Inside the payroll tax cut package

Associated Press

Updated: Feb 16, 2012 5:09 PM

(AP) - Congressional negotiators have agreed on a roughly $150 billion package that extends three major programs through the end of the year: a 2 percentage-point reduction in the Social Security payroll tax, federal unemployment benefits for the long-time unemployed and avoidance of a 27 percent cut in reimbursements for doctors treating Medicare patients.

A look at how the package would be financed:

— There would be no cuts in other programs to pay for the $100 billion cost of extending the payroll tax cut.

— Half of the unemployment benefit extension would be paid for by asking new federal employees to contribute an additional 2.3 percent into their defined benefit plans. The other half would come from auctioning off broadcast airwaves to wireless companies. That raises $15 billion even after $7 billion would be spent for a new communications network for emergency workers.

— The approximately $20 billion cost of preventing payment cuts to Medicare doctors would be paid for with cuts in other areas of health care.

— $2.5 billion would come from a health care law fund directed to Louisiana to make up for Medicaid money it lost because of the influx of federal dollars after Hurricane Katrina.

— $4.1 billion from reducing Medicaid payments to hospitals with a disproportionate share of uninsured patients. President Barack Obama sought similar cuts in his proposed 2013 budget.

—$5 billion would be cut from a 10-year, $15 billion program included in the 2010 health care law, promoted by Sen. Tom Harkin, D-Iowa, that was aimed at boosting prevention and public health programs.

—$2.7 billion saved by reducing payment rates for clinical laboratory services by 2 percent in 2013.

—$6.9 billion saved by reducing bad debt payments. Currently Medicare reimburses hospitals and skilled nursing facilities for 70 percent of cost-sharing that patients are unable or unwilling to pay. Bad debt reimbursements would be phased down to 65 percent in the 2013 budget year. Obama had also recommended reductions in these payments.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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