Medicare actuary more confident in Paul Ryan’s ‘Road Map’ cost controls than Obama’s health law
The government’s chief actuary for Medicare spending on Wednesday said he had more confidence that Republican Paul Ryan’s plan to reform entitlements would drive down health-care costs than President Obama’s recently passed overhaul.
Richard S. Foster, the chief actuary of the Centers for Medicare and Medicaid Services, made the comment in response to questions from lawmakers during House Budget Committee hearing.
Rep. Chris Van Hollen, the ranking Democrat from Maryland, went on the attack against committee chairman Paul Ryan’s “Road Map” plan, which is a long-term proposal to make entitlement spending solvent.
Van Hollen pressed Foster on whether Ryan’s plan would work, prompting Foster to point out that one of the biggest problems in health care now is that most new technology that is developed increases costs rather than decreasing it.
“If there’s a way to turn around the mindset for the people who do the research and development … to get them to focus more on cost-reducing tech and less on cost increasing technology, if you can do that then one of biggest components of [increasing costs] turns to your side,” Foster said. “If you can put that pressure on the research and development community, you might have fighting chance of changing the nature of new medical technology in a way that makes lower cost levels possible.”
Foster said: “The Road Map has that potential. There is some potential for the Affordable Care Act price reductions, though I’m a little less confident about that.”
The thinking behind Foster’s comment is that a voucher system would reduce the amount of government money available for health care over time, causing consumers to shop around and creating an incentive in the health-care sector to compete for those dollars.
In a brief interview outside the House chamber later in the day, Ryan explained it this way: “There’s only going to be so much money for health care because the economy can only support so much … So is it better spent through the person in a competitive marketplace or through the government under increasing price controls and pressure?”
“If you go through the century, these entitlements consume all money. The GAO calculation assumes Congress is going to wise up and cut back on these programs because people will decide they don’t want 100 percent of their discretionary income going to health care. They want some for food and some for shelter and some for other things. So there will be a curtailment of health care spending in the future,” Ryan said. “The question is which curtailment gets you the better results at going after the cause of health inflation: consumer pressure or government price controls.”
During the hearing, Ryan, chairing the first meeting of the full Budget Committee for the first time since Republicans took control of the House in November, followed Van Hollen’s questions by implying the ranking member was trying to change the subject from the topic of the hearing, which was the fiscal consequences of Obama’s health overhaul.
“I find it interesting that ranking member spent most of his time not talking about the health-care law we’re having the hearing on today, but about an individual member’s proposal,” Ryan said.
Much of the discussion in the hearing, especially during the question-and-answer period with Ryan and Van Hollen, involved the impact of the payment rates from the government to physicians and health-care providers for Medicare recipients.
Congress has for years passed what is known as the “Doc Fix” to avoid cutting payment rates to providers. It would cost more than $200 billion to lower payments for the next 10 years to the rates recommended under the Medicare Sustainable Growth Rate.
Ryan has charged for more than a year that the $575 billion in cuts to Medicare included in Obama’s health law cannot be counted as both going into the Medicare trust fund and helping to pay for the expansion of Medicaid – which covers health care for low-income recipients – to 20 million more Americans.
Foster’s response to Ryan’s question of whether this is double counting went deep into the weeds of how the government often lends itself money from the trust funds for Medicare and Social Security.
“My answer is a definitive yes and no,” Foster said when asked if Obama’s health law double-counted.
The funds go from the Medicare trust fund to the Treasury general fund, and then can be used to pay for Medicaid. But at some point, the trust fund will need the money it lent out, perhaps when it comes time to pay recipients out of the fund.
“[A] hundred dollars can’t be spent as $100 toward health-care reform and as $100 toward health-care expenditures. That takes $200,” Foster said. “The key thing is when you go back to pay that $100, then Treasury has to find that $100 some other place.”
Rep. Mick Mulvaney, a newly elected congressman from South Carolina, honed in on whether this loaning of money out of the trust fund adds to the national debt.
“The $100 bond does increase the total gross of the total debt,” Foster said.
Such debt does count against the federal debt ceiling.