It’s very likely that providers are going to see their Medicare payments cut

I think it’s time for the AMA to panic, but not for the reason everyone thinks. Today the President proposed cutting Medicare spending by reducing payments to providers.  I don’t think that’s how things will play out, however. I have to agree with Matt Yglesias here:

[T]he biggest news out of today’s deficit plan from President Obama probably isn’t the plan itself but an ancillary veto threat. We’ve long known that the White House favors higher taxes on the rich, and also that it’s willing to consider agreeing to some very right-wing notions about Medicare spending as part of a grand bargain to get it. Today, though, the president is clearly stating for the first time that he will veto any plan from the super committee or elsewhere that cuts Medicare benefits without raising taxes on the wealthy.

Given the rhetoric we’re seeing, it seems very unlikely that the supercommittee is going to recommend tax increases on anyone, let alone the wealthy. Given that, unless President Obama is bluffing, any cuts to Medicare (even those to providers) will be vetoed and not become law.

But, when that happens, the trigger will go into effect. And, if you remember:

If the panel can’t come up with enough savings, automatic cuts would go into effect. Medicaid, Social Security and veterans’ benefits would be protected. But providers could see a 2 percent cut in Medicare reimbursement.

That’s how it could happen. I’m not sure I see a way out here. Happy to hear your thoughts!

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