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House Republicans go on budget offense

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Sep 18, 2023
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Illustration: Eniola Odetunde/Axios

It's budget week in the House Budget Committee — which means another round of creative maneuvering around the political grenade that is Medicare.

Why it matters: There are many ways to reduce Medicare spending without reducing seniors' benefits, but they all tend to get clumped together when it's politically advantageous.

  • The catch now is that one of these cost-saving policies — site-neutral payments — is a source of bipartisan interest in multiple committees.

Driving the news: The Budget Committee will mark up its 2024 budget on Wednesday, a spokesperson confirmed to Axios.

  • Chairman Jodey Arrington told Semafor last week that a markup on a balanced budget was "imminent," and that Medicare and Social Security would be untouched.
  • Balancing a budget without touching Medicare and Social Security would require enormous cuts to every other kind of government spending. But a big question is whether the budget will literally not address either program, or whether it just won't touch seniors' benefits.

Between the lines: The House is due to take up a bipartisan price transparency package today that, among other things, would require equal Medicare reimbursement rates for drugs administered at hospital-owned outpatient facilities and doctors' offices.

  • That's a small-scale form of site-neutral payments, which will save a few billion dollars over the next decade. But the larger-scale versions would save hundreds of billions of dollars, and are frequently included on lists of how to achieve substantial budget savings.
  • So it wouldn't be surprising if they show up in the committee's budget, along with other policies like reducing payments to Medicare Advantage plans.
  • Sometimes details don't really matter when it comes to scoring political points. The Inflation Reduction Act, for example, reduces Medicare spending by lowering payments to drug companies.
  • But regardless, Democrats' reaction to bipartisan ideas when they're included in a partisan budget would be interesting, to say the least.

The intrigue: Another way to deal with Medicare in a 10-year budget is to assume the program costs the federal government less money over the next decade because of slower cost growth.

  • A recent attention-grabbing New York Times story explored how Medicare spending growth has been much slower over the last decade than expected, and the per-beneficiary spending has largely leveled off. No one really knows why.
  • The Congressional Budget Office — and plenty of others — drastically overestimated how quickly costs would grow.
  • The story raises the question: What if CBO is still overestimating Medicare cost growth, thus meaning Congress wouldn't have to slash spending by as much to balance a budget?
  • One GOP lobbyist said the committee has looked at using different Medicare cost growth estimates than CBO.

Yes, but: Josh Gordon, director of health policy at the Committee for a Responsible Federal Budget, said CBO has adjusted its assumptions about cost growth over time and warned against "making some kind of independent opinion that they're still too high."

  • Budgets that assume lower Medicare growth without including policy changes to achieve that lower growth would "be a budget gimmick," he added.
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