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Since 2008 – Progress Through Politics

President's Debt Commission – The Final Report (Part3)

The Debt Commission Report, formally The National Commission on Fiscal Responsibility and Reform, has been subject to a lot of derision on the left.  It has been seen as a waste of time at best, or an attack on Democratic core principles at the worst.

This is the third installment looking section by section of the report.

Here’s the link to the first installment:…

Here’s the link to the 2nd installment:…

Also, here is the link to the actual report:


Now on to the next part of the report:

Health Care Savings

Well this section starts out strong, by saying plainly how health care affects the federal budget:

Federal health care spending represents our single largest fiscal challenge over the long-run. As the baby boomers retire and overall health care costs continue to grow faster than the economy, federal health spending threatens to balloon. Under its extended-baseline scenario, CBO projects that federal health care spending for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the health insurance exchange subsidies will grow from nearly 6 percent of GDP in 2010 to about 10 percent in 2035, and continue to grow thereafter.

RECOMMENDATION 3.1: REFORM THE MEDICARE SUSTAINABLE GROWTH RATE. Reform the Medicare Sustainable Growth Rate for physician payment and require the fix to be offset. (Saves $3 billion in 2015, $26 billion through 2020, relative to a freeze)

The Sustainable Growth Rate (SGR) – known as the “doc fix” – was created in 1997 to control Medicare spending by setting payment targets for physician services and reducing payment updates if spending exceeded the targets.

They recommend a freeze on physician payments and then a cut starting in 2013 for a short term adjustment, then in the medium term they recommend:

For the medium term, the Commission recommends directing the Centers for Medicare and Medicaid Services (CMS) to develop an improved physician payment formula that encourages care coordination across multiple providers and settings and pays doctors based on quality instead of quantity of services. In order to maintain pressure to establish a new system and limit the costs of physician payments, the proposal would reinstate the SGR formula in 2015 (using 2014 spending as the base year) until CMS develops a revised physician payment system. The Medicare actuary would be required to certify the new payment system would not cost more than would have been allowed under the SGR formula.

I don’t think the cuts are wise, I would just recommend their medium term solution to be the solution, which I thought was part of the health care law.  I remember the President discussing moving from a pay for service plan to a pay for results plan, which is basically what the commission is saying.  So I guess we can check that off the list.


(Costs $11 billion in 2015, $76 billion through 2020)

This was just enacted by the new health care law for a voluntary long-term care plan.  They say reform or repeal it, but don’t offer any ideas; even though they talked to a lot of health care experts and they even concede that repealing it will add to the deficit.  Seems like a worthless recommendation.

RECOMMENDATION 3.3: PAY FOR THE MEDICARE “DOC FIX” AND CLASS ACT REFORM. Enact specific health savings to offset the costs of the Sustainable Growth Rate (SGR) fix and the lost receipts from repealing or reforming the CLASS Act.

The recommendation title doesn’t jive with the rest of this section.

Here are some of their recommendations to save some money:

3.3.1 Increase government authority and funding to reduce Medicare fraud.

(Saves $1 billion in 2015, $9 billion through 2020)

This is already being done by the health care law and the President’s executive order, check another one off the list.

3.3.2 Reform Medicare cost-sharing rules.

(Saves $10 billion in 2015, $110 billion through 2020)

This is their recommendation:

In place of the current structure, the Commission recommends establishing a single combined annual deductible of $550 for Part A (hospital) and Part B (medical care), along with 20 percent uniform coinsurance on health spending above the deductible. We would also provide catastrophic protection for seniors by reducing the coinsurance rate to 5 percent after costs exceed $5,500 and capping total cost sharing at $7,500.

Now, I haven’t looked at Medicare or used it before.  Does this improve the program or not from the consumer point of view?  Unless, it maintains the status quo for the consumer, I’m not for it.  If not, then any cut backs in Medicare are a no go in my opinion.

3.3.3 Restrict first-dollar coverage in Medicare supplemental insurance.

(Medigap savings included in previous option. Additional savings total $4 billion in 2015, $38 billion through 2020.)

I disagree with this part, if people want to purchase Medigap insurance to cover the out of pocket expenses they should be free to do so at any level (free market, right?).

3.3.4 Extend Medicaid drug rebate to dual eligibles in Part D.

(Saves $7 billion in 2015, $49 billion through 2020)

I don’t see how this save the government any money.  Rebates go to the beneficiaries.  Odd.

