Budget hawks frustrated by 2020 politics in entitlement reform fight

Budget watchers are growing increasingly frustrated about the politicization of tackling cost-saving measures in entitlement programs, particularly Medicare.

The growing divide between Democrats and Republicans was on full display this past week, when President Trump’s budget proposal for fiscal 2021 called for roughly $2 trillion in cuts to entitlement programs. Anti-poverty advocates said many of those provisions would hurt the poor and deny people health coverage.

Democrats seized on the proposal, characterizing it as Trump slashing Medicare benefits, even though the president largely hewed to his State of the Union promise to leave Medicare untouched. He instead proposed some $500 billion worth of measures that would reduce costs to providers without eating into benefits.

Speaker Nancy Pelosi (D-Calif.) called the White House spending request a “heartless budget.”

“If you’re sitting at home at your kitchen table and you’re a senior or there is a senior in your family on Medicare, you’re getting cut,” she said.

But experts say the Medicare proposals should be relatively uncontroversial, leaving budget watchers wondering if reforms to any of the nation’s largest deficit drivers is politically possible, or if the issue has simply become a non-starter in Washington.

“There is literally nothing that would cut benefits from Medicare recipients,” said Marc Goldwein, the head of policy for the Committee for a Responsible Federal Budget, a fiscal watchdog group. “The policies would actually help them because they’d reduce the amount they’d pay in premiums and out-of-pocket costs.”

Some of the major Medicare proposals, he noted, have a history of bipartisan support and were even included in former President Obama’s budget requests. Democratic presidential candidate Pete Buttigieg includes three of the policies in his health care proposal, and Sen. Elizabeth Warren (D-Mass.), who is also running for president, includes two of them in hers.

Among them is a proposal requiring that the site of a procedure — a doctor’s office or a hospital — doesn’t affect the cost.

Another would affect the level of payments Medicare pays to providers for what’s called post-acute care, such as physical therapy or rehab.

Both aim to reduce payments to the providers but don’t directly scale back benefits or cut off access for recipients.

But it is possible for such cost-cutting measures to ultimately affect benefits, according to Juliette Cubanski, an associate director of the Kaiser Family Foundation’s Medicare Program.

“When it comes to Medicare, I don’t think it makes sense to hold up this budget as something that Medicare beneficiaries need to lose any sleep over,” she said. “But if you cut provider payments and they scale back on benefits, there could be a spillover effect there, or a connection between the two.”

House Budget Committee Chairman John Yarmuth (D-Ky.) argued that absent any broader reforms, such changes could have repercussions for rural hospitals.

But the exact implications aren’t clear, says Goldwein, who said studies of similar cost-cutting measures in the past have found minor changes in benefits.

Those policies are in contrast to the various restrictions Trump proposed for Medicaid, food stamps, welfare and housing assistance, which would deny some beneficiaries access and in some cases scale back the level of benefits.

For those concerned about reducing the deficit, conflating cost-saving measures with cutting benefits muddies the waters, analysts say.

“I think it’s very frustrating to lump them together, because people have a point on Medicaid. But when it comes to Social Security and Medicare, they’re Obama-era policies to increase program integrity and reduce costs,” Goldwein said.

Since Trump took office, the deficit has increased by roughly two-thirds and is expected to reach $1 trillion. Democrats blame the $1.9 trillion GOP tax law from 2017 and a Republican effort to boost defense spending. Republicans, meanwhile, point to the higher domestic spending favored by Democrats.

But analysts argue that an aging population is stretching spending from mandatory programs such as Social Security and Medicare, which are major drivers of the debt.

Russ Vought, acting director of the White House Office of Management and Budget, said the problem stemmed from politicians using a program’s cost as shorthand for its value.

“Washington, D.C., far too often wants to just say what’s the dollar amount and makes that the sacrosanct value for how you’re doing with regard to your commitment,” he said at a House Budget Committee hearing this past week. He also insisted that the Trump budget would leave programs such as Medicaid untouched.

Democrats, for their part, said they welcomed reforms but needed proof that they worked before slashing budgets.

“I have to be a little bit miffed, I guess is the best word, because you talk about savings and waste and fraud, and that you’re going to be doing different types of approaches, but has the administration offered any legislation in any of these areas?” Yarmuth asked Vought at the hearing. “The administration has not offered legislation to deal with health care.”

Indeed, Goldwein noted, some $750 billion of savings in the president’s budget would come from an unspecified health plan that has yet to be unveiled.

Election year politics is in many ways playing a role in the debate, with experts noting that it’s easier to tout more benefits and lower taxes than the alternative.

“It’s very difficult to talk about cutting Social Security or Medicare benefits. At the same time, there aren’t a lot of people who want to say we need to increase taxes or revenues to pay for these programs,” Cubanski said. “We’re not having a conversation about, ‘How much are we willing to pay for these programs?’ and ‘How much should we pay moving forward?’”