CBO outlines health benefit cuts worth hundreds of billions

Other options include:

• creating a public option starting in 2014: $88 billion;

• medical malpractice reforms: $64 billion;

• giving federal employees a voucher plan for their benefits: $73.25 billion;

• increasing states' share of Medicaid spending: $181 billion;

• cutting support for graduate medical education at teaching hospitals: $69.4 billion;

• raising Medicare eligibility age to 67: $124.8 billion; 

• having Medicare recipients contribute to the first 20 days of a skilled nursing facility stay: $21.3 billion;

• requiring a co-payment for home health episodes covered by Medicare: $40.1 billion;

• increasing cost-sharing for Medicare and Medigap insurance: $92.5 billion;

• reducing payment rates in high-spending geographic areas: $47.6 billion;

• cutting payments to small rural hospitals: $62.2 billion;

• requiring drug makers to offer rebates for "dual eligibles": $112 billion.

CBO also looked at ways to cut the military's healthcare costs.

Options include:

• introducing minimum out-of-pocket requirements under TRICARE For Life: $43 billion;

• increasing medical cost-sharing for military retirees not yet eligible for Medicare: $28.1 billion;

• limiting TRICARE benefits for retirees and their dependents: $105.2 billion; and

• increasing cost-sharing for pharmaceuticals under TRICARE: $13.3 billion.

Finally, the options paper also considered ways to cut discretionary spending, which is appropriated each year by Congress.

Options include financing food safety and inspection services through fees (saves $11.6 billion) and cutting the National Institutes of Health budget and allowing it to grow only at the rate of inflation (cuts outlays by $37.81 billion).