The New York Times gets around to writing the story that I’ve understood to be the case for a couple weeks, that there’s a Medicare-and-Medicaid-for-revenue swap on the table in the debt limit negotiations. Like other reports, this one claims that the Medicare and Medicaid cuts are limited to providers. Of course, those could certainly have a bearing on access for beneficiaries if the providers decide that the benefits of taking those patients are too low.

Obama administration officials are offering to cut tens of billions of dollars from Medicare and Medicaid in negotiations to reduce the federal budget deficit, but the depth of the cuts depends on whether Republicans are willing to accept any increases in tax revenues.

Administration officials and Republican negotiators say the money can be taken from health care providers like hospitals and nursing homes without directly imposing new costs on needy beneficiaries or radically restructuring either program.

Before the talks led by Vice President Joseph R. Biden Jr. broke off 12 days ago, negotiators said, they had reached substantial agreement on many cuts in the growth of Medicare, which provides care to people 65 and older, and Medicaid, which covers lower-income people. Those proposals are still on the table when Congress reconvenes this week, aides said, and are serious options that Democrats could accept in exchange for Republican concessions that raise revenues.

Hospital lobbyists are the ones doing the heavy lifting in opposition to this. It could be that what they got away with in the Affordable Care Act is what’s being attacked in this round. But let’s look at specifically what gets mentioned as far as cuts:

• “cuts in Medicare payments to hospitals for uncollectible patient debt and the training of doctors;”
• “steps to eliminate Medicare ‘overpayments’ to nursing homes;”
• “a reduction in the federal share of some Medicaid spending;”
• “and new restrictions on states’ ability to finance Medicaid by imposing taxes on hospitals and other health care providers.”

The Medicare cuts do look like hits on providers, and an extension of the ACA programs designed to rein in costs. The Medicaid cuts go straight to overall spending on the program, and cannot help but lead to either increased cost-sharing for beneficiaries or reduced enrollment. It just shifts the costs from the federal government to the states, and then restricts the states from coming up with the money to offset the cost on their own. I don’t know how this squares with the maintenance of effort provisions in the ACA, which force a minimum level of coverage on the states. If that is still active, then this is just a measure to increase state budget deficits by $100 billion over the next ten years, which will have to come out of something else. Probably education, as that’s the other major state expense. Hospitals are ready to shift these costs as well, particularly by raising rates on private insurance carriers.

The extent of these cuts would depend on the extent of the revenue increases in the deal. Republicans on the Sunday shows made the puzzling claim that they support “revenue raisers” as long as that resulted in no increased tax revenue in federal coffers. Which I think means that they don’t support revenue raisers.

I think I know what’s happening here. The Administration has given enough in cuts to satisfy that $2 trillion limit, they just want these token revenue increases to secure the deal. They think somehow that slaying the spectre of Grover Norquist with a deal that’s 6:1 cuts or more will help them politically. Yet Norquist’s statement at the top of Deval Patrick’s op-ed – “We will make it so that a Democrat cannot govern as a Democrat” – is quite operative here. This is a gift of a deal for Republicans, and a few showy “revenue raisers” won’t change that. Indeed, Republicans would be insane to turn down this deal, a point David Brooks makes today. But implicit in that analysis is that Democrats would be insane to MAKE it. Or at least, they would have to believe really wrong, Hoover-era things about how the economy works. The fact is that we don’t have a spending problem, but a recession problem, combined with the lowest level of tax revenue in 60 years. And this deal will only exacerbate that.

When Republicans end the kabuki and accept an extreme austerity deal with a couple tax raisers, they won’t have lost, is the point.