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Fiscal commission could alter Medicare debate

Feb 5, 2024
Rep. Jodey Arrington in the Capitol.

Rep. Jodey Arrington in the Capitol. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

A bipartisan push to establish a fiscal commission to reduce the national debt could have big implications for Medicare and other entitlement programs, if authorizing language gets attached to a future government funding deal.

Why it matters: Recommendations from a commission of lawmakers and outside experts could highlight tough choices ahead in an election year — and move the debate over Medicare solvency beyond the rolling short-term funding deadlines that consume lawmakers.

  • But the to-do list could cross into politically dangerous territory if proposals are seen as cutting seniors' health benefits.
  • As we've written before, beyond all the talk about saving the program are three unpalatable options: to raise taxes, cut benefits, or cut payments to the health care industry.

Details: The idea of a fiscal commission to address the nation's ballooning debt isn't new.

  • This year it's originated in the House Budget Committee's Fiscal Commission Act, which was advanced out of the committee with other budget reform proposals last month.
  • Were it to become law, the commission would face a December deadline to produce a report and propose legislation.
  • Legislative proposals from the commission backed by a majority of the 12 lawmakers on the panel would then be fast-tracked through committees of jurisdiction within five days and then go to the floor.
  • There's a companion bill introduced in the Senate by Joe Manchin and Mitt Romney.

What they're saying: House Budget Chair Jodey Arrington is bullish that he could get the Fiscal Commission Act attached to a government funding package in the House because "the speaker is committed and we have enough Democrats that I think are pushing it."

  • "Why wouldn't we include it in a funding bill? A commission that looks at the long term unfunded liabilities that are driving the debt and come up with a bipartisan plan," he said.
  • Speaker Mike Johnson said he wanted to establish a bipartisan fiscal commission when he was elected last fall.
  • A spokesperson in the speaker's office told Axios that it's "too soon to say" whether the Fiscal Commission Act will make it into a funding deal.

Yes, but: Progressive Democrats warn the commission could lead to cuts to Medicare and Social Security benefits.

  • A group of 100 Democrats sent a letter to House leadership in January asking them to not include any fiscal commission legislation as a part of any must-pass government funding deal.
  • They pointed to past commissions that have historically recommended steps like cutting or privatizing Social Security, and argued that decisions on that scale shouldn't be left to "a small group of individuals behind closed doors."

Rep. Scott Peters, the Democratic lead in the House, discounted concerns about back-door entitlement cuts.

  • "We're the party that claims that we want to protect Medicare and Social Security," Peters told Axios. "In nine or 10 years when revenues aren't sufficient to meet outlays, current law provides across the board cuts, and so I think it's ridiculous to say do nothing."

Zoom in: Overhauling Medicare programs has long been a radioactive issue for both parties.

  • "Medicare, Social Security are icons of security and old age," said Joe Antos, senior fellow at the American Enterprise Institute.
  • "Any politician who starts talking about dealing with the fiscal problems that either one of those programs has runs the risk of looking like they want to dismantle the foundation of both of those iconic programs, and you just can't do that."
  • Still, Antos said if a fiscal commission was serious, it would have to look closely at Social Security and Medicare because "they really are responsible for the substantial growth in the in the debt and the deficit" and their outlook is "grim."
  • Indeed, a 2023 Medicare Trustees report estimated that the Hospital Insurance Trust Fund will start running out of funds in 2031.

By the numbers: Medicare is estimated to significantly grow as a share of the federal budget and GDP over the next 10 years.

  • CBO estimated that from 2021 to 2032, net Medicare spending would increase from 10.1% to 17.8% of the federal budget and from 3.1% to 4.3% for the GDP.
  • Total Medicare spending on Part A, Part B, and Part D benefits in 2021 totaled $829 billion and is estimated to grow to $1.8 trillion in 2031, according to KFF.

Of note: Medicare, along with federal health spending on other government programs was a key focus for the House's Energy and Commerce Committee last week, with the CBO's Chapin White highlighting how those costs are slated to increase over time.

Reality check: Johnson already faces enormous challenges teeing up a spending package on a compressed timetable without having entitlement reforms attached.

  • And there's little chance the Senate will bite, with Finance Chair Ron Wyden telling reporters last week that a fiscal commission is "a seriously flawed idea" that's "long on budget cuts of essential programs like Social Security and Medicare, and real short on actual revenue."
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