CBO: Medicare council would have little savings effect

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.