Obama, GOP share some common ground on Medicare cuts

President Barack Obama gestures as he speaks at a Democratic party fundraiser in New York. Unlikely as it may seem, President Barack Obama and Republicans in Congress actually do share some common ground on the need to curb Medicare costs. Embedded in both the House GOP plan to replace Medicare with a voucher-like system and in Obama's counter-proposal is the idea of putting a limit on the growth of the $500-billion program, and making sure it sticks. (AP Photo/Kathy Willens, File)

Unlikely as it may seem, President Barack Obama and Republicans in Congress actually share some common ground on the need to curb Medicare costs to fight the spiraling federal debt.

Although the House GOP plan to replace Medicare with a voucher-like system got shunted aside last week, that may not be the end of the story. Embedded in both the Republican plan and in Obama’s counter-proposal is the idea of putting limits on the growth of the half-trillion-dollar-a-year program — and then enforcing them.

High-level deficit negotiations resume Tuesday under the stewardship of Vice President Joe Biden, and tackling health care spending is critical to what could become the year’s most important legislation.

The two sides differ sharply on how that should be done. Obama says the GOP would leave frail seniors at the mercy of profit-driven insurance companies. Republicans say the president would empower unaccountable bureaucrats to ration care.

If they can meet in the middle on the idea of an enforceable limit, it could open the door for major changes. Over time, that could mean less money for hospitals, doctors, drug companies and other providers and higher out-of-pocket expenses for many retirees.

Health care costs of an aging American population are the biggest challenge facing Biden and the deficit negotiators. Tiptoeing around the politically volatile issue won’t impress financial markets that are nervous over the $14 trillion national debt. Red ink ballooned as a consequence of two wars, tax cuts and the recession, and the government now is borrowing about 40 cents of every dollar it spends.

“We’re at a point where we really need to get a solution,” said Rep. Dave Camp of Michigan, whose job as chairman of the Ways and Means Committee makes him the top House Republican on Medicare. “In other times when we’ve had this debate, we haven’t had the debt crisis.”

Medicare is the largest single bill payer in the $2.5 trillion U.S. health care system. The way it works now, annual increases in the cost of care for 47 million elderly and disabled people basically get passed on to taxpayers. If spending surges in one part of the program, officials try to tamp it down in future years, like budgetary whack-a-mole.

Obama’s approach and the House GOP budget by Rep. Paul Ryan of Wisconsin would both try to limit the amount of taxpayer money going into Medicare.

It’s a tricky thing. If the limit is too tight, the welfare of millions of people could be jeopardized, to say nothing of the political careers of proponents. Too loose, and it’s meaningless.

“They are both saying Medicare has to be on a budget,” said economist Eugene Steuerle of the Urban Institute think tank. “But each of them is also saying it has to be my type of system on a budget, and not your type of system.”

Ryan’s plan would provide a fixed payment for everyone now 54 or younger to purchase a private insurance plan once they hit 65 and become eligible for Medicare. After getting an earful from constituents, GOP leaders backed away from pushing for Ryan’s overhaul, but still left it on the table.

Obama would keep Medicare a government program but give a panel of experts the power to force cuts if spending exceeded a certain target. His latest proposal would strengthen cost curbs that are already in the new health care overhaul.

Those are significant differences, but there’s another important yardstick for consumers: how hard each plan would ratchet down the growth of Medicare spending.

Think of it as a kind of Goldilocks test.

Ryan’s plan would increase the government payment for retirees’ health insurance by the general inflation rate and the age of the individual. It could be like Goldilocks landing on a hard mattress, because health care costs gallop ahead of inflation.

Obama calls for cuts in Medicare payments to service providers if spending increases by more than the overall growth of the economy and an additional cushion. Medicare costs have been growing faster than the economy, so Goldilocks would still feel it, but there would be some give.

AARP, the seniors lobby, opposes Ryan’s plan and has concerns about Obama’s.

It’s too early to tell if the deficit talks will lead to budget limits for Medicare. But the idea can be paired with another plan circulating in Congress: automatic restraints if lawmakers fail to keep federal spending at about one-fifth the size of the economy.

“We’re going to have to return to first principles of budgeting, that you have to set limits,” said Maya MacGuineas, of the Committee for a Responsible Federal Budget, a bipartisan group that advocates reducing the deficit. “That’s only going to get more support as pressure from health care drains the rest of the budget.”

Copyright © 2011 The Associated Press

2 Responses to "Obama, GOP share some common ground on Medicare cuts"

  1. Carl Nemo  May 10, 2011 at 7:44 am

    Where are the ‘deep discussions’ concerning defense spending/waste cuts. There’s never a shortage of taxpayer money for a never-ending stream of ‘killtoys’ for the military…no?

    We’re still in Iraq with a contingent of 50,000 adviser/trainers, not including a mystery number of thousands of overpaid contracting parasites, the same for Afghanistan with over a 100,000 of our troops ‘milling about’. Pakistan is another rathole where our tax dollars are frittered away to allegedly buy staging zones for our ‘war on terror’ in aforementioned Afghanistan; this entire shakedown orhestrated by our premier ongoing government enfranchised “RICO Enterprise”, known as the CIA all with the blessings of a hardcore group of corrupt, power-crazed Congressmen. I know, we the groundlings, simply don’t get the ‘big picture’; ie., the larger scope of things when it comes to ‘necessary graft and corruption’ in high places. I say bullsh*t!

    Medicare/Medicaid is now plagued with an annual fraud cost to the tune of 80 billion, not the program itself, but the medical grifters and outright gangster elements that are exploiting it, many of the these entities running such scams being newly landed Russian ‘immigrants’ and those from the Balkan regions, Romania et al. Nice huh…! Ah, Amerika the land of ‘opportunity’…no?!

    Homeland Security/TSA has turned into another national ‘blood-sucking’ boondoggle with a bunch of ‘authority’ types prancing about, armed to the teeth with badges while swaggering and shoving their statist enfranchised crap down our collective throats all in the name of the so-called ‘war on terror’ with little to show for it except raising the blood pressure of travelers and making life in general; miserable in the U.S.

    Folks we’ve met the ‘terrorists’, both in a financial and life-changing way and “it’s them”…our now rogue, out of control government!

    We’re soon to make Greece seem like a international success story in national solvency. Recently the “Weiss Sovereign Debt Ratings” for nations rated the U.S., C, lower than that of Bulgaria and Mexico, both with a C+. Greece is rated E (failed); I.E., a ‘basket case’ for all practical purposes. Seemingly they’re soon to have company in the basket. Nice huh? / : |

    Carl Nemo **==

  2. Julian Bradshaw  May 10, 2011 at 2:29 pm

    Canada spends considerably less on healthcare than the US, and everyone in the country is covered. Universal medicare, the Canadian plan, costs less, delivers more and is good for business, because businesses don’t have to cover the cost of medical care for their employees…something that in many cases constitutes the largest cost of doing business in the US.

    But we all know that there is never any limit on the amount of money available for the military. Talk about having screwed up priorities!

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