In his Inaugural speech, President Obama renewed his commitment to safety nets: “Medicare and Medicaid and Social Security–these things do not sap our initiative, they strengthen us.
Yet last week, he signaled that he is “open to making modest adjustments to programs like Medicare.” Should seniors brace for bad news?
No. There are many ways to cut Medicare spending without drawing blood. It’s a matter of using a scalpel, not an axe, to trim the fat.
Not long ago, the Center for American Progress (CAP) unveiled a Senior Protection Plan that would do just that, revealing how we could reduce Medicare spending by $385 billion without harming beneficiaries.”
The administration pays attention to CAP. Recently Bloomberg News described CAP as “the intellectual wellspring for Democratic policy proposals, including many that are shaping the agenda of the Obama administration.” This suggests that the report’s proposals may offer a preview of “adjustments to Medicare spending” that the president would consider.
How would CAP save $358 billion without rationing benefits or shifting costs to middle-class seniors? The report focuses on squeezing waste out of the system. Waste doesn’t help beneficiaries.
During recent fiscal cliff negotiations, Democrats and Republicans agreed to adopt four of CAP’s proposals, and I suspect that, over time, we will see more of its recommendations become part of the reality of health care reform.
Recently, I interviewed CAP president NeeraTanden and Topher Spiro, CAP’s managing director for health policy. I was impressed by how their practical approach differs from conservative strategies for slicing “entitlements.”
“Painful” Doesn’t Mean Better
When Republicans discuss safety nets such as Medicare they tend to talk proudly about the “very painful cuts” that will be needed. (Given their righteous tone, one would think that they were the ones who were going to suffer.)
Tanden explains that CAP’s goal is to offer ideas that would reduce waste and make Medicare more efficient “without punishing seniors.”
Complicated Problems and Simple Solutions
Typically, conservatives favor blunt solutions that can be summed up in a sound bite: “Raise the eligibility age for Medicare to 67.” (Here, I’m reminded of H.L. Mencken’s observation: “For every complicated problem, there is a solution that is short, simple, and wrong.”)
In truth, forcing seniors to wait until they are 67 would save nothing. The change would merely shifts costs to older seniors, younger Americans who have private insurance, employers, and the states. CAP points out: that “the cost increases would be twice as large as the federal savings.”
Nevertheless, in 2011, President Obama seemed open to this idea. Could this be one of the “adjustments” that he has in mind?
Spiro doesn’t think so. “That was in a different context. Since 2011, the Supreme Court has ruled that the states do not have to expand Medicaid.” As a result, more than 270,000 65-and 66-year-olds could be left uninsured. “The administration will take this under consideration.”
The other change, of course, is that “the president has more leverage,” Spiro notes. “He won the election.”
Dozens of Reforms Are Needed
While Republicans prefer sweeping across-the board solutions, thoughtful reform is more complicated.
CAP calls for dozens of discrete changes, including:
- prohibiting “pay for delay” agreements that let “brand-name drug manufacturers pay generic drug manufacturers to keep generics off the market” (saving $5 billion);
- increasing premiums for the wealthiest 10% of Medicare beneficiaries (raising $25 billion);
- insisting that drug-makers extend Medicaid rebates to low-income Medicare beneficiaries (saving $137.4 billion).
To fully understand CAP’s approach, consider the four ideas that were accepted during Fiscal Cliff negotiations. . .
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