3.3.5 Reduce excess payments to hospitals for medical education.

(Saves $6 billion in 2015, $60 billion through 2020)

I don’t have any qualms with this one, it basically wants to bring payments in line with actual normal costs incurred by the hospital.

3.3.6 Cut Medicare payments for bad debts.

(Saves $3 billion in 2015, $23 billion through 2020)

This seems like an odd process, so I agree with the commission to end this practice.

3.3.7 Accelerate home health savings in ACA.

(Saves $2 billion in 2015, $9 billion through 2020)

Basically pushing this program up two years.  

3.3.8 Eliminate state gaming of Medicaid tax gimmick.

(Saves $5 billion in 2015, $44 billion through 2020)

This makes sense to me.  Basically, states overbill the hospitals so they can get a higher federal match.  This is abuse of the system.

3.3.9 Place dual eligibles in Medicaid managed care.

(Saves $1 billion in 2015, $12 billion through 2020)

Basically, when people are dually eligible there are overlapping responses that result in higher costs for the government.  This would make administration through Medicaid and Medicare would reimburse Medicaid.  If this helps reduce duplication and reduce costs, I’m for it.

3.3.10 Reduce funding for Medicaid administrative costs.

(Saves $260 million in 2015, $2 billion through 2020)

They recommend eliminating the reimbursement for administrative costs to the state, that will basically move the costs to the state governments.  I disagree with this.  States are having a hard enough time paying for Medicaid as it is, this will just increase the strain on state government budgets.

3.3.11 Allow expedited application for Medicaid waivers in well-qualified states.

I don’t think giving waivers is a good idea, it seems like a road to dismantling the system.

3.3.12 Medical malpractice reform.

(Saves $2 billion in 2015, $17 billion through 2020)

This is probably their worst idea yet, all this does is hurt consumers and help insurance companies.  Definitely
a no from me.

3.3.13 Pilot premium support through FEHB Program.

(Saves $2 billion in 2015, $18 billion through 2020)

Another stab into the heart of everyday people.  They want to do a defined contribution plan for federal employees.  If you thought you heard this before, it’s because you have, that’s what happened to pensions when they were turned into 401ks.  They also included as part of this section a plan to basically gut Medicare by changing the funding structure to a strange hybrid volunteer structure.

RECOMMENDATION 3.4: AGGRESSIVELY IMPLEMENT AND EXPAND PAYMENT REFORM PILOTS. Direct CMS to design and begin implementation of Medicare payment reform pilots, demonstrations, and programs as rapidly as possible and allow successful programs to be expanded without further congressional action.

They basically want reforms required by the new health care law to be implemented the way they are supposed.  I guess this is another section that really didn’t need to be here.

RECOMMENDATION 3.5: ELIMINATE PROVIDER CARVE-OUTS FROM IPAB. Give the Independent Payment Advisory Board (IPAB) authority to make recommendations regarding hospitals and other exempted providers.

I agree with this, basically the IPAB was created in the new healthcare law to manage rising costs, but it exempted certain groups like hospitals.  They want Congress to close this hole.  That sounds like a good idea to me.

RECOMMENDATION 3.6: ESTABLISH A LONG-TERM GLOBAL BUDGET FOR TOTAL HEALTH CARE SPENDING. Establish a global budget for total federal health care costs and limit the growth to GDP plus 1 percent.

The title basically says what they want to do.  I agree in part.  I think that creating a global health care budget, this will promote more transparency.  I also keeping the growth of health care costs controlled in the Congress’s and the President’s agenda is a good idea.  I don’t think putting a hard cap is a good idea.


Now I’m not an expert in health care.  So, someone who is should look at the PDF pages 37-43 to see if I missed anything.  I think overall there are some good ideas and definitely some really awful ones in this section.

So, what’s the plan?


  1. than the others. It requires a more thorough understanding of current practices and cost than most of us have. For instance, the doc fix needs to be done away with, but what would be fair to doctors and taxpayers?

    One item that doesn’t seem to make sense is the one about the CLASS Act. This is a new insurance plan for long-term care for mentally and physically disabled persons. It is supposed to be fully-funded by premiums, so I don’t see how repealing it would reduce federal expenditures. If anything, it would require Medicare and Medicaid to pick up the difference, which would increase the deficit.

    Here’s a link to a fairly short summary of the CLASS Act published by the Kaiser Family Foundation. The KFF is one of the few health care institutions that I trust to be honest about this kind of issue. The document is a pdf –

  2. IL JimP

    on this report, but this seemed to be the section that a lot of people wanted to talk about.  Oh, well.  The next section will be done soon.

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