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Medicare News
Medicare, Medicaid to Consume 20% of Gross National
Product by 2050
Medicare Advantage subsidy making problem worse:
Director Congressional Budget Office
June 22, 2007 -
Congressional Budget Office
Director Peter Orszag on Thursday at a hearing of the
Senate Budget Committee
said that federal spending on Medicare and Medicaid would increase from
about 4.5% to about 20% of U.S. gross domestic product by 2050,
CongressDaily
reports.
At the hearing, the first in a series on health
care costs, Orszag said, "Rising health care costs and their
consequences for federal health insurance programs constitute the
nation's central fiscal challenge" (Posner,
CongressDaily,
6/21).
He added, "The rate at which health care costs grow
relative to income is the most important determinant of the long-term
fiscal balance; it exerts a significantly larger influence on the budget
over the long term than other commonly cited factors, such as the aging
of the population" (Reichard,
CQ HealthBeat, 6/21).
According to Orszag, efforts to limit federal
health care spending "over the long term will be very difficult without
addressing the underlying forces that are also causing private costs for
health care to rise."
Orszag attributed increased health care spending in
part to new medical treatments, which "introduce new categories of
spending" and in some cases "are being given broadly to patients" who
"could do just as well with less-expensive care" (CongressDaily,
6/21).
Asked about the effects of Medicare Advantage on
federal health care spending, Orszag said that, "if over the next couple
of years the rate of growth that we have experienced recently in
Medicare Advantage were to continue, I think the result would be a
fundamental change in the nature of the Medicare system that may then be
hard to reverse," adding that the larger the rate of growth, "the more
fundamental the change in the current nature of the Medicare system, and
the higher the cost of the system" (CQ
HealthBeat, 6/21).
Recommendations
Orszag recommended expanded research on the comparative effectiveness of
medical treatments through increased collection and data on patients
that could compare treatments with the information made available to
physicians under privacy restrictions.
In addition, he recommended "modest" financial
incentives to physicians and patients to encourage use of cost-effective
medical treatments (CongressDaily,
6/21).
He also recommended the elimination of regional
variations in the practice of medicine, a move that he said could reduce
health care spending by 30%. He added that, although improved preventive
care and "wellness" programs can "help to promote better health
outcomes," their "effects on federal and total health spending are
uncertain" (CQ
HealthBeat, 6/21).
>>
Orszag's testimony is available online.
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