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Conservative and Liberal Policy Analysts Agree on Need to Reduce Medicare Costs

By Rebecca Adams, CQ HealthBeat Associate Editor

June 3, 2013 -- Although federal health spending appears to be slowing, now is not the time to stop looking for ways to reduce national Medicare costs, two health policy analysts with different political ideologies said at a recent briefing.

"It's premature to celebrate the disappearance of the excess cost problem because we've been through this before," said former Congressional Budget Office director Doug Holtz-Eakin, now president of the conservative American Action Forum. He was speaking on a panel at the nonpartisan Alliance for Health Reform.

Holtz-Eakin cited several previous historical periods in which Medicare spending slowed but later picked back up, including 1975, 1978, 1984 and 1994-99, when managed care initially reduced costs before a backlash among the American public forced insurers to loosen restrictions.

Center for American Progress President Neera Tanden, a former Obama administration aide, agreed.

Recent news about lower Medicare spending does not "take any pressure off the effort to reduce national health expenditures," she said.
Beyond the consensus about the need to keep looking for ways to cut Medicare expenses, the two also agreed that systems that pay based on the quality of care could reduce long-term costs.

However, they did not agree on other ways to restructure the Medicare system.

Democrats have "fundamental questions about efforts to simply shift costs to beneficiaries," said Tanden, as Democrats say that some Republicans have proposed in their budget plans. "We should be wary of those efforts."

The Medicare trustees' report released May 31 showed that the trust fund that finances the inpatient hospital part of Medicare will be exhausted in 2026, two years later than had been projected last year.

Some of the slowdown could be due to changes in the delivery of health care, but a good deal of it may be due to the recession.
When the report was released, lawmakers also celebrated the positive news but said it may not last, particularly because of changing demographics as the nation ages.

"These numbers can allow us to be optimistic, but they are not a reason for inaction. We are facing a wave of retiring baby boomers. Close to 10,000 people a day qualify for benefits," Senate Finance Committee Chairman Max Baucus, D-Mont., said last week.

But adjustments to Medicare are politically explosive, particularly if they reduce benefits for seniors, and some lawmakers may feel that the improved fiscal news reduces the urgency of trying to push for change.

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