Supercommittee Dems offer $350 billion in Medicare cuts

From Politico

Supercommittee Democrats quietly floated details late Wednesday of a $2.3 trillion tax-and-cut proposal that includes $400 billion in Medicare and Medicaid reductions, but also clears the way for a new physician payment formula.

The framework — a counterproposal to one offered by Republicans on Monday — calls for $350 billion in savings from “Medicare reforms,” including $250 billion from the providers and another $100 billion from beneficiaries.

Democrats also plan to siphon about $50 billion from Medicaid, according to a document obtained by POLITICO. The proposal seeks to save about $20 billion from increasing Medicaid’s “inflationary rebate” — an apparent reference to the program’s prescription drug rebates — and $13 billion in provider taxes.

“Democrats have continued to offer serious compromises on spending and entitlements in an effort to get a bipartisan deal, and now it’s up to Republicans to finally do the same when it comes to revenue,” a Democratic aide familiar with the negotiations said.

Even so, Republicans were dismissive of the proposal, saying it rehashes a framework that is unworkable.

The latest offer from Democrats capped a day of back-and-forth bickering on Capitol Hill over the particulars of the plan. Democrats insisted that Republicans needed to offer up a plan that provided more revenues to reduce the deficit, while Republicans said they had compromised enough and accused Democrats of walking away from the negotiations.

The run on entitlement programs comes with a catch. According to the document, the entitlement cuts are contingent on whether Republicans accept a range of new revenue proposals also outlined in the offer.

In return, physicians paid under Medicare will move closer to a goal they have long championed: relief from a faulty payment formula, the Sustainable Growth Rate, that has created a backlog of cuts that Congress postpones year after year.

The Democrats’ blueprint envisions paying for part of that fix with savings incurred from a drawdown in military services in Iraq and Afghanistan. By a conservative estimate, a reduction in wartime activities could yield $650 billion, depending on congressional action.

Rounding out the proposal, Democrats seek a combined $9 billion from cuts to disproportionate share hospital payments and changes to the durable medical equipment program.

More broadly, the proposal outlines $400 billion in discretionary spending reductions and $200 billion from mandatory spending. The lower spending curve is matched by about $1 trillion in new revenues — including $650 billion that would come from a rewrite of the tax code.

If Congress fails to move on a tax overhaul, then $650 billion in new revenues would be automatically triggered.

One provision that could touch off a fight among other Democrats is a proposal to cut about $8 billion from the new health care law’s Prevention and Public Health Fund.

On Wednesday morning, HHS Assistant Secretary Howard Koh made an impassioned plea to keep the law’s funding for preventive health care intact.

“We ignore prevention at our peril,” Koh said during a presentation sponsored by POLITICO Pro. “These are small, but wise strategic investments that can have big payoffs.”