I want to welcome everyone to today’s hearing on the President’s budget and other bipartisan proposals to reform Medicare. This is the fourth hearing for our subcommittee this Congress and the second Ways & Means Committee hearing in a series focusing on proposals to reform Medicare and Social Security.
During our first hearing of the Congress we focused on redesigning the Medicare benefit package to make it more rational and responsive to seniors and Medicare patients. Today’s discussion is an extension of that hearing – discussing the details around three specific policies:
1. Increasing income-related premiums for Medicare Parts B & D;
2. Increasing the annual Medicare Part B deductible; and
3. Establishing a home health copay.
We have focused on these three policies because they are included in the President’s 2014 budget and supported by several bipartisan organizations.
All too often recently, discussions surrounding finding Medicare savings have come under the context of a “grand bargain” or a “super committee.”
As the committee of jurisdiction over these critical topics, we have an obligation to discuss them publicly and determine how best to craft policy in these areas. That is why we are holding this hearing today.
The President’s budget estimates these three policies will save $54 billion over 10 years. These are real savings for a program that is facing bankruptcy in ten short years.
Asking seniors to pay more when they have the means to do so is not a new concept.
In 2003, Republicans lead the charge with income-related premiums for Medicare Part B and D in the Medicare Modernization Act, which ensured that seniors have access to affordable, high quality medicines through free market competition for their business.
In 2010, Democrats included income-related premiums in the Medicaid program, Health Exchanges and increases for Medicare Part D in the Affordable Care Act known as ObamaCare.
Throughout federal programs there has been recognition that some seniors can contribute more and some seniors need additional assistance.
The growth of the retiree population has been, and will continue to be, a tremendous source of stress on Medicare’s finances.
When Medicare was enacted in 1965 the average life expectancy was 70.2 years. It was anticipated that Medicare would cover an average person’s health expenditures for the last 5.2 years of life.
In 2010, the average American lived to the age of 78.4, which means Medicare covered the last 13.4 years of life – a 158 percent increase. Yet, we have not made changes to the Medicare benefit structure to address this increase.
Now, I know that some may want to reject these policies out of hand and may suggest that the overall Medicare spending per senior has decreased. They may contend that this means there is less of a need to find Medicare savings.
I too am glad to see Medicare’s spending is down. But the program is headed toward bankruptcy in ten short years. Burying our heads in the sand and waiting for the looming crisis to overwhelm us will only force future Congress’s to take more drastic measures.
Even the Medicare Trustees recognize the growing challenges of Medicare’s financial future as the baby boomers enter Medicare. Even if per senior spending decreases, that will not help the sustainability of the Trust funds when the number of new seniors coming into the program begins to dramatically increase.
And simply cutting providers is not the answer. In fact, the Medicare Trustees warn that because of cuts already in law, 15 percent of Part A providers will be unprofitable by 2019 and roughly 40 percent would be unprofitable by 2050. The actuaries warn that these cuts will force providers to “withdraw from providing services to Medicare beneficiaries.”
Finally, instead of simply focusing on how much money a policy might save Medicare, or how many more beneficiaries will pay more, I challenge this Committee and our witnesses today to think bolder.
The question that we should be asking ourselves is: How can we act now – this year – to extend Medicare solvency for an additional 10 years beyond 2023? Why not extend its life an additional 20 years? We owe it to current and future seniors to examine and pursue these critical goals.
It will require hard decisions, yes, but making them now will ensure a vibrant Medicare for generations to come.