Cantor Urges President to Detail Cuts In Medicare, Medicaid as Part of Debt Plan

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House Majority Leader Eric Cantor (R-Va.) July 12 called on President Obama to provide details on how he would cut entitlements, including Medicare and Medicaid, as part of a comprehensive deal to cut the deficit and raise the debt limit.

“I think it's time for [the president] to come out and say what he's for and stop sitting here talking about the fact that he's ready to do the big deal,” said Cantor, speaking at a U.S. Chamber of Commerce symposium on controlling health care costs.

Cantor, who made his remarks before returning to the White House to continue talks on raising the debt limit, noted that Republicans had already voted to overhaul Medicare and Medicaid as part of their budget blueprint that passed the House in April. “We're the ones putting our budget forward to begin with,” he said.

The Republican plan would transform Medicare into a so-called premium support, or voucher program, in which seniors would receive a federal payment to purchase private health insurance (66 HCDR, 4/6/11). Medicaid, now funded jointly by the federal government and the states, would shift to a block grant program in which states would receive a set federal payment each year to provide health care for beneficiaries.

During Cantor's 15-minute keynote speech, the majority leader castigated the Obama administration's signature health reform law, calling it “the wrong policy, built on the wrong assumptions” and “fundamentally flawed.”

“I've come to the conclusion we have to repeal Obamacare because there is no ability to improve a flawed product that's premised on more coming from Washington,” Cantor said.

He said the GOP alternative plan for reforming health care would focus on preserving existing employer-based health insurance but with more incentives to strengthen the individual and small group markets. “That's where competition is lacking,” he said.

Other elements of a Republican health care plan would include allowing consumers to purchase health insurance across state lines and malpractice reform, Cantor said.

‘No Larger Issue,’ CBO Director Says

Appearing on a panel earlier in the day, Douglas Elmendorf, director of the Congressional Budget Office, said, “There is no larger issue in the federal budget” than spending on health care. The nearly $1 trillion in health care spending by the federal government this year accounts for one-fourth of the federal budget and 7 percent of gross domestic product, he said.

Over the past decade, spending on health care in government and the private sector has increased more rapidly than GDP, Elmendorf said, adding, “There is no reason to expect the underlying forces that produced that pattern to evaporate overnight.”

In addition to accelerating costs, an aging population over the next 10 years will further strain the nation's health care system, Elmendorf stressed, noting that by 2021, the nation's Medicare population will grow by 33 percent.

Reforms included in the Patient Protection and Affordable Care Act will attempt to rein in Medicare costs, among others, by promoting bundled payments for coordinated care and imposing penalties for avoidable hospital readmissions, Elmendorf said. But even with these measures, the CBO has projected that health care costs will continue to increase, although at a slower rate, he noted.

Aging Population Seen as Small Factor in Costs

Paul Ginsburg, president of the Center for Studying Health System Change, a health policy research group, disputed the notion that an increase in the elderly population has a major impact on health care costs. He said the consensus among researchers is that an aging population adds about four-tenths of a percent to the overall cost trend, an amount he called “relatively small” but “not trivial.”

Increased physician employment by hospitals was one of several recent developments that are helping to drive up health care costs, Ginsburg said. Primary care physicians are finding they are often better off working at hospitals that are able to negotiate higher payments for the medical care they provide, he said. One negative result of this trend, he said, is that it contributes to increased costs in Medicare and Medicaid.

On the other hand, one positive effect is that the hospital “is able to draw more primary care physicians into its service area,” Ginsburg said.

By Ralph Lindeman