Healthcare Spending in the Age of Obamacare
NEW YORK ( MainStreet) How does the federal government reduce federal healthcare spending in the age of Obamacare? The Congressional Budget Office (CBO) has some proposals - some of which seem antithetical to Obamacare. This does nothing to dispel the idea that the left hand of the federal government does not know what the federal right hand is doing.
CBO director Doug Elmendorf gave a presentation at the Public Policy Initiative of the Wharton School at the University of Pennsylvania, Philadelphia on November 15 in which he explained why federal healthcare spending is increasing. He then proposed some ways it can be reduced - which seems to be at odds with President Barack Obama who has made it his signature plan to increase federal healthcare spending.
Elmendorf said the federal government spent roughly $1 trillion on healthcare in fiscal year 2013. It also subsidized healthcare to the tune of another $250 billion in taxes. According to Elmendorf, the spending is more now than it was ten or twenty years ago. The next ten or twenty years will see even more increases.
He talked about how we got here and he proposed some ideas that could slow that growth. He mentioned an aging population, more subsidies and higher costs.
"Indeed, growth in federal spending for healthcare is the key factor making the budget policies of the past unsustainable in the future," Elmendorf said.
"Federal healthcare spending is growing because of a combination of the aging of the population, an expansion of federal subsidies for health insurance, and rising healthcare costs per person," he continued. "Since a central goal of policies regarding health and healthcare is to help people live longer, the more successful our policies are, the more population aging we will have. Hence, efforts to reduce federal healthcare spending need to be directed at the other two factors pushing up spending."
Elmendorf noted that reducing the number of people eligible for federal healthcare subsidies or the size of those subsidies would be a straightforward way to reduce federal spending.
"CBO has examined some potential reductions in federal subsidies, including repeal of the coverage provisions of the Affordable Care Act, the elimination of subsidies through that act for people with income above a certain threshold, an increase in the Medicare eligibility age, and an increase in Medicare premiums," Elmendorf said.
But such changes, while reducing federal spending, would also be counter to the Obama administration's stated goal of providing universal healthcare. Furthermore, the additional uncompensated care that would strain the system more he noted.
Elmendorf also observed legislators could enact policies that will reduce healthcare costs per person. He said CBO has reviewed some ideas. Among them are "including improving the health of the population, paying Medicare providers in different ways, increasing beneficiaries' out-of-pocket costs in Medicare, creating a competitive market for private insurers in Medicare and capping the amount that each state receives for Medicaid."