Obamacare funding a tough sell with Congress

President Barack Obama’s 2014 budget sketches out his vision of a grand bargain on entitlements — and makes another stab at getting the funding needed to make sure the Obamacare exchanges are up and running late this year.

The federal government is going to be responsible for putting up the new insurance marketplaces known as exchanges in 33 states — a task for Washington that was neither anticipated nor funded when the health law was passed in 2010. The administration has been asking for more money — and being rejected by Congress. The Department of Health and Human Services has maintained that it will get the exchanges up no matter what — but it has not been clear to date about how it will fund that effort. The department may release more details at a 2 p.m. briefing with Secretary Kathleen Sebelius.

HHS has several times asked Congress for about a billion for the Centers on Medicare and Medicaid Service, with the lion’s share of that going for the health law implementation.  But with Congressional Republicans still strongly opposing the health law, they haven’t granted it.

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The subsidies for eligible people to help pay for coverage, for the Medicaid expansion, and for the state run exchanges were all part of the 2010 law and have not been deeply affected by the sequestration and other budget deals, although estimates of some parts of it have gone up over time.

On the savings side of the budget, Obama would make deep cuts to Medicare, including more than $300 billion in provider payments and $50 billion from seniors. It would make wealthier seniors pay more than under prior means testing proposals.

That’s the bulk of the $400 billion in health care savings that he’s offering Republicans in search of the latest and more modest version of the grand bargain that has eluded the White House and Congress so far.

It’s a combination of proposals from previous deficit reduction talks, and an expansion of some of them, and follows the outline of the last offer Obama made to House Speaker John Boehner (R-Ohio).

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But despite the cuts, HHS as a whole would get $80.1 billion in discretionary funds, a raise of $3.9 billion — nearly 5 percent. The National Institutes of Health would receive $31 billion — the same as was requested last year. And FDA would see an increase of more than $800 million, in part from higher user fees from industry.

The administration asked for $30 million for the CDC to expand a violent death reporting system to all 50 states and for research into the causes of gun violence in the wake of the Newtown, Conn., massacre last year.

The largest single change Obama would make to Medicare is to mandate drug rebates for low income seniors. The rebates, which are fiercely opposed by the pharmaceutical industry, would save $123 billion.

The drug industry will not like this budget. The administration is also proposing to close the Medicare prescription drug doughnut hole by 2015 — a full five years ahead of the Affordable Care Act’s target date of 2020. That would be paid for by accelerating additional drug rebates by $11.2 billion.

The total cuts to drug companies and other providers total $306 billion. They include more than $80 billion in lower payments to post-acute care providers, $25 billion in reduced bad debt payments and $11 billion less for graduate medical education.

Wealthier seniors, too, would chip much more under the president’s plan. The administration has previously proposed that higher income beneficiaries pay a larger share of their Medicare premiums. In a deficit-reduction plan from 2011, for instance, the measure would have raised $20 billion. The budget released Wednesday would raise that figure to $50 billion.

The budget would also charge seniors almost $3 billion in higher premiums for first-dollar Medigap insurance that covers co-pays and other cost-sharing requirements in the program.

But Medicaid would escape largely unscathed in part because the administration does not want to give any reason for states weighing whether to expand Medicaid under the health care law to fear that the White House will renege on its funding promises.

The budget does not include a major change in the way the federal contribution to the joint federal-state health care program is calculated or a separate provision affecting Medicaid provider taxes. Both of those had been included in earlier administration proposals but were abandoned ahead of the massive expansion of Medicaid that the administration wants states to go ahead with in 2014.

The White House budget does not include raising the eligibility age for Medicare, which Obama had considered in earlier deficit-reduction talks with Boehner.

Overall, the budget would trim a total of $1.8 trillion from the deficit, but it replaces the sequester so the agency budgets don’t include those across-the-board cuts in 2014.

Cuts of the magnitude proposed would only take place as part of a larger package including increased revenues, which Republicans strongly oppose, the White House made clear.

“If they refuse to include revenues in any deal, there will be no deal,” a senior administration official said in a background briefing with reporters.

To the dismay of liberals, the budget proposal also includes chained CPI, but it will include “a bump” for older and low-income seniors, an official said. While chained CPI primarily affects Social Security cost-of-living adjustments, it would also take a slice out of some Medicare provider payments.

This article first appeared on POLITICO Pro at 6:01 a.m. on April 10, 2013.

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