Cutting Medicare and Medicaid to Solve Debt Ceiling Issue Will Only Shift Health Care Costs

Health care experts say that the Medicare and Medicaid budget cuts that have been proposed by lawmakers to resolve the debt ceiling issue would only shift health costs, not eliminate them, according to a new Wall Street Journal story. So far, abut $350 billion in cuts have been proposed to the two programs over the next 10 years, but most think these government savings would actually become new costs for others.

Lawmaker Proposes Medicare and Medicaid Cuts

Lawmakers have been in debates over the past few weeks on how to avoid default after national debt reached its $14.3 trillion ceiling on May 16. Some have proposed raising taxes while others want budget cuts.

This week, House Majority Leader Eric Cantor (R-Va.) presented a list of proposed cuts, which include lower federal payments to hospitals with many poor patients, as well as state Medicaid programs, new patient co-payments for clinical lab work and reduced payments to nursing homes and rural hospitals.

These cuts would be in addition to the $500 billion in cuts to the Medicare program that were already approved to allow the passage of the 2009 health care bill.

Proposed Cuts Will Be Shifted to Other Entities

Both Democratic and Republican health care analysts who have reviewed the cuts agree that they would not really save money. Instead they would shift financial burden to other entities like public hospitals, the states and individuals.

For instance, up to $53 billion in savings over the next 10 years would come from cutting Medigap, which is Medicare supplement insurance. The cuts would result in higher out-of-pocket costs for seniors.

Another proposal has been to save $14 billion to $26 billion by cutting back on reimbursing unpaid debts. While this would save the government money, it would shift the burden to hospitals.

Experts say the better alternative to making these cuts would be to devise a strategy that would restrain costs. For instance, Medicare could offer different tiers of coverage similar to private health insurance. This way, more could be acquired from seniors willing to pay more for higher-quality coverage.

Experts say states, hospitals and individuals are not in a position to burden the shifted costs. They hope lawmakers will work out other ways to resolve the debt issue by the Aug. 2 deadline.