Debt Panel Discusses Entitlement Spending in First Policy Meeting

Spending on entitlement programs played a prominent role in discussions during the first policy meeting of the new debt panel, Modern Healthcare reports.

Testimony From CBO Director

The hearing, held Tuesday, featured testimony from Congressional Budget Office Director Douglas Elmendorf on the increasing costs of Medicare and Medicaid.

Elmendorf said, "If current policies are continued in coming years, the aging of the population and rising costs of health care will push up federal spending, measured as a share of GDP, well above the amount of revenue the federal government has collected in the past." He added, "As a result, putting the federal budget on a sustainable path will require significant changes in spending policies, significant changes in tax policies, or both" (Zigmond, Modern Healthcare, 9/13).

When Sen. Patty Murray (D-Wash.) asked Elmendorf if a "comprehensive" approach, including increasing revenue and reforming entitlement programs, would be preferable to efforts aimed at finding discretionary savings, Elmendorf deflected the question, saying "it is not CBO's role to make recommendations" about cost-cutting strategies (O'Donnell, National Journal, 9/13).

However, Elmendorf suggested trying to cut the deficit later in the decade without making upfront spending cuts or tax increases, which could result in "an added drag on the weak economic expansion."

Meanwhile, Sen. Jon Kyl (R-Ariz.) said he is not interested in making cuts to Medicare and Medicaid benefits or reimbursements. He said the panel should instead root out administrative inefficiencies, such as improper payments to businesses and individuals (Wong, Politico, 9/13).

Democrats Resist Entitlement Cuts Proposed by Obama

Many Democrats are publicly opposing a plan by President Obama to make significant cuts to entitlement programs to fund his new jobs plan, the New York Times reports (Pear, New York Times, 9/14). Obama last week said the debt panel should cut entitlement programs to help offset the $450 billion cost of his jobs proposal (California Healthline, 9/12).

Rep. Frank Pallone (D-N.J.) said, "Medicare and Medicaid cannot sustain additional cuts, whether in benefits or provider payments." Rep. Emanuel Cleaver (D-Mo.), chair of the Congressional Black Caucus, said the caucus "would rather see some kind of increase in revenue as opposed to cutting these programs."

Democrats and analysts also believe that making cuts to Medicare and Medicaid would undermine their opportunity to criticize such proposals by the GOP during the 2012 presidential campaign. Cleaver said the president's plan "cancels out any bludgeoning that Democrats might give the Republicans over Medicare and Medicaid" (New York Times, 9/14).

Health Industry Forms Plan To Address Costs

Members of the Healthcare Leadership Council -- including executives from Aetna, the Mayo Clinic and Pfizer -- on Wednesday are expected to approve a plan that would call for increasing the eligibility age for Medicare and shifting beneficiaries into private health plans, the Wall Street Journal reports.

The organization intends to send the plan to the debt panel for consideration, as part of an effort to resist larger cuts (Adamy, Wall Street Journal, 9/14).