GREENSTEIN: Health care reform: Tough task ahead

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By Robert Greenstein

ANALYSIS/OPINION:

As Congress returns this week, no task before it looms larger than reforming a health care system that costs more than any other country's yet leaves 46 million people uninsured.

Policymakers are converging on the idea of using a health insurance "exchange," in which insurers compete for business and can't reject people with medical conditions or charge them higher rates, and lower-income people receive subsidies to make coverage affordable. But policymakers also will have to make progress on the toughest issue - how to pay for health reform so it doesn't make the troubling fiscal picture even worse.

Nothing is more important for long-term fiscal stability than slowing the growth rate of health care costs in both the public and private sectors. Major changes in medical practice will be needed. But we don't yet know that much about what specific changes will slow cost growth without reducing quality. Even with such changes, savings will materialize slowly over many years.

So, Congress must find specific savings now to offset the substantial cost of health reform over the next 10 years, as the nation moves toward universal coverage (itself a necessary condition for restraining costs over time). To find the savings, policymakers will have to stand up to interest groups and make tough choices on both spending and revenues. What should they do?

President Obama has proposed $295 billion in savings over 10 years from Medicare and Medicaid. A bipartisan paper from Senate Finance Committee staff provides more options. Policymakers should adopt virtually all of these proposals, which include:

• Curbing Medicare overpayments to private insurers. As Congress' bipartisan expert advisory body on Medicare has recommended, Congress should "level the playing field" by paying the private insurance companies that cover millions of Medicare beneficiaries through the Medicare Advantage program the same amount it would cost to cover these people through traditional Medicare, rather than paying them an average of $1,000 in overpayments per beneficiary per year.

• Charging higher-income seniors more for Medicare prescription drug coverage, as various Republicans have long proposed.

• Lowering the cost of Medicaid and Medicare drug coverage through reforms in how the programs pay for drugs.

• Reducing Medicare overuse by reforming the "Medigap" market so that policies that supplement Medicare coverage no longer pay every dollar of Medicare deductibles and co-payments, which leads beneficiaries to overuse Medicare services.