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Reduction In Medicare, Medicaid Needed

Ruzanna Harutyunyan's picture

The Senate Budget Committee on Tuesday held a confirmation hearing for White House Office of Management and Budget Director-designate Peter Orszag, during which he discussed the need to reduce spending on Medicare and Medicaid, CQ Today reports. During the hearing, Orszag said that the current budgetary process does not address the long-term fiscal problems that the federal government faces. He said, "My view, for whatever it is worth, is that it is difficult to argue that our current processes for addressing long-term budget issues, especially including health care, are working that well" (Clarke, CQ Today, 1/13).

Orszag said that, in the event that spending on Medicare and Medicaid continues to increase at current levels, the programs will account for 20% of gross domestic product by 2050. He said that efforts to reduce spending on Medicare and Medicaid must occur in combination with broader efforts to reduce health care costs. "Indeed, were we to try to slow Medicare and Medicaid spending alone without slowing the rate of growth in health care costs systemwide, we would simply create massive access problems for Medicare and Medicaid beneficiaries, since providers would be increasingly unwilling to serve those populations relative to others," Orszag said.

Orszag said, "The principal drive of our long-term deficits is rising health costs," adding, "If confirmed, I look forward to working closely" on the issue with HHS Secretary-designate Tom Daschle. He said, "We appear to have massive opportunities to reduce health care costs without harming health outcomes" (Reichard, CQ HealthBeat, 1/13).

Potential Proposals

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Orszag cited efforts to expand health care information technology, determine the reasons for regional differences in the cost of medical services and improve preventive care as potential proposals to reduce health care costs. "There is a ray of hope," he said, adding, "Significant evidence suggests that higher cost does not always mean higher-quality care" (CQ Today, 1/13). Orszag said, "I think at the heart of a lot of the problems we have with the health care system is the lack of incentives for better care" (CQ HealthBeat, 1/13).

However, Orszag "was careful not to endorse any specific proposals, saying only that there are many worthy of review," according to CQ Today. He said that President-elect Barack Obama will provide more details about specific proposals to reduce health care costs when he releases his first budget plan in late February (CQ Today, 1/13). According to CQ Today, "Orszag is expected to be a leader on that front in the Obama administration as well as in crafting the incoming administration's health overhaul plan" (CQ HealthBeat, 1/13).

Prospects for Confirmation

Committee Chair Kent Conrad (D-N.D.) said that he hopes the Senate will confirm Orszag and Robert Nabors, whom Obama has nominated as deputy director of OMB, in the near future. However, the committee cannot vote on their nominations until Obama takes office and files official paperwork with Congress, according to Conrad.

Conrad said that he hopes the Senate will approve a unanimous-consent agreement to allow the committee to discharge Orszag and Nabors without a vote on Jan. 20, a move that would allow an immediate vote on their nominations by the full Senate (CQ Today, 1/13). Conrad said, "We have talked to the offices of the members of the committee (about the unanimous consent) and we have strong agreement" (CongressDaily, 1/13).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.