KHN Morning Briefing

Summaries of health policy coverage from major news organizations.

CBO Predicts Bright Short Term, But Unsustainable Health Costs As More Baby Boomers Retire

The Congressional Budget Office's report ups the ante in budget battles between the Obama administration and GOP lawmakers, who are staking out positions on the March 1 sequestration, as well as on trims to Medicare and other entitlement programs.

Los Angeles Times: Bright Fiscal Forecast For The Short Term
Revenue is increasing as the economy improves and as higher taxes on wealthier households take effect. The deficit is also shrinking because spending on unemployment insurance and other government assistance programs goes down as the economy improves. But the continued growth in healthcare costs and the increase in the nation's population of senior citizens eligible for Medicare will keep the budget on an unsustainable path. Even though health spending has slowed in recent years for reasons analysts do not fully understand, the sheer volume of new Medicare and Medicaid recipients means costs will rise (Mascaro and Parsons, 2/5).

The Washington Post: As Obama Calls For Short-Term Fix To Avert Sequester, CBO Reports Falling Deficits
Obama said that he is committed to a broad effort to restrain the national debt and that past White House proposals to rein in Medicare costs and increases in Social Security benefits "are still very much on the table" as part of that effort. But with the sequester due to hammer the fragile economic recovery in less than a month, the president said Congress should take quick action on a short-term measure to replace it, giving policymakers more time "to finish the job of deficit reduction" (Montgomery and Goldfarb, 2/5).

Bloomberg: Deficit To Shrink Below $1 Trillion, U.S. Agency Predicts
The federal budget deficit will total $845 billion this year, the first time in five that the gap between taxes and spending will be less than $1 trillion, according to a government report…The agency said that health-care spending is growing less quickly than anticipated. In 2012, Medicare costs rose by 3 percent, or $16 billion, the smallest annual gain since 2000 (Faler, 2/6).

The Wall Street Journal: Debt Rise Colors Budget Talks
The projections will become a measuring stick for a rapid-fire series of budget decisions on Capitol Hill. Three key dates loom for policy makers: the across-the-board spending cuts are set to bite both military and domestic spending on March 1; that is followed by a March 27 deadline for funding government operations for the rest of the fiscal year as well as a new law that withholds lawmakers' pay unless they vote by April 15 on budget outlines. Even if Congress allows across-the-board spending cuts to kick in, sunsetting tax provisions to actually expire and Medicare doctor fees to be cut, the deficit is projected to begin increasing gradually from 2016 onward as more of the baby boom generation qualifies for Social Security and Medicare (Paletta, 2/5).

The Associated Press/Washington Post: Congressional Budget Office: Budget Deficit Estimated At $845 Billion For 2013
But as more and more baby boomers retire and claim Medicare and Social Security and as Obama's health care law takes effect, deficits would move higher and again reach near $1 trillion in the latter portion of the 10-year window — despite the recently enacted tax increase on family income exceeding $450,000 and automatic spending cuts of about $100 billion a year. The package of spending cuts and tax increases are punishment for Washington’s failure to strike a long-term budget pact (2/5).

Reuters: Social Security, Health Spending To Hit $3.2 Trillion A Year
Spending on Social Security and healthcare will double to $3.2 trillion a year over the next decade, threatening a sharp rise in national debt unless Congress acts to avoid the danger, congressional researchers warned on Tuesday. A report from the nonpartisan Congressional Budget Office did not put forth a plan to resolve the long-term imbalance between revenues and spending on retirement and healthcare benefits (Morgan, 2/5).

The Associated Press/Washington Post: Analysis: Obama And GOP Want To Replace Across-The-Board Cuts, But With What?
As a result, they seem likely to spend the spring and perhaps a good part of the summer struggling to escape a bind of their own making. And this time, Medicare and the rest of the government's benefit programs are likely to face changes. Already, the two sides are laying down markers (2/6).

USA Today: Obama Seeks Short-Term Budget Plan To Avoid Sequester
The president said he is still looking for a major debt reduction deal for the long term of more than $1 trillion over the next 10 years, saying that earlier ideas are "still on the table." Obama said he still supports proposed changes to the tax code and to the ever-rising entitlement programs like Social Security and Medicare, but he did not provide many specifics. White House spokesman Jay Carney said Obama would work with Congress on the composition of a short-term budget plan that would require tens of billions of dollars in debt reduction to avoid the scheduled budget cuts. Carney noted that Obama and congressional Republicans have struck previous deals that add up to some $2.5 trillion in debt reduction over the next decade (Jackson, 2/6).

Meanwhile, CQ Healthbeat looks at how CBO's predictions could boost efforts to overhaul Medicare's formula for reimbursing doctors -

CQ Healthbeat: CBO Report Could Be Game Changer For SGR Overhaul
Buried deep inside a Congressional Budget Office report released Tuesday is an estimate that overhauling the Medicare physician payment formula over the next decade would cost just $138 billion. That’s dramatically lower than the roughly $300 billion CBO has previously estimated (Reichard, 2/5).

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