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MEDICARE: Under The Gun–Medicare “Trigger” Looms in ’07



December 13th, 2006
by Rob Cunningham

Beltway sages expect the health agenda for the 110th Congress to be crowded, especially in comparison with other recent sessions, and can identify without great difficulty a number of issues that are likely to loom large come January. SCHIP reauthorization and Medicare’s physician payment dilemma are on most pundits’ short list of inevitable preoccupations. The new Democratic majority has declared its intention to take up as a priority the Medicare Modernization Act’s ban on government price negotiations with pharmaceutical manufacturers under in the Part D drug benefit, and to revisit payment levels to private plans in Medicare as well. Perennials like coverage of the uninsured and promotion of health information technology will be back. The list goes on.

Just as consequential, but perhaps not as high on the cognoscenti’s radar, congressional staffers warn that Medicare spending is expected to hit a threshold known as the “trigger,” created by a wild-card provision in the MMA which mandates draconian spending cuts. HHS explained the trigger this way in May:

As required by the Medicare Modernization Act, the Trustees compare overall projected Medicare expenditures with the program’s “dedicated revenues” — principally HI payroll taxes, certain income taxes on Social Security benefits, beneficiary premiums, and special state payments to Part D. This difference is projected to exceed 45 percent of total Medicare outlays in 2012. Because this result falls within the first seven years of the projection period (2006-2012), it triggers a determination of “excess general revenue Medicare funding” — the first time that such a determination has been made under the MMA.

If a second such determination is made in next year’s Trustees Report, then a “Medicare funding warning” would be made. Such a warning would require the President to propose legislation to address the issue in the next budget, and Congress would be required to consider the proposal on an expedited basis.

Further exegesis by Comptroller David Walker and former Medicare Trustee Marilyn Moon explains more and spells out some of the provision’s far-reaching implications.

At a Dec. 13 briefing in Washington sponsored by the Alliance for Health Reform, the Republican health policy director for the Senate Finance Committee, Mark Hayes, noted the imminent approach of the trigger point by way of reminding his audience that issues like SCHIP and physician payment would have to be addressed in the context of better budget discipline. Bridgett Taylor, of the House Energy and Commerce Democratic staff, countered that that the provision might be repealed, although repeal would be a tough sell with fiscally conservative Blue Dog Democrats; and that enforcement might be problematic. Senate Majority Leader-elect Harry Reid’s health policy adviser Kate Leone called the trigger provision a Republican scare tactic. But in characterizing Medicare’s spending problems as part of a larger, systemic challenge of the U.S. health system, she tacitly acknowledged that for all the Democrats’ aspirations, there is nothing but tough sledding ahead.

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1 Trackback for “MEDICARE: Under The Gun–Medicare “Trigger” Looms in ’07”

  1. HealthBlawg
    January 21st, 2007 at 4:45 pm

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