News Column

Experts Urge Long-Term Medicare Savings

December 14, 2012

By Kelly Kennedy, USA TODAY,


Democrats and Republicans agree the solution to the nation's out-of-control health care spending won't be wrapped up with a "fiscal cliff" bargain and short-term spending cuts.

"There are a lot of conservatives and a lot of centrists and lot of progressives who believe we need comprehensive reform," said Robert Moffit, Medicare expert for the Heritage Foundation, a conservative think tank. "Medicare's long-term debt is $37 trillion -- that's not going to be solved in the next three weeks dealing with the fiscal cliff."

That's where the similarities end.

As things stand, federal health care spending will increase from 5% of the gross domestic product now to almost 10% in 2037, and continue to grow from there, according to the Congressional Budget Office (CBO). That's in part because health care costs overall are increasing, and because Baby Boomers are starting to hit Medicare age.

When it comes to the details of reducing long-term spending on Medicare, which cost an estimated $560 billion this year, Republican proposals that seem simple enough can cause unseen problems while those promoted by Democrats, including those in the 2010 health care law, are often hard to quantify. And one provision of the law aimed directly at curbing higher Medicare costs - the Independent Payment Advisory Board - has been under constant attack by Republicans as a form of health care rationing.

"People have these narrow budget blinders on, and they miss the big picture of lowering health care costs," said David Certner, AARP's legislative policy chief. "It's better for the federal government in the short-term, but it's worse for everybody else."

During last year's debt-ceiling crisis, Republicans and the Obama administration seemed close to some kind of agreement to raise the age of eligibility for Medicare from 65 to 67. Erskine Bowles, co-chairman of Obama's deficit-reduction commission, also said he supported an age increase.

The president's re-election and the June Supreme Court decision upholding the health care law mean it will remain in place. Seniors who would have to wait until age 67 for Medicare will now have the ability to buy health insurance.

Moffit said the age should be raised higher, to 68, which would save $244 billion over 10 years.

While increasing the eligibility age provides clear cost savings on paper, it may also shift costs without working to contain them elsewhere in Medicare and the health care system overall, said Tricia Neuman, senior vice president for the Kaiser Family Foundation.

One part of the health care law that was created specifically to save money remains a target of Republicans during the fiscal cliff debate - the Independent Payment Advisory Board. Neuman of the Kaiser Family Foundation said one proposal being discussed would bring the board into play earlier than now allowed in the health care law. Beginning in 2013, IPAB must present proposals to save money if projected spending goes above a certain amount. Medicare is not expected to hit that amount until 2021, based on CBO estimates.

Last month, House Majority Leader Eric Cantor, R-Va., again vowed to repeal IPAB, calling it a "rationing" board, even though the law specifically prohibits the board from cutting care to seniors. The board is required to cut Medicare spending when its budget is too high. It is not allowed to determine what kind of care a person receives. Congress can vote to reverse the board's decisions if they can save the same amount of money with another plan. The CBO determined that getting rid of the board would cost $3.1 billion over the next 10 years.

Source: Copyright USA TODAY 2012

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