CRFB President Maya MacGuineas and Board Member Douglas Holtz-Eakin Testify on Medicare Reform

On Wednesday, CRFB President Maya MacGuineas and CRFB board member Douglas Holtz-Eakin testified in front of the Senate Special Committee on Aging on Medicare reform. The hearing focused on the future of the vital program and ways it can be reformed to strengthen its finances going forward. The hearing examined a variety of possible reforms and what their effect would be, both fiscally and from a programmatic standpoint. 

MacGuineas testified that there are a wide variety of potential reforms for Medicare, in fact many of which overlap. She identified three general types of reforms:

• Savers - things that lower Medicare spending directly, such as raising the Medicare eligibility age
• Benders - things that lower the growth rate curve to health care spending, such as cost-sharing requirements
• Structural Reforms - things that would change the basic structure of Medicare, such as putting Medicare on a budget

MacGuineas then went into that fact that no matter how large a package of health reforms are passed, it is likely that more changes will be necessary later. She also noted that just because something does not score well in the 10-year budget window, that does not mean it is not worthwhile as things that save money past the 10-year window are critical. Finally, she urged that we need to look at way to end the open-ended nature of health-care spending and put health care spending on a budget as we do other parts of the federal spending.

Holtz-Eakin also testified that Medicare needs to reformed in the face of our fiscal challenges. Like MacGuineas, he offered a number of policy prescriptions and specific ideas. As an immediate reform Holtz-Eakin said that the Sustainable Growth Rate (SGR) needs to be fixed. He also went into the pros and cons of other Medicare reforms, such as various tort reform options, MediGAP reform, and premium support, among others. 

Overall, our long-term fiscal problems are caused by entitlement growth, driven largely by spiraling health-care costs. Thus, Medicare reform is crucial to fixing our fiscal problems, something that we hope the Super Committee and Congress as a whole will address.