Diverting Health Care Funds

Diverting Health Care Funds

In cash-strapped Washington, President Obama’s $1 trillion health care law is presenting a tempting target for lawmakers seeking funds for other projects, as Congress last week raided the health care piggy bank for the third time in less than a year.

Congress last week axed a part of Democrats’ signature domestic achievement to find $11 billion to cover the cost of repealing a withholding tax that otherwise would have hit government contractors in 2013. Mr. Obama signed that bill into law on Monday.

The withholding bill follows two other efforts — one in December and another in April — that reworked the health care law to squeeze savings for other priorities. The December bill funded higher payments for doctors who treat Medicare patients, and the April legislation repealed a paperwork provision in the original health care law that businesses said would be onerous.

All told, Congress and the president have tapped some $50 billion earmarked to pay for benefits and programs in the health care overhaul in future years to fund more-immediate spending needs.

Both earlier efforts dealt with health care issues, but the bill Mr. Obamasigned Monday marks the first time that the massive 2010 law has been tapped to fund something completely unrelated.

“They don’t want to open it up. They’re getting forced to open it up now and then, but to open it up for budgetary reasons, I think the pressures are pretty real,” said former Congressional Budget Office Director Doug Holtz-Eakin, who said it’s easier to cut future benefits than it is to cut programs that are already paying out.

Most of the health care law’s benefits won’t begin paying out for several years, and Mr. Holtz-Eakin said he expects legislators to revisit the law again before then.

The failure of the bipartisan supercommittee this week to come up with a plan to shrink the federal deficit and find spending cuts and revenues is likely to increase the pressure to raid the health care program for funds.

Rising cap

In December and April, lawmakers adjusted the formula that calculated how much of a subsidy would be given initially to buy health insurance through the new exchanges. Under the original law, many Americans would receive a subsidy larger than their income reflected, but Congresscapped the amount that they would have to repay.

In December, Congress raised the repayment cap — effectively lowering the government’s payout tab — and used the savings to cover higher payments to Medicare doctors. In April, Congress raised the cap again, this time retargeting the money to cover the costs of repealing the so-called 1099 reporting requirement that small businesses said was far too burdensome.

Dipping into the Affordable Care Act to fund other projects angers some supporters of the law, including Igor Volsky, with the Center for American Progress, though Mr. Volsky said the raids have been relatively small in the scope of the whole law.

“I don’t think lawmakers should be taking money out of the law, particularly since the law hasn’t been implemented,” he said. “We don’t know how things are going to shake out. Give it a chance to work; maybe then you can go back in and make some changes.”

New formula

The rare bipartisan agreement last week to repeal the plan to withhold 3 percent of payments from government contractors would cost the government $11 billion — money that had to come from somewhere.

Back to News »


Your source for news and views on patent reform.