Medicare News Blog Update:

The Fiscal Cliff and Medicare

Everywhere we turn right now it seems there is a mention of the “fiscal cliff”. It is all over the news and in the newspapers. Many of us are wondering what exactly is the “fiscal cliff” and how will it affect us. One issue of special concern with regard to the “fiscal cliff” is Medicare and the future of Medicare. The Medicare Newsgroup defines the “fiscal cliff” as the combination of tax increases and automatic spending reductions, set to hit in February 2013, that the Congressional Budget Office (also known as “CBO”) said could plunge the United States’ economy back into a recession. The tax increases refer to both the expiration of the George W. Bush-era tax cuts and to the expiration of the Social Security payroll tax deductions. The automatic spending reductions, in regards to Medicare, involve a 2% across-the-board cut mandated by the Budget Control Act of 2011 and a 27% cut to physician payments required by the Sustainable Growth Rate. The cuts would decrease spending by $1.2 trillion from fiscal year 2013 to fiscal year 2021 – half would come from the defense budget and the other half from other departments’ budgets (including the Medicare program).

Is anything being done to stop the Fiscal Cliff?

Policymakers have begun discussing a potential package of deficit-reduction measures to stop the nation from going over the “fiscal cliff,” a series of mandatory budget cuts and tax increases scheduled to take effect starting in January 2013. These deficit-reduction measures could potentially include various cuts and/or alterations to the Medicare program, and there is growing speculation about how Congress will change the program to contain federal spending.

Will the Fiscal Cliff cause cuts to Medicare?

One political party has proposed significant changes to entitlement programs, including the Medicare program, be included in any deficit-reduction legislation. However, there are groups that have opposed this idea and are pressing for rejection of cuts not only to the Medicare program, but to Social Security as well.

Many of the cuts suggested deal with the amount Medicare will pay doctors and hospitals for services.  Many of our clients wonder how this will affect their doctors and hospitals. There are political representatives that have warned that excessive cuts to Medicare could be devastating to hospitals that are already coping with reductions under the Affordable Health Care Act. Many people believe doctors and hospitals already make too much money. However, a reduction in payments could lead to staff reduction and possibly affect the quality of care you receive.  A reduction in payments could also make providers question if they should participate in Medicare.

Certain health care provider groups have urged Congress to make Medicare payment changes based on quality through measures such as increased payments for physician practices that are classified as high-performing health systems. In the alternative, this would mean cuts to other non-qualifying providers.

Will the Fiscal Cliff change the Medicare eligibility age?

Some experts have predicted that the deficit-reduction bargain could involve raising the Medicare eligibility age to 67.

Where does that leave us?

We can speculate all we want but until the folks in Washington, D.C.  come to an agreement no one knows exactly what the future will hold.  The “fiscal cliff” is a significant issue in many, if not all, aspects of the United States’ financial condition, not just the Medicare program. While there are resolutions proposed to avoid the “fiscal cliff” which may affect the Medicare program and its funding, the Medicare program itself is not going anywhere. Our goal at Medicare Pathways is to keep you informed regarding any changes to the Medicare program so that we can continue to provide the excellent quality of service our clients have come to expect and deserve.


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