Deficit Panel Eyes Another Bite at Healthcare

Friday, 04 Jun 2010 08:03 AM

 

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WASHINGTON - Concern over rising U.S. debt could force lawmakers to take another crack at reining in healthcare costs long before any promised savings from President Barack Obama's sweeping overhaul are realized.

The new healthcare law, signed by Obama in March, seeks to save about $500 billion from the Medicare government healthcare program for the elderly over the next decade without reducing basic benefits.

But deficit hawks and even some supporters of the overhaul say more cuts are needed to improve the long-term U.S. budget outlook and avoid the kind of financial market turmoil recently sparked by Europe's debt woes.

The Democratic-controlled Congress is unlikely to rewrite the new law, but some experts believe more could be done to speed up Medicare payment reforms and expand other cost-saving measures in the new law.

"The rising costs of healthcare will put tremendous pressure on the federal budget during the next few decades and beyond," Douglas Elmendorf, director of the non-partisan Congressional Budget Office, wrote in his blog last week. "In CBO's judgment, the health legislation enacted earlier this year does not substantially diminish that pressure."

When it comes to reducing the deficit, Medicare and other government healthcare programs are big-ticket items. The aging 78-million strong baby boom generation and rising medical costs will continue to put pressure on government spending. Elmendorf concluded that putting the budget on a sustainable path would require a "significant reduction" in the growth of federal healthcare spending.

POLITICAL UNCERTAINTIES

It is unclear how much more can be squeezed out of Medicare given the uncertainties and political realities surrounding the overhaul. But a fiscal commission asked by Obama to recommend ways to reduce the deficit and slow the growth of U.S. debt plans to tackle the issue.

"It is the biggest issue. There is no question," said Erskine Bowles, co-chairman of the commission.

The U.S. debt just topped $13 trillion. Much of it is held by China and other countries, and some analysts worry the debt could double in a decade if nothing is done to stop the flow of red ink.

"I'm hoping that we are not going to redebate the bill that's been passed, but work with that as a foundation and then figure out ... what more needs to be done if anything," said Andrew Stern, a member of the fiscal commission who backed Obama's healthcare overhaul when he was president of the Service Employees International Union.

Polling data show the healthcare overhaul remains unpopular and Republicans are pushing for repeal in the run-up to the November congressional elections when they hope to recapture control of Congress.

The partisan divide will make it difficult for the 18-member bipartisan commission to agree on further cuts.

"The problem is that Republicans are pretty uniformly opposed to any increase in revenues and Democrats aren't willing to cut spending unless taxes are on the table. So we have an impossible situation," said Isabel Sawhill, a budget expert at the Brookings Institution.

PUTTING A FACE ON THE NUMBERS

Sawhill says lawmakers should strengthen the authority of an independent payment board that is to propose Medicare payment savings if specific cost-cutting targets aren't met. The first proposals would not go into effect before 2015 and some providers, such as hospitals, are off limits until 2020.

She also suggested lawmakers take another look at a provisions that create a new government insurance program to help the elderly and disabled stay in their homes. Many experts say it could add significantly to long-term deficits.

"It's a ticking time bomb in terms of its impact on deficit," Sawhill said.

Republicans are pushing to allow insurers to sell policies across state lines and to limit medical malpractice lawsuits, which they say would save people money.

Whatever the deficit commission recommends, Democratic Congressman Xavier Becerra, a member of the panel, said in an interview that it is important budget cutters keep in mind the human face behind the numbers.

"What I am concerned about is that we are going to do this number crunching in a sterile environment that doesn't take into account the reality of day to day life for Americans," he said.

© 2014 Thomson/Reuters. All rights reserved.

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