Deadlock on the "fiscal cliff" negotiations? That would be good news for Social Security, Medicare and Medicaid benefits

Paul Krugman is impressed at the determination of the Republican opposition to block action on budget issues proposed by President Obama. In Operation Rolling Tantrum 12/02/2012,he writes:

Oh, boy. This isn’t going to end, even when or if a deal is reached on defusing the austerity bomb; John Boehner has just declared that he's going to hold the full faith and credit of the United States hostage every time we hit the debt limit. Nor will it be a case of holding the nation at gunpoint until it meets GOP demands; Republicans are signaling that they don’t intend to make any specific proposals, they’re just going to yell and stamp their feet until Obama soothes them somehow.

This is good news as far as it goes for benefits on Social Security, Medicare and Medicaid. As much as Obama may hope for a Grand Bargain to cut benefits on those programs, the only way he can hope to make that the start of his utopian postpartisan future is if the Republicans agree on a deal that includes it. But, in the scenario Krugman describes - "if the next two years are, as they seem likely to be, one long Republican tantrum" - they may not even be able to agree on anything they can pass off as a comprehensive package to solve the problem of the Gentle Fiscal Slope scheduled to begin January 1.

And if the Republicans continue with a strategy of fundamental opposition to try to keep the economy ailing and make Obama look bad, not only does he not get the Grand Bargain and postpartisan harmony. He may also have to act like a Democratic President who won re-election by a strong margin and fight the Republicans.

Politico, which Charlie Pierce calls Tiger Beat On The Potomac because of its often flighty, gossipy reporting seems to be working off some alternative script about what's really being proposed and at least tacitly agreed to in the "fiscal cliff" negotiations. But this piece by Jennifer Haberkorn and Paige Winfield Cunningham spells out ways cutting Medicare benefits would hurt large numbers of people, The cold, hard realities behind Medicare cuts 12/02/2012. On raising the eligibility age from 65 to 67:

Most Democrats on Capitol Hill have lined up against the idea, arguing that doing so would leave 66- and 67-year-olds without access to affordable coverage. Plus, the 66- and 67-year-olds aren’t the ones sinking the Medicare trust fund; they’re typically the cheapest beneficiaries.

But they likely would become the costliest in the private insurance market, which could make coverage hard to find if they don’t already have it through the workplace — and they’d probably have to pay more out of pocket than they would under Medicare. ...

An ABC News/Washington Post poll released Wednesday shows that 67 percent of people surveyed oppose the idea, too.

And they remind us, "Obama tentatively agreed to raise the eligibility age during his summer 2011 debt ceiling negotiations with House Speaker John Boehner."

On increasing the Medicare Part B premium to cover 35% of its costs: "This is by far the biggest saver — but it’s also one that would clearly violate the Democrats’ pledge not to shift costs to seniors."

There is a drug rebate requirement that falls on drug companies that was reduced under the Bush Administration in Medicare Part D, i.e., drug companies have had to pay less in rebates since 2006. Restoring that rebate, which Politico calls "dual-eligible rebates," would save money without reducing benefits. Politico notes, "Drug companies will fight to make sure the idea never sees the light of day."

Another benefit-reducing idea is to increase the amount recipients have to pay for Medicare and Medigap cost-sharing. Increasing the required payments from recipients is itself a benefit reduction and means that it puts more pressure on recipients to forego or postpone treatment to to cost considerations.

Means testing for Medicare would also be a reduction in benefits. Haberkorn and Winfield don't explain Democratic opposition to this well. Medicare supporters are leery of means-testing for Medicare because that makes it easier for enemies of the program to stigmatize it as "welfare." Like Social Security, Medicare is a defined-benefit plan to which future beneficiaries contribute during their working careers.

The last option they discuss is cuts in reimbursements to Medicare providers. That is not a cut in benefits unless the reductions were so poorly designed and/or so drastic that it actually interfered with delivery of services. There's not magic measuring stick here; it requires people who know what they are doing on the Medicare side to negotiate, implement and monitor the changes, and decent performance and financial audits to evaluate such reductions when they are implemented.

Tags: austerity economics, barack obama, fiscal cliff, grand bargain, medicaid, medicare, social security

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