Tuesday, March 23, 2010

Gregg Amendment (#3567) on Protecting Medicare Savings

Senator Gregg has offered an amendment (#3567) to prevent Medicare from being raided for new entitlements and to use Medicare savings to save Medicare.
  • The health care law and reconciliation bill cut a combined $529 billion from Medicare.  The Gregg amendment prohibits using these Medicare cuts to pay for new government spending in the underlying bill. 
  • The amendment provides that the major provisions in the underlying bill, including the subsidies and Medicaid expansion, cannot go into effect unless the Director of OMB and the CMS Actuary certify that all of the projected spending in the bill is offset with savings—but that savings shall exclude any changes to Medicare or Social Security.
  • This amendment will ensure that the savings generated from Medicare cuts in the bill do not go towards a new entitlement.
Arguments in Favor
  • Democrats have repeatedly said that they are not using Medicare savings to pay for this legislation. The Gregg amendment tests their willingness to stand by this statement. If Medicare savings really aren’t being directed towards a new health care entitlement, they should support this amendment.
  • Both the Congressional Budget Office and actuaries at the Centers for Medicare and Medicaid Services have highlighted the problem with Democrats using Medicare savings to pay for new entitlements.  CBO found that the savings “would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation or on other programs.”  Likewise, the CMS actuaries noted that “in practice, the [Medicare savings] cannot be simultaneously used to finance other Federal outlays (such as coverage expansions…) and to extend the trust fund, despite the appearance of this result from the respective accounting conventions.”
  • In December, Democrats put forward a number of amendments that say that Medicare savings should protect Medicare, but they have no teeth. For example, the Bennet amendment said that “savings generated for the Medicare program… shall extend the solvency of the Medicare trust funds… and improve or expand guaranteed Medicare benefits and protect access to Medicare providers.”  The Bennet amendment passed 100-0.  If Democrats voted for the Bennet amendment, they should support the Gregg amendment—unless they are admitting that the Bennet amendment was just for show.
  • CBO recently released a letter to Congressman Ryan indicating that if the two health care bills’ savings were dedicated solely to extending the life of the Medicare trust funds, the combined bills would RAISE the deficit by $260 billion.  It also added: “In effect, the majority of the [Medicare] savings under H.R. 3590 and the reconciliation proposal would be used to pay for other spending and therefore would not enhance the ability of the government to pay for future Medicare benefits.”  Many may view legislation which relies on these types of accounting gimmicks as fiscally irresponsible and unwise.
  • The amendment would allow the major spending provisions to go into effect if non-Medicare savings were found.  Medicare savings are needed to protect Medicare’s solvency.