18 federal health budget cut options

The Congressional Budget Office recently came out with what amounts to a new game for people who want to revamp the federal government: a list of 87 ideas for narrowing the federal budget deficit, along with estimates of how much each option might help.

CBO analysts give dozens of ideas for raising revenue, and dozens of ideas for cutting spending.

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The CBO analysts describe each policy option in detail. The analysts discuss how each option might hurt people and, in some cases, how options could produce problems that could lead to new federal spending.

For agents and brokers interested in acute care or long-term care health insurance products, the most interesting section of the guide may be a part that lists 18 ideas for narrowing the portion of the federal budget deficit related to health care programs.

Health spending accounted for about $3.2 trillion in spending in 2015, or 18 percent of annual U.S. gross domestic product, according to government figures. Medicare, a federal program, and Medicaid, a program funded by the federal government and state governments, accounted for $1.2 trillion of 2015 health care spending.

Adopting the toughest version of all 18 CBO health proposals could narrow the federal budget deficit by about $3.7 trillion over a 10-year period, or an average of $370 billion per year, according to the CBO impact estimates. The average value of the cuts would amount to about 12 percent of total 2015 health care spending.

Here’s a look at the 18 health-related items and their value. The values represent how much the CBO analysts think the item would cut federal spending over the period from 2017 through 2026.

Rank on the list is based on the CBO’s highest possible impact estimate for that item. The CBO estimates, for example, that reducing Medicare’s coverage of patients’ bad debt could save from $15 billion to $31 billion over 10 years. That item’s position on the following list is based on the $31 billion impact estimate.

Small health budget changers

18. Ending congressional direction of U.S. Defense Department medical research: $9 billion.

17. Raise the age of eligibility for Medicare to 67: $18 billion.

16. Change how TRICARE, a military health care program, handles fees and cost-sharing amounts for working-age military retirees: $18 billion.

15. Add minimum out-of-pocket spending requirements to the military’s TRICARE for Life program: $27 billion.

14. Adopting a voucher-based spending reduction program at the Federal Employees Health Benefits Program: $31 billion.

13. Reducing Medicare’s coverage of patients’ bad debt: $15 billion to $31 billion.

12. Reducing federal payments for graduate medical education at teaching hospitals: $32 billion.