What the Deficit Commission Says About Health Care

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An early proposal from President Obama’s deficit commission appears to have been leaked today. The commission was due to release recommendations in December and its findings and proposals were much anticipated.

It’s unclear if the “draft” unveiled today will mirror final recommendations from the commission, but at the very least, what came out today is a peek at where the group is headed. (UPDATE: Some sober words of wisdom from Ezra Klein that are worth reading in full.)

Check out these stories for an overview of the report. Here’s a more in-depth look at what the report says about health care, a major major drain on the federal budget:

The deficit commission endorses some key elements of the Affordable Care Act. The draft proposal recommends speeding up cuts to Medicare Advantage and charity care payments to hospitals, both provisions in the ACA. The commission report also calls for a much stronger Independent Payment Advisory Board, the newly created commission charged with slowing the growth in Medicare spending. (Republicans have cited IPAB as a health reform element they want to repeal or defund.) The debt commission draft proposal also endorses one much debated conservative idea and one much debated liberal idea that didn’t make it into the final bill: tort reform and a public option.

Another recommendation calls for reforming the way the federal government pays for long-term care. Currently, many elderly Americans impoverish themselves to become eligible for Medicaid, which pays for nursing home care. The report released today calls for replacing these Medicaid payments with a “capped allotment.” The proposal also calls on seniors to pay more toward their health care, calling for expanding “cost sharing.” The proposal says all seniors should have to fulfill a universal deductible instead of the current system of various co-pays for services.

Perhaps the most significant recommendation – and one that health care economists have been making for decades – is a strict cap on the amount of employer-provided health insurance expenses that are tax deductible. The ACA sets an extremely high cap that won’t kick in until 2018. The proposal from the debt commission goes much further, recommending that health insurance tax exclusion be capped at the actuarial value of the standard option available to government workers in the Federal Employee Health Benefit Plan.

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