. And I'm not even positive how reduced subsidies would translate into reduced protection, since technically the subsidies go directly to the insurers. (I don't even want speculate about the impact until I know more. I’ll update this item when I do.)

(snip)