Republicans give up on Medicare overhaul – By Adam Cancryn & Sarah Ferris (politico.com) / June 17 2018
The quiet surrender comes as new projections show Medicare’s trust fund in its worst shape since the recession.
Republicans on Capitol Hill are giving up on what might be their last best chance to overhaul Medicare, just as they’re losing their leading champion on the issue, House Speaker Paul Ryan.
The quiet surrender on a subject that’s energized GOP fiscal hawks for the better part of a decade comes as new projections show Medicare’s trust fund in its worst shape since the recession, partly because of Republicans’ other chief obsession: their sweeping tax cuts.
That’s left conservatives unsure how to agitate for a politically unpopular Medicare overhaul — one that President Donald Trump detests — and raises new questions about who will take up the entitlement reform mantle as Ryan heads for the exits.
“It takes two houses of Congress and a president to want to do that,” said Sen. Roy Blunt (R-Mo.), lamenting the party’s apathy over Medicare. “No matter who’s been in the House or who’s been speaker, we have not been able to get entitlement reform done.”
The sudden silence on entitlements is an awkward one for congressional Republicans, who spent much of the Obama administration calling for major reforms and new limits on spending. Without that, they warned, Democrats’ agenda would blow up the deficit and bankrupt Medicare, a program that serves nearly 60 million seniors and people with disabilities.
However, the GOP’s sweeping tax cuts will add $1.5 trillion to the deficit, slowing the flow of money into Medicare and putting the health care program on increasingly unstable financial ground, the report from Medicare’s trustees predicts. The decision to also repeal Obamacare’s deeply unpopular Medicare cost-containment panel, the Independent Payment Advisory Board, will put additional strain on Medicare’s finances, the trustees said. Medicare’s hospital trust fund is now projected to go broke by 2026, three years earlier than projected.
To make matters more complicated for Republicans hoping to overhaul Medicare, they are scrambling to figure out how to make their pitch without crossing Trump, who pledged on the campaign trail not to cut Medicare.
“I’m not naive enough to expect anything’s gonna come out of this between now and November, but you have to keep having the conversation,” said Rep. Tom Cole (R-Okla.), a member of the House’s budget and spending panels.
But some Republicans who just years ago fretted over runaway spending are now urging a long-term view on Medicare, insisting that a surging economy will alleviate financial pressure on the program’s trust fund.
“Obviously, they’re not taking into consideration what we’re already seeing, which is additional growth,” said Sen. John Thune of South Dakota, the chamber’s No. 3 Republican. “It’s going to be a lot easier to solve entitlement reform in a growing economy than in an economy that’s in recession.”
The trustees’ report, which was overseen by Cabinet officials, projected the GOP tax cuts would reduce the income taxes people pay on Social Security benefits, part of which are funneled toward Medicare. The tax law’s repeal of the Obamacare penalty for not having insurance will drive up the uninsured rate, increasing Medicare payments for uncompensated care, the report said.
Medicare’s chief actuary, Paul Spitalnic, said lower-than-expected tax returns explained the “vast majority” of this year’s funding shortfall. The trustees found that payroll and income taxes simply aren’t enough to cover Medicare’s large budget gap, partly as a result of the GOP’s tax law. The results, Spitalnic said, are “largely a revenue story.”
The report also delivered grim news for Social Security: For the first time since 1982, the program is expected to spend more than it raises in revenue and collects in interest.
The annual trustee reports tend to fluctuate from year to year in their evaluations of the programs’ long-term stability. Projections during the last financial crisis, for instance, were particularly gloomy. The year former President Barack Obama took office, Medicare’s trustees thought the program would go broke by 2017 — a projection that never came to fruition because of an improving economy and a prolonged slowdown in the growth of health spending.
While the Medicare and Social Security trustees reports are closely watched by budget wonks, there is little risk of the national programs collapsing any time soon. Even if their trust funds run dry, the programs will still have enough money to support the vast majority of benefits.
Still, the projection that Medicare’s hospital trust fund would deplete its reserve in just eight years surprised even some long-term budget observers. The finding would appear to play into Republicans’ calls for reining in Medicare spending, a politically treacherous proposal that’s nevertheless remained a hallmark of conservative budgets for nearly a decade.
Republican leaders have shown little appetite for tackling Medicare since taking full control of Washington last year. Though Ryan himself said a Medicare overhaul would be a priority for 2018, Republican leaders have abandoned the idea ahead of a midterm election that could determine control of Congress.
Neither chamber has firm plans to pass a budget blueprint this year, and some conservatives now fear GOP leaders may skip it entirely, leaving a big question mark about the GOP’s fiscal agenda.
House Budget Chairman Steve Womack (R-Ark.) contended the trustees’ report underscores the need for the House to unite behind a fiscal plan that includes entitlement reform. But he said he’s still struggling to build support for a Medicare blueprint that would be strictly symbolic.
“If you think immigration is tough — and it is — you haven’t seen anything yet,” he said.
During the Obama administration, House Republicans approved belt-tightening budgets that would transform Medicare into a so-called premium support model giving beneficiaries a set amount to spend either on traditional Medicare coverage or private insurance plans. Critics contend the plan, dubbed Medicare privatization, would leave enrollees with higher costs and worse coverage. Other Republicans have supported raising Medicare’s eligibility age.
Democrats, who in the past have eagerly campaigned against the GOP‘s Medicare plans, claim Republicans have shed their concerns about fiscal restraint in pursuit of tax cuts.
“When Republicans want to cut taxes but don’t want to contain health care spending, they are yanking Medicare three years closer to insolvency,” said Oregon Sen. Ron Wyden, the top Democrat on the Finance Committee.
GOP leaders, though, insist they haven’t taken their eye off entitlements. They just need a bit more time at the drawing board.
“It’s still a huge thing,” House Ways and Means Chairman Kevin Brady (R-Texas) said. “The question is, how do we address this thing?”
https://www.politico.com/story/2018/06/15/republicans-medicare-overhaul-abandoned-623203
