POLITICS
12/10/2013 10:40 pm ET Updated Dec 11, 2013

Budget Deal Whacks Medicare Providers

WASHINGTON -- It's hard to discern in the budget deal announced Tuesday night, but the bulk of its deficit savings come from fresh cuts to Medicare providers.

Under the proposal announced by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.), chairs of their chambers' respective budget committees, lawmakers will replace about two-thirds of the hated automatic cuts under budget sequestration (totaling $63 billion) for this year and next, and cut the deficit by about $23 billion.

That $23 billion -- and then some -- is explained in a short line in the summary of the deal: "The budget proposal saves $28 billion over ten years by requiring the President to sequester the same percentage of mandatory budgetary resources in 2022 and 2023 as will be sequestered in 2021 under current law," it says.

"Mandatory budget resources" refers mostly to Medicare providers.

Under the Budget Control Act of 2011, which set up the sequester, so-called discretionary programs were subject to 5.1 percent across-the-board cuts when the Congress' "supercommittee" failed to find targeted savings. Most "mandatory" programs, such as Social Security and Medicaid, were exempt. But Medicare was not, and was subject to a 2 percent cut aimed at providers, worth more than $120 billion over the 10 years of the sequester.

By extending the sequester for mandatory programs, Medicare providers -- including hospitals -- will have to take the hit for two more years.

Congressional staffers were not prepared to talk about the cuts on the record, but said it boiled down to Medicare providers being the least-painful target. Democrats, they noted, have not traditionally been strong supporters of preserving the payments to providers, being much more concerned with maintaining funds for beneficiaries. Republicans saw extending for two years cuts that are already in the law for mandatory programs as a simple way to add deficit reduction to the replacement of sequestration for discretionary programs.

"As far as finding $25 billion in deficit reductions, that's a pretty easy place to get it," one aide said.

But a trade group for publicly traded hospitals slammed the deal, saying it jeopardized seniors' access to care.

"America’s hospitals have grave concerns about the Murray-Ryan proposed budget agreement and urge Members of Congress to oppose it," Chip Kahn, president of the Federation of American Hospitals, said in a statement. "The budget agreement threatens access to critical health care services for seniors by trading off Medicare cuts for increases in government and defense spending today. Rather than providing relief to the arbitrary Medicare sequester cuts, this agreement maintains the current cuts and extends these cuts into the future. It sustains bad budget policy under the guise of solving real mandatory spending issues facing this country."

Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.

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