Lawmakers are trying to round up more ideas for ways to cut federal spending on health care programs.
The federal government had a budget deficit of $486 billion in fiscal year 2014 on $3 trillion in revenue.
The government spent about $1 trillion on health programs. About $600 billion went to Medicare. The rest went to the federal portion of Medicaid spending; the Children’s Health Insurance Program; health programs for military personnel, veterans and federal employees; and programs related to the Patient Protection and Affordable Care Act (PPACA), including the PPACA exchange plan premium subsidy tax credits.
Increases in health care costs have slowed, but the costs remain huge, and funding for entitlement programs — Medicare and Medicaid — will crowd out resources for other programs, such as medical research, if Congress fails to act, Rep. Joseph Pitts, R-Pa., chairman of the House Energy and Commerce health subcommittee, said today at a hearing on health spending priorities organized by the subcommittee.
“We need policies that drive reform and savings that make sense,” Pitts said.
To see some of the hearing witnesses’ ideas, read on.
1. Squeeze the Medicare providers, not elderly and disabled enrollees
Judy Feder, a professor at Georgetown University, said one principle members of Congress and other policymakers should follow is to focus mainly on cutting reimbursement rates for the health care providers, not the amount of necessary care, or the quality of care, that frail and elderly Americans get.
“Medicare and Medicaid are essential to the health and financial well-being of the elderly, disabled, and poor,” Feder said, according to a written version of her testimony posted on the committee website. “Their costs per enrollee have consistently grown more slowly than private insurance premiums, despite their focus on populations with the greatest health care needs.”
Medicaid, for example, costs 27 percent less per child and 20 percent less per non-elderly adult than private coverage, Feder said.
Medicare spending per enrollee grew just 0.7 percent per year from 2010 through 2014, which was below the rate of growth in gross domestic product (GDP) per capita, Feder said.
States already have the flexibility to come up with creative solutions in the Medicaid program, and Medicaid provider pay is already low, Feder said.
Policymakers can probably get more savings, without hurting patients, through steps such as reducing spending on Medicare Advantage and refining payment mechanisms for post-acute care, Feder said.
Critics have complained about the effects of previous Medicare policy changes, such as changes in the way Medicare pays hospitals, but evidence shows the changes have promoted efficiency in health care delivery, Feder said.
2. Make drug providers offer Medicaid enrollees rebates
Marc Goldwein, senior policy director at Committee for a Responsible Federal Budget, had several ideas for saving money by reducing federal spending on drugs.
One was to encourage doctors to use low-cost drugs, rather than high-cost drugs, when they must administer the drugs themselves.