This story comes from our partner

If the government pushes hospitals and doctors to become more productive and less wasteful, does that mean it will happen?

That question permeated the long battle in Congress over President Obama’s health care reform bill.Ìý   Supporters of reform said there had to be a better way.Ìý Productivity in health care has lagged behind the rest of the economy for decades, and health care costs are now far higher for Americans  than for citizens of most other industrial nations.Ìý

Now, as became clear on Thursday in the latest report from the trustees for Medicare and Social Security, it is time to put the theory to the test.

The trustees that the new health care law could generate so much better productivity that the Medicare trust fund would stay solvent until 2029 – 12 years longer than predicted just one year ago.

The new estimates offer  few clues about where that new efficiency will come from.Ìý  They are simply based on the fact that the new health care law requires that Medicare payments to hospitals and doctors will be adjusted to reflect higher productivity. At least initially, it won’t matter whether that productivity actually occurs.Ìý 

The new law calls for a raft of pilot programs and a new research center to test experimental approaches for delivering health care and charging for it.Ìý But it’s anybody’s guess which ideas will work and when – if ever — the savings will materialize.Ìý

What if the improvements don’t occur?  At some point, the Congress would face a grim choice: let Medicare pay more than it planned, or watch legions of health care providers refuse to serve Medicare patients.Ìý  That’s exactly what has happened, year after year, as Congress temporarily waived rules aimed at slowing physician reimbursements.

“The outcomes are far from certain,” the new report cautioned.Ìý “Many experts doubt the feasibility of such sustained improvements and anticipate that over time the Medicare price constraints would become unworkable and that Congress would likely override them.”

In the meantime, the new report confirmed that both Social Security and Medicare are still headed toward insolvency as the nation’s 76 million baby-boomers reach retirement age in growing numbers.

Daunting Future

For the first time since 1983, outlays for Social Security this year are expected to exceed revenues from payroll taxes. The shortfall is expected to be $41 billion this year, which reflects the steep drop in revenues during the recession. But while the shortfalls are expected to disappear as the economic recovery gains speed, they are expected to reappear in 2015 and widen rapidly after that.Ìý

The long-term outlook for Social Security remains about as bleak as last year: Without action by Congress to either raise taxes or cut benefits, the trust fund’s reserves of $2.5 trillion will run out in 2037. At that point, the government would have to cut benefits by about 22 percent, and more in subsequent years, in order to balance incoming revenues with outlays.

Medicare faces a much more daunting future. Its main hospital insurance trust fund is already paying out more than it receives from payroll taxes, and will be insolvent in 2029, even if health care reform delivers on all its promises. And while the problems of Social Security stem mainly from the surging number of retirees, Medicare’s problems are compounded by health care prices that have climbed faster than inflation, year after year.

“The report shows that we have work left to do,” acknowledged Kathleen Sebelius, Secretary of Health and Human Services and one of the trustees. “To achieve the gains projected in this report, we must continue to work hard with our partners across the country to implement the reforms in the Affordable Care Act effectively and on time.”

John Rother, executive vice president of AARP, the premier senior citizen advocacy group, said the report from the Social Security trustees “reaffirms that the program is financially strong in the short-term and can be strengthened for the future with relatively modest adjustments.” Rother said the trustees’ report confirmed that Social Security can pay full benefits for decades, and approximately 75 percent into the future even if nothing is done. “AARP renews its call to act in the coming few years to shore up the system’s long-term ability to pay promised benefits to retirees, survivors and those with disabilities,” he added. “We should not wait for a crisis to develop to act. Americans should be confident that their earned benefits will be there for them when they need them.”

Betting on Productivity

The trustees’ new report was delayed by four months this year, as the program’s actuaries tried to calculate the health care law’s impact. The projections are prepared by the chief actuaries for the old-age programs, with heavy consultation from outsides experts and economists. In addition to Sebelius, the trustees include Treasury secretary Timothy Geithner, Labor secretary Hilda Solis and Michael J. Astrue, the Social Security commissioner. The trustees normally include two people from outside the government, one Republican and one Democrat, but those posts are vacant at the moment.

Virtually all the projected improvement in Medicare’s long-run outlook stems from a big bet on higher productivity. Under the law, Medicare is supposed to increase its reimbursements to hospitals and doctors more slowly, on the assumption that productivity in health care climbs as quickly as in the rest of the economy.

Because of changes enacted in 1983 to boost payroll taxes and gradually postpone the retirement age, the Social Security trust funds have accumulated a surplus of $2.5 trillion and also earn billions of dollars in interest. But the annual cash surplus in payroll taxes has been diminishing for years, and the deep economic recession briefly eliminated it this year – several years earlier than expected. The setback had no impact on benefits, because the trust fund simply dipped into its reserves, and the annual surpluses are expected to briefly reappear as the economic recovery gains strength. On Thursday, the trustees confirmed that Social Security will start running deficits again in 2015 and those will grow steadily wider until the trust fund is exhausted in 2037.

Former President George W. Bush waged an unsuccessful campaign to overhaul Social Security, both by cutting the growth in future benefits and by letting people divert some of their payroll taxes to private retirement accounts. The plan would have created enormous deficits for the next decade or so, and would have eventually led to a dramatic drop in guaranteed benefits. Democrats staunchly opposed the plan, and public opposition remained high. By 2006, Bush had abandoned his effort.

Analysts say Social Security’s could be fixed by relatively modest adjustments to taxes and future benefits. Those adjustments include another postponement in the so-called , which is now 66 but will hit 67 in 2022. Other ideas include raising the amount of annual income that is subject to payroll taxes. At the moment, taxes are not imposed on annual income above $106,800. would slow the growth of future benefits by indexing them less to the rise in wages than to inflation.Ìý

Complex Problems

The outlook for Medicare actually improved from last year, mainly because the trustees expect that cost reductions in the health care reform bill will take a bit of pressure off its long-term problems. The Obama administration foreshadowed that conclusion earlier this week, when the Center on Medicare and Medicaid Services that the new law will save Medicare $575 billion over the next decade. As a result, the trustees said, Medicare’s main hospital insurance trust fund will not reach insolvency until 2029.Ìý

Even so, the trustees warned that Medicare’s problems are much bigger and far more complex than those of Social Security. For one thing, it isn’t certain that the savings projected from increased productivity and from by the new Independent Medicare Advisory Board will .Ìý

But even if those savings do occur, the main trust fund is already running sizeable deficits that are expected to get much worse. Even staunch supporters of the new health care law say it marks only a small first step toward slowing the out-of-control rise in the cost of health care services.

This <a target="_blank" href="/medicare/ft-new-medicare-report/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

This story comes from our partner

The charged with recommending proposals for reducing the long-term deficit will meet for the first time today, with opening remarks at the White House by President Obama. The Democratic and Republican co-chairmen of the 18-member commission say that there is no way the U.S. can “grow its way” out of a budget deficit likely to total $1.4 trillion this year, and that both spending cuts and tax increases will have to be considered.

With questions abounding about the makeup and mandate of the National Commission on Fiscal Responsibility and Reform, here is a handy guide for following the deliberations in the coming months and making sense of the rhetoric and terminology:

COMMISSION GOALS: LESS THAN A BALANCED BUDGET

Main goal: Proposals that would create a “primary budget balance” by 2015. “Primary balance” does NOT mean a balanced budget. Revenues would cover all spending – EXCEPT for interest payments on the debt, which the White House estimates will total $571 billion, or 3 percent of GDP, in 2015.

Secondary goal: Come up with longer-term recommendations to deal with projected explosion in Medicare and Social Security benefits. No specific deficit reduction numbers here.

THE COMMