Last week, lion of the left Rep. John Conyers led a protest on Capitol Hill where he sang a familiar tune: “No cuts” to Medicare, Medicaid and Social Security. The target of his protest was the Joint Select Committee on Deficit Reduction, a.k.a. the “supercommittee.”
While co-chair Rep. Jeb Hensarling (R-TX) joked last week that he does not have a cape to go with his supercommittee assignment, the challenges before the panel are certainly super-sized. And they are only made worse by shrill cries of no changes to entitlement programs.
It is no revelation that health care spending — Medicare, Medicaid and now Obamacare — is beyond unsustainable. The president’s own bipartisan Deficit Commission put it bluntly last year in its final report when it said, “Commission members, and virtually all budget experts, agree that the rapid growth of federal healthcare spending is the primary driver of long-term deficits.”
According to the Congressional Budget Office’s (CBO) most recent long-term budget outlook, health care spending has grown by about 66% over the past 25 years and will grow nearly as quickly over the next 25.
Medicare spending will nearly triple by 2035. The latest Medicare Trustees’ report concluded that Medicare is already $38 trillion in the hole; meaning we’ve promised $38 trillion in benefits and we don’t have the money to cover it.
One look at this CBO chart and the steep incline tells you all you need to know about the disastrous future that could await us if we don’t fix health care spending.
What does the left say about this crisis? “No cuts.” “Not a dime,” said Rep. Jerrod Nadler (D-NY) at the Conyers rally.
The National Committee to Preserve Social Security and Medicare must think that money grows on trees. It concluded that, “Because [Medicare] payments are adjusted every year, these programs cannot run out of money.”
This is the same group that asserted that “Medicare is an efficient, effective health care program.” They must have missed the Government Accountability Office report designating Medicare as “a high-risk program because of its size, complexity and susceptibility to improper payments,” such as fraud, waste and abuse.
As CBO director Doug Elmendorf has explained, if we don’t fundamentally change these programs, we’ll have to either raise taxes to catch up with spending or cut benefits to levels that we can actually afford.
Before we have to make that dire choice, we should pursue a third way. And that’s where the supercommittee comes into play. If its members are serious and try to “go big” as many on Capitol Hill have suggested, then Medicare is the place to start.
They should first look at what a previous “supercommittee” did. The National Bipartisan Commission on the Future of Medicare was created by President Clinton in 1998 to address the same long-term Medicare crisis we face today. Chaired by former Louisiana Senator John Breaux and former House Ways and Means Committee Chairman Bill Thomas, the Bipartisan Commission recommended many changes, but most notably Medicare premium support.
Premium support is basically where the federal government gives beneficiaries a subsidy to shop for a private Medicare plan that best suits them. The government would oversee the entire process by regulating plans, setting benefit levels, ensuring standards of quality, negotiating premium prices and providing information on plan options.
Similar in many ways to the plan put forth by House Budget Chairman Paul Ryan and former Clinton OMB Director Alice Rivlin, the Bipartisan Commission’s final report noted that this approach “would allow beneficiaries to choose from among competing comprehensive health plans in a system based on a blend of existing government protections and market-based competition.”
President Obama’s own Deficit Commission recommended that this model be aggressively explored by piloting it in the Federal Employees Health Benefits Program for possible future expansion into Medicare.
Ironically this model is also similar to Obamacare. There the federal government is giving large subsidies for citizens to buy private health insurance and regulating plan options, mandating benefits, setting quality standards and price levels and providing plan information.
Why would many Democrats defend premium support in Obamacare, but demonize it in Medicare?
To be fair, the flip side of the question can also be asked about Republicans. The difference is that Medicare has been and will always be a federal program, while Obamacare pushes the federal government deep into the private insurance market where it doesn’t belong.
While there are many other improvements that must be made in Medicare — paying doctors for providing quality care, expanding information technology, going after fraud in a serious way — the formula of choice, competition and consumers can lower costs.
This has already worked in the Medicare prescription drug program, where costs are significantly lower than they were originally expected to be.
Given the budget calamity that is just around the corner, we cannot bow to calls of no changes to the programs that are clearly leading us toward the cliff. The supercommittee may not have time to “go big” with Medicare premium support, but it can and should do all it can to set the wheels in motion.
David Merritt is the former Chief Executive Officer at the Center for Health Transformation and the Gingrich Group.
