Provider Groups Blast U.S. Senate CAP Act

Healthcare provider and consumer groups joined ranks on Wednesday to blast a proposal in the U.S. Senate to impose a cap on federal spending, saying the "real-world" impact of the plan would cut more than $2.7 trillion from critical safety net programs.

The Commitment to American Prosperity (CAP) Act, sponsored by Sen. Bob Corker (R-TN) and Sen. Claire McCaskill (D-MO), would limit federal spending to about 21% of Gross Domestic Product and automatically cut across all federal programs in any year where spending is projected to exceed the cap. 

The Lewin Group was commissioned by a group of provider and consumer organizations to analyze the impact of the proposal and found that the CAP Act would cut $4.2 trillion from federal spending between 2013 and 2021, including: $1.3 trillion in Social Security; $859 billion in Medicare; and $575 billion in federal Medicaid payments to states.

"Arbitrary caps that don't take into account the growing healthcare needs of our aging population are bad news for the patients and communities hospitals serve," said Rich Umbdenstock, president/ CEO of the American Hospital Association.  "Hospitals are already absorbing more than $155 billion in federal reductions as well as billions more in reductions in state Medicaid programs.   Additional cuts of this magnitude would force most hospitals to operate in the red, just at a time when more people are turning to them for care."

Newly inaugurated American Medical Association President Peter Carmel, MD, said physicians understand the need to reduce the nation's deficit, but he suggested that budget cuts should be done with a scalpel and not a chainsaw.

"We know from experience that across-the-board cuts to federal health programs are counterproductive to health system improvements and will ultimately limit access to care for patients," Carmel said. "With baby boomers entering Medicare and more patients joining Medicaid, the AMA encourages policymakers to focus on policy changes that will protect vulnerable patients while improving the fiscal health of the nation."

Under the CAP Act, The Lewin Group analysis found thatby 2021:

• Social Security benefits would be cut by nearly 20%.
• Cuts to Social Security and other income support programs would force 3.8 million people into poverty--2.1 million of them seniors, a 44% increase among this age group.
• 5.1 million people could lose their health insurance.
• Dramatic reductions in fees for physician services would lead to fewer physicians participating in Medicare.
• Cuts to hospitals could force most to operate in the red, jeopardizing access to care.
• Up to 1.3 million healthcare workers could lose their jobs.
• Cost shifting of federal payment shortfalls to private employers could lead to a nearly 5% increase in health insurance premiums for those in employer-sponsored plans.

"AARP understands the nation's long-term fiscal challenges must be confronted, but this discussion cannot simply be reduced to a budget exercise—this is about real people," said David Certner, AARP's Legislative Policy Director. "We oppose proposals that rely on arbitrary spending limits because they could result in harmful cuts to the critical Medicare, Social Security and long-term care benefits that allow millions of older Americans to live independently and age with dignity. Such proposals threaten the financial and health security of today's seniors and future generations." 

It is not clear how much support the CAP Act has in Congress.Nevertheless, the groups that banded to oppose the proposal said similar consequences could result from any across-the-board measure that sets specific limits on spending. They want Congress to reject proposals that call for arbitrary spending caps.

The groups that commissioned The Lewin Group study include American Hospital Association, American Medical Association, AARP, American College of Cardiology and LeadingAge.

For more information, view a summary of the findings or the full report.