• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Gang of Six Fails Big on Medicare

    The recent proposal from the Gang of Six has received attention as a possible deal for raising the debt ceiling. On health care, the G6 proposal was initially weak, and as the story goes, the Gang allegedly beefed up its changes to health care spending to attract more support. But in reality, the improvements are small, and the plan ultimately fails to adequately address federal spending on health entitlements or to promise acceptable solutions down the road.

    Medicare, the health entitlement for the elderly and disabled, represents the largest driver of deficit spending, as its cost rises each year due to rising health care costs and the aging population. For this reason, most agree that reductions in federal health spending should be at the heart of any serious proposal to reduce deficits.

    The G6 proposal is almost laughably vague on its changes to Medicare. It would require the Senate Finance Committee to find savings within all health spending to offset the cost of permanently fixing the sustainable growth rate—which would otherwise cut physicians’ Medicare payments by almost 30 percent at the end of this year. This flawed strategy of cost containment has been delayed since 2002 due to the harmful effects it would have on seniors’ access to physicians and services, and a permanent solution would be a welcome change. But punting to the Senate Finance Committee gives no indication whatsoever of how the “doc fix” will be paid for. The only real clue is the committee’s previous work: Obamacare.

    With little direction provided by the Gang of Six proposal itself, the “savings” used to pay for the doc fix would probably follow along the same lines as the policies in the unpopular health care legislation already passed into law. More reimbursement cuts or unproven promises of future efficiency gains won’t be enough to pay for a “doc fix” or to address the additional trillions in unfunded obligations for which Medicare is responsible.

    The Finance Committee would also be tasked with finding additional savings in federal health spending, but here, both the amount and the source are up for interpretation. The executive summary cites savings of either $85 billion or $202 billion—apparently, the Gang hasn’t decided yet.

    Neither of these numbers is anything to applaud. Even if the G6 proposal aimed for the higher target—$202 billion between 2012 and 2021—this would save only a measly $13 billion above the health savings in the Bowles–Simpson deficit commission proposal over the same timeframe. If the G6 aimed for $85 billion in savings instead, their plan would be $104 billion below the commission’s proposal. And then there’s the fact that we still have no idea how either dollar amount in savings would be achieved. In the Bowles–Simpson plan, we knew exactly how the cuts would be delivered.

    Finally, the G6 relies on a hard cap on Medicare spending to create savings. It would be enacted in—get this—2020 and would require Congress and the President to act if the growth in total federal health costs exceeded GDP+1 percent per beneficiary. This is the same growth rate that will be enforced by the Independent Payment Advisory Board for Medicare. While placing a hard cap on health care spending is a good idea, this one is unenforceable and does nothing to ensure much-needed structural reforms.

    Congress won’t ever achieve meaningful deficit reduction without a complete transformation of Medicare. Nothing in the G6 proposal indicates that it would even start Congress down the path to accomplishing this goal. This is, quite simply, insufficient and unacceptable

    Posted in Obamacare [slideshow_deploy]

    3 Responses to Gang of Six Fails Big on Medicare

    1. Bobbie says:

      Please keep in mind, in the private sector all jobs are paid by the service as rightfully should be. In government all jobs are paid NOT BY SERVICE but by tax payers ONLY and where CORRUPTION IS ALWAYS!!! The democrats screwed these programs so bad to FIT THEIR AGENDA with no supervision no checks and/or balance. No doubt deliberately to make it difficut to resolve. Stand for Americans, who you are and don't listen to the media or the redundant cries for pity from democrats. Democrats weaken America(ns)! Don't fall!

    2. Just get rid of all scooters for the folks who really do not need them? I have taken care of elderly relatives at end stage and found records where my honest relatives challenged doctors for charges on services they did not receive. So enforce the white coated crooks bad deeds. One relative at 80 could do almost anything but cartwheels and had a scooter rep hound her until she got a scooter, why I asked, I wanted her to finally leave me alone she answered.

    3. George Colgrove, VA says:

      McConnel, et al is done – let this be a warning to all other republicans. A vote to increase the debt ceiling is a letter of resigation. You will be primaried! THe picture of McConnel is very appropreate – he knows his defeate is complete.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.