By Douglas E. Schoen
THE REPUBLICAN PRIMARY in Florida brought discussions of healthcare,
particularly Medicare, back to the forefront of the national discourse. With its
sizeable senior population, Medicare and Social Security were top of mind to
It is certainly important that health care, and particularly Medicare, be
debated thoroughly during the Presidential campaign, as entitlement reform is
one of the most pressing issues that Congress and the White House will face next
year. Indeed, the latest annual Medicare and Social Security Trustees report
projected that the Medicare trust fund will run out in 2024 – five years earlier
than previously expected – and the Social Security trust fund will run out by
The good news is the emerging national consensus, across the ideological
spectrum, that we must address the nation’s budget problems and that Medicare
reform must be a part of any agreement. It’s essential, though, that changes to
the Medicare program be made responsibly, starting with the principle that
reform must protect the elements of the program that are working efficiently
One Medicare program that should be kept intact is Part D, the prescription drug
benefit program. Part D is the most cost-effective and successful entitlement
program the federal government runs. Even Newt Gingrich, presenting himself on
the campaign trail as the champion of conservative voters, has spoken up several
times in support of Part D. He has touted the market-based program’s success
and effectiveness in saving lives, saving money and offering people more
Thanks to competition among insurers, the prescription drug program costs the
government and beneficiaries far less than initially projected. Last year, the
Congressional Budget Office (CBO) reduced its baseline 10-year spending
projection for all of Medicare by $186 billion, two-thirds of which is accounted
for by a reduction in Part D spending.
While Medicare Part D is an example of a Medicare program that works, it is
clear that not all Medicare policies and programs are as useful and valuable.
The Independent Payment Advisory Board (IPAB) that was created with the passage
of President Obama’s health care law is one such provision that should be
eliminated. IPAB would allow an unelected and unaccountable board to make
program cuts to meet spending targets.
Proponents of the board have argued that IPAB will improve the quality of care
as a result of the cost-cutting measures it enacts. In fact, IPAB is a threat to
critical medical treatments and services for all Medicare beneficiaries. The
cuts it imposes will only reinforce systemic problems, not fix them, and create
Major changes in the Medicare program should not be decided by bureaucratic fiat
in a process lacking transparency and oversight. Rather, they should be debated
and decided by elected officials who will be held be accountable for their
decisions. Everyone knows that tough choices lie ahead. It’s up to our political
leaders to explain that reforms are essential to make Medicare secure for future
generations of seniors.
There are many possible ways to reduce Medicare spending. A broad reform debate
will enable people to better understand the tradeoffs involved.
To make sure program benefits remain available for those who need them most,
lawmakers should consider eligibility requirements and need-based benefits. By
raising the eligibility age for Medicare to 67 from 65, for example, $124
billion would be saved.
The bipartisan Simpson-Bowles commission has proposed gradually limiting the
Medicare benefits the wealthy receive. Last fall, President Obama proposed
higher Medicare premiums for high-income seniors as part of the deficit
reduction plan that he submitted to the Congressional “supercommittee.” Obama’s
plan would save about $20 billion over 10 years in Medicare.
Increasing premiums beneficiaries pay for Medicare doctors’ coverage to 35
percent of program costs from the current 25 percent could save $241 billion.
Modernizing Medicare’s benefit package to include copayments, deductibles and an
out-of-pocket maximum could save about $14 billion through 2018. A cutback in
subsidies for “Medigap” supplemental insurance would save $92 billion.
A still-bolder proposal going beyond Medicare itself would be to remove the
distortion in the tax code that keeps health insurance tied to employment. The
tax write-off for employer-provided health care benefits is the single largest
tax expenditure. It is estimated to cost the government more than $1 trillion
over the next five years. Capping the tax exclusion in 2018 and then phasing it
out over 10 years would result in massive savings that could be devoted to
shoring up Medicare and other programs for seniors.
The American people are ready to accept some difficult choices as part of a
comprehensive deficit reduction program. It is time for Congress to begin the
Douglas Schoen is a political strategist and author of “Mad as Hell: How the Tea Party Movement is Fundamentally Remaking Our Two-Party System” (Harper 2010), co-authored with Scott Rasmussen
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