Budget official urges new look at Medicare Part D

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Congress' top accountant yesterday told House Budget Committee members that they should revisit the new Medicare prescription-drug program as one way to help reduce the amount of money that will be spent on health care.

David M. Walker, U.S. comptroller general, and other budget analysts who testified before the panel said the rising cost of health care is one of the main factors driving the growth of federal entitlement spending. They said health care costs must be controlled and that the programs themselves are in need of reform.

After presenting a list of options to save health care dollars, Mr. Walker, who heads the Government Accountability Office (GAO), said: "I would add to that ... re-looking at Medicare Part D," the new prescription-drug program that officially began last month. Mr. Walker said it needs attention because the government would have to invest $8.7 trillion in today's dollars to pay for the program during the next 70-plus years.

Although he did not list specifics regarding how the Medicare drug program should be changed, he said money would be saved if Medicare could negotiate directly with drug companies for lower prices -- something that Democrats and a few Republicans have been advocating. Supporters cite the success of the Department of Veterans Affairs (VA), which has such negotiating authority.

But Douglas Holtz-Eakin, an economist at the Council on Foreign Relations and a former director of the Congressional Budget Office, said the VA population and structure is different from Medicare's, and that the government would not save much money by allowing Medicare to negotiate.

He urged caution against changing the Medicare drug program, which encountered enrollment glitches and other problems at the outset.

"It's a couple of months old," he said. "It's going to take awhile for this to shake out."

Mr. Walker suggested focusing more on prevention, developing a core of essential health care services and allowing people to pay for extra services, and mandating a limited growth rate for government-sponsored health care programs.

Both men told the panel that the population of baby boomers who start retiring in a few years will make for tough choices in reforming entitlement programs.

Mr. Holtz-Eakin said Congress likely will have to make annual efforts to forcibly curb entitlement spending. That budget-reconciliation process occurred last year when, for the first time in eight years, Congress gathered $40 billion in savings from entitlement programs.

"This is the future of this committee," Mr. Holtz-Eakin said.

Democrats are hammering the need to revisit the new Medicare drug program during this election year and have introduced several bills.

Top House and Senate Democrats yesterday demanded action from Republicans, who have said more legislation is not needed.

"Medicare Part D is a reward for drug companies and a disaster for America's seniors," said Sen. Richard J. Durbin, Illinois Democrat.