We've discussed many times before the important role entitlement reform plays in addressing our long-term debt. As the baby boomer generation continues to age and health care costs continue to grow faster than the economy, federal health care spending is expected to rise and comprise a growing share of the federal budget.
The Urban Institute's Robert Berenson, John Holahan, and Stephen Zuckerman recently released a very useful paper entitled "Can Medicare Be Preserved While Reducing the Deficit?" The paper presents a number of Medicare reforms for beneficiaries, providers, and health insurance plans, with gross savings of $735 billion and savings of $600 billion net of a repeal of the Sustainable Growth Rate (SGR) formula.
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.