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CBO: Medicare council would have little savings effect
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07/25/09 12:08 PM ET
The Congressional Budget Office told House leadership on Saturday that
a White House plan for an independent advisory council to rein in
Medicare spending would do little to save the government money over the
next 10 years.
In a letter sent to Majority Leader Steny Hoyer (D-Md.), the Congressional Budget Office (CBO) concluded that the Independent Medicare Advisory Council Act (IMAC) would yield savings of $2 billion between 2010 and 2019 -- with all of the savings realized between 2016 and 2019. The overall healthcare overhaul is expected to have a price tag of $1 trillion.
"In CBO's judgment, the
probability is high that no savings would be
realized," CBO Director Douglas Elmendorf wrote to Hoyer on Saturday. "There is also a chance that
substantial savings might be
realized. Looking beyond the 10-year budget window, CBO expects that
this proposal would generate larger but still modest savings on the
same probabilistic basis."
Elmendorf explained that the way the IMAC is envisioned in its current form reduces "the likelihood that the council would recommend reductions in payment rates or reforms in the delivery system for Medicare
services that would yield much greater budgetary savings."
Significant changes in the way payments to providers are made and in the incentives facing beneficiaries "would probably be necessary to obtain substantial savings," he wrote. "Outside influence on the council and the president, however, might make it politically difficult to recommend and implement
reforms that could be viewed as undesirable by interested parties."
The latest CBO estimate on the Medicare proposal comes after Democrats have been pressing feverishly to lower costs of healthcare reform in order to win the support of the fiscally conservative Blue Dog Democrats, who want significant changes.
On Tuesday, Blue Dogs and Rep. Henry Waxman (D-Calif.), the chairman of the Energy and Commerce panel, praised the proposal to emerge from White House meetings of giving an independent panel, rather than Congress, the ability to keep Medicare spending in check.
CBO also sent the letter to House Minority Leader John Boehner (R-Ohio), as well as Waxman and several other committee chairmen. The letter also made its way to the committees of jurisdiction in the Senate.
In a letter sent to Majority Leader Steny Hoyer (D-Md.), the Congressional Budget Office (CBO) concluded that the Independent Medicare Advisory Council Act (IMAC) would yield savings of $2 billion between 2010 and 2019 -- with all of the savings realized between 2016 and 2019. The overall healthcare overhaul is expected to have a price tag of $1 trillion.
Elmendorf explained that the way the IMAC is envisioned in its current form reduces "the likelihood that the council would recommend reductions in payment rates or reforms in the delivery system for Medicare
services that would yield much greater budgetary savings."
Significant changes in the way payments to providers are made and in the incentives facing beneficiaries "would probably be necessary to obtain substantial savings," he wrote. "Outside influence on the council and the president, however, might make it politically difficult to recommend and implement
reforms that could be viewed as undesirable by interested parties."
The latest CBO estimate on the Medicare proposal comes after Democrats have been pressing feverishly to lower costs of healthcare reform in order to win the support of the fiscally conservative Blue Dog Democrats, who want significant changes.
On Tuesday, Blue Dogs and Rep. Henry Waxman (D-Calif.), the chairman of the Energy and Commerce panel, praised the proposal to emerge from White House meetings of giving an independent panel, rather than Congress, the ability to keep Medicare spending in check.
CBO also sent the letter to House Minority Leader John Boehner (R-Ohio), as well as Waxman and several other committee chairmen. The letter also made its way to the committees of jurisdiction in the Senate.
Rep. Mike Ross (D-Ark.), the chairman of the Blue Dog healthcare task force, and Sen. Kent Conrad (D-N.D.), the chairman of the Budget Committee, said earlier this week that the CBO already told them the Medicare council would not produce large short-term savings but that it could be good long term.
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