Hatch's Five Ideas to Reduce Federal Health Spending

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. Providing specifics as Sen. Hatch did, especially on the entitlement side, is quite welcome at this point as budget negotiations will be ramping up in the coming weeks and the need for lawmakers to focus on the country's real fiscal challenges: entitlement reform and fundamental tax reform.

According to an accompanying press release, Hatch said:

If we’re serious about addressing our nation’s debt, Medicare and Medicaid need structural reforms....Today, I want to lay out five specific reform proposals that can help to rein in entitlement spending and put our nation on a better fiscal course.  These are reasonable, rational ideas that have all enjoyed bipartisan support over the years.  I believe they should be included in any deficit reduction package.

In his speech, he proposed five structural reforms to the Medicare and Medicaid programs. In the release, Senator Hatch highlighted the role they have played in prior budget negotiations and proposals.

Last month, we listed these and other ideas in our Health Care and Revenue Savings Options report. Below are the policies Senator Hatch proposed along with similar options from our report:

• Raise the Medicare eligibility age from 65 to 67.

• Limit Medigap plans from covering initial out-of-pocket expenses.

• Reform Medicare cost-sharing into a single combined annual deductible with a uniform coinsurance rate and an annual catastrophic cap.

• Institute competitive bidding into Medicare.

• Establish per capita caps on Medicaid spending.

As Ranking Member of the Senate Finance Committee, which has jurisdiction over Medicare and Medicaid, Senator Hatch’s speech is an important addition to the discussion around reforming federal health spending. With uncertain health care cost growth and demographic pressures from an aging population, long-term structural reforms like these should be on the table as lawmakers consider a bipartisan deficit reduction plan.