III: Health Care

Achieve health care cost containment.

Other Information:

Replace the phantom savings from scheduled Medicare reimbursement cuts that will never materialize and from a new long-term care program that is unsustainable with real, common-sense reforms to physician payments, cost-sharing, malpractice law, prescription drug costs, government-subsidized medical education, and other sources. Institute additional long-term measures to bring down spending growth. Health Care Savings -- Federal health care spending represents our single largest fiscal challenge over the long-run. As the baby boomers retire and overall health care costs continue to grow faster than the economy, federal health spending threatens to balloon. Under its extended-baseline scenario, CBO projects that federal health care spending for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the health insurance exchange subsidies will grow from nearly 6 percent of GDP in 2010 to about 10 percent in 2035, and continue to grow thereafter. These projections likely understate true amount, because they count on large phantom savings – from a scheduled 23 percent cut in Medicare physician payments that will never occur and from long-term care premiums in an unsustainable program (the Community Living Assistance Services and Supports Act, or “CLASS Act”). The Commission recommends first reforming both the formula for physician payments (known as the Sustainable Growth Rate or SGR) and the CLASS Act, and finding savings throughout the health care system to offset their costs. In addition, we recommend a number of other reforms to reduce federal health spending and slow the growth of health care costs more broadly. Over the longer term (2020 and beyond), the Commission recommends setting targets for the total federal budgetary commitment to health care and requiring further structural reforms if federal health spending exceeds the program-specific and overall targets. We recognize that controlling federal health spending will be very difficult without reducing the growth of health care costs overall. To that end, the Commission’s recommendations on tax reform regarding reducing and potentially eliminating the exclusion for employer-provided health insurance will help decrease growth in health care spending, according to virtually all health economists.

Objective(s):

3.1: Medicare

3.2: CLASS Act

3.3: Doc Fix

3.3.1: Medicaid Fraud

3.3.2: Medicare Cost-Sharing

3.3.3: First-Dollar Coverage

3.3.4: Drug Rebate

3.3.5: Medical Education

3.3.6: Bad Debts

3.3.7: Home Health

3.3.8: Medicaid Tax Gimmick

3.3.9: Dual Eligibles

3.3.10: Administrative Costs

3.3.11: Medicaid Waivers

3.3.12: Medical Malpractice

3.3.13: FEHB Program

3.4: Payment Reform

3.5: Provider Carve-Outs

3.6: Health Care Budget

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