We've said frequently on this blog that controlling health care spending will be a crucial part of putting the debt on a sustainable path. After all, federal spending on health is expected to grow from 4.9 percent of the economy in 2013 to 6.4 percent in 2023 under our realistic baseline and to much higher levels thereafter.
As promised, the Brookings Institution's Hamilton Project has released the remaining papers in its series "15 Ways to Rethink the Budget." We will be discussing the papers a series of blog posts. We covered two defense proposals on Friday, and next we focus on their Medicare proposals which affect both beneficiaries and providers in the program.
A popular secondary story from the newest CBO baseline centers on the "doc fix," the patch that prevents a large cut to physician payments due to the Sustainable Growth Rate (SGR) formula. The American Taxpayer Relief Act (ATRA) put off a 27 percent cut to physician payments for 2013, but left in place cuts for future years (now scheduled to be 25 percent in 2014).
At nearly $500 billion a year, Medicare is the costliest piece of the federal health care budget. As we’ve discussed before, Medicare spending and enrollment is projected to rise rapidly as more baby boomers retire over the next few decades. Meanwhile, Part A of Medicare has been running cash-flow deficits over the last several years and is projected to be insolvent by 2024.
Adding to the conversation around reforming federal health spending, Senator Tom Coburn (R-OK) has released a short report on why the Medicare age should be raised.
Today, Senator Orrin Hatch (R-UT) spoke on the floor of the Senate about the need for health entitlement reforms to be part of a deficit reduction package. Senator Hatch joins a handful of other lawmakers in recent weeks who have proposed a range of entitlement reform policies that could help reduce our long-term debt.
Last Congress, H.R. 452 was introduced in the House to repeal the Independent Payment Advisory Board (IPAB), a 15 member board of Senate-confirmed experts created by the Affordable Care Act with the purpose of containing Medicare costs.
Earlier this week, we discussed the recent slowdown of National Health Expenditures (NHE) and how, while promising, it may not last. That means more must be done to control health care spending in the future.
With health care spending a central topic in budget discussions, the actuaries at the Centers for Medicare and Medicaid Services (CMS) have released a timely report on the growth of National Health Expenditures (NHE). In the report, published in Health Affairs, CMS finds that total health care spending (both private and public spending) in the U.S. in 2011 reached $2.7 trillion, or about 17.9 percent of GDP. This comes out to roughly $8,700 per person.
The recent offers from the White House and Republican House leadership have shown that both parties appear to be committed to finding a compromise. But lawmakers still have a long ways to go. Not only must Congress and the President find a way to replace the fiscal cliff, but they should do so with a plan that adequately addresseses our unsustainable debt problem. To do this, all ideas must be on the table.