Washington is providing a textbook example of how loud promises of fiscal discipline are quietly abandoned when only powerful interest groups are watching.
The special interests in this case are the insurance companies that sell Medicare Advantage plans, and the makers of medical devices -- industries the Patient Protection and Affordable Care Act appropriately tapped to help fund popular insurance reforms and coverage for the uninsured. Shamefully, the administration is walking away from the Medicare Advantage savings, and Congress appears primed to eliminate the tax on device makers.
Medicare Advantage plans are paid 9 to 13 percent more per enrollee than it would cost to cover the same person in the traditional Medicare program. About 13 million of the 50 million people on Medicare are enrolled in the plans, which often provide desirable extra services, such as dental and vision coverage. The law called for the overpayments of about $1,100 per enrollee to be reduced over time. Trimming them would be painful, but makes fiscal sense for a government in debt and looking to subsidize basic coverage for 27 million uninsured people. But rather than make a 2.2 percent cut in 2014 as initially announced, Medicare officials said Tuesday the payments will be increased 3.3 percent.
Medical-device manufacturers are looking for similar consideration. They want Congress to repeal the 2.3 percent tax the law imposed on them to raise $30 billion over 10 years. Seventy-nine of 100 senators recently voted for a nonbinding amendment calling for repeal. With that overwhelming support, can a binding vote be far behind?
So under intense lobbying, two key revenue streams are likely to be eliminated, while the important reforms they would fund remain in place. That's a prescription for more national debt and more public cynicism, two things the nation already has in abundance.