Medicare costs must be reined in to tame deficit

If lawmakers want to reduce the $1.3 trillion federal budget deficit, they will have to go after Medicare, according to many news reports.

So far, the chairmen of President Obama's debt-reduction commission, former Senator Alan Simpson--a Republican--and Erskine Bowles--a Democrat who formerly was President Clinton's chief of staff--face an uphill battle, the New York Times reports. Indeed, they've delayed a vote several days, because they haven't yet managed to win the backing of any of the panel's elected officials for their proposed spending cuts.

Political will seems to be in short supply. In fact, both parties are afraid to ignite short-term political opposition by suggesting harsh measures to guarantee the country's long-term financial health.

The national debate over Medicare, which is a big contributor to the national debt, won't go away anytime soon. The program, which covers 47 million people, will spend an estimated $519 billion this year, KHN reports. By 2020, if nothing changes, spending would nearly double ($929 billion). In the first 10 years of health reform, another 30 million baby boomers will become eligible for and enroll in Medicare, boosting the program-eligible population by about 30 percent.

There's simply "no way we can address our fiscal problems without coming to terms with Medicare's future," Douglas Holtz-Eakin, former head of the Congressional Budget Office, told NPR.

Some possible solutions might involve narrowing the eligibility requirements--something no one has suggested; paying doctors and hospitals less; or forcing Medicare patients to pay more. Neither of the latter two ideas could hold water, considering providers will reject getting less, while patients won't want to pay more.

Trying to maintain the status quo isn't much of an option either. "What people don't understand about Medicare is how crappy the benefit package is," Bruce Vladeck, President Clinton's Medicare chief, told NPR.

Telling Medicare beneficiaries with higher incomes to pay more likely won't fill the gap, he said, because there probably won't be that many high-income boomer beneficiaries. Boomers have lost pensions and retiree health benefits and watched their real estate values plummet in recent years.

To learn more:
- read the NPR story
- here's the New York Times story
- read the Kaiser Health News article