Posted July 8, 2011
By Loren Adler and Shai Akabas
Chris Hildebrand contributed to this post.
America’s long-term debt problem is predominantly a story of rapidly rising health care costs and the retirement en masse of the baby boomers. That’s why last week’s Medicare reform proposal from Senators Coburn and Lieberman should be commended for attempting to bridge the partisan divide on this contentious, yet vitally important issue.
The Bipartisan Policy Center’s Debt Reduction Task Force similarly recommended the two largest policies in this package: updating Medicare’s complicated cost-sharing requirements while providing a catastrophic limit to out-of-pocket costs, and increasing Part B premiums to be more in line with the program’s original intentions.
All of the components in this package, though, are worthy of consideration and debate. Watching a moderate proposal such as this get demagogued is disconcerting since Medicare, as currently structured, is not fiscally sustainable. While there are valid concerns about some of the specific proposals - particularly to increasing the eligibility age (though read the strong counter-argument from the Committee for a Responsible Federal Budget) and to further means testing the program’s premiums - action must be taken to control Medicare’s growth. Those weighing in against this set of reforms should be asked to present their own recommendations that achieve equal or greater savings.
Are these the types of entitlement reforms that Senator Coburn was holding out for in the Gang of Six negotiations? If so, get him back in there! Any comprehensive, bipartisan debt-reduction package is going to require significant entitlement reform, and Democrats would be wise not to write off this serious proposal so quickly.
The specifics of the Coburn-Lieberman package:
- Increase the Medicare eligibility age from the current 65 to 67 by 2025
- Update Medicare’s cost-sharing rates and provide catastrophic coverage
- Limit Medigap coverage for Medicare’s cost sharing
- Require higher income seniors to pay the full cost of Part B and D premiums, among other means-testing initiatives
- Phase out Medicare payments for bad hospital debts
- Accelerate policies implemented in the Affordable Care Act to save money in the home health industry
- Implement programs to help combat Medicare fraud
- Use some of these savings to fund a “doc fix” for three years
Economic Policy Project