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CBO Director Has No Magic Pill For Medicare

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One of the leading sources of answers in Washington says he has no quick and easy solutions for the problems that face Medicare and the U.S. long term care finance system.[@@]

The debate about LTC finance is still at a very early stage, Douglas Holtz-Eakin, director of the Congressional Budget Office, said here Tuesday at a conference organized by America’s Health Insurance Plans, Washington.

The debate about tax incentives for private LTC insurance is a “classic example” of the policy questions facing the federal government as it decides how big of a role the government should play in paying for health care, Holtz-Eakin said.

The Medicare system raises even bigger questions, but it is much newer than Social Security, and, today, the CBO cannot provide the kinds of clear analyses of problems at the Medicare program that it provides for problems at Social Security, Holtz-Eakin said.

“Because the diagnosis isn’t as clear, there isn’t a menu of solutions I can provide,” he said.

Instead, Holtz-Eakin said, the problems of the Medicare system may best be dealt with incrementally.

Holtz-Eakin said his support for an incremental approach to change might not be popular.

“It’s not a great strategy,” he said. “But it’s all I’ve got.”

Holtz-Eakin did say that he hopes Congress will get serious about reforming programs such as Medicare, Medicaid and Social Security.

“It’s better to act now than to wait,” Holtz-Eakin said.

Today, the government expects the Social Security surplus to run out in 2010, Holtz-Eakin said.

“Every year thereafter, Congress will have to find resources that it used to find in Social Security elsewhere in the federal budget,” he said. “Social Security will no longer be a cash cow. It will be a cash drain.”

Meanwhile, Medicare probably will be getting 40% of its funding from general revenue around 2007. If the general revenue funding level stays over 40% for 2 consecutive years, the Medicare Modernization Act requires Congress to intervene and find ways to reduce that number, Holtz-Eakin said.


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