Healthcare Reductions and the “Donut Hole”

Abstract

Near the end of the Clinton administration, the healthcare provider community was ably demonstrating the negative impact of the reductions enacted under the Balanced Budget Act, and Congress made efforts to moderate reductions by delaying implementation. Just months after Bush II’s inauguration, the terrorist attacks of September 11, 2001, put anti-terrorism initiatives at the top of the legislative agenda, but some healthcare progress was still made. Under the leadership of the Secretary of Health and Human Services, Congress passed the Medicare Prescription Drug Improvement and Modernization Act, allowing private health insurers to directly compete with Medicare. In 2005, Congress passed the Deficit Reduction Act which continued the BBA delays but also made changes to the Medicaid program. It was followed by the 2006 Tax Relief and Health Care Act which allowed another extension to delay implementation of the Sustainable Growth Rate formula, authorized an increase in Medicare Part B reimbursements for providers, and gave more flexibility to states to adapt and adopt their Medicaid programs to market forces. Near the end of Bush’s second term, the country slid into recession causing many employees to again lose healthcare benefits, bringing the struggles of the uninsured and underinsured back into the spotlight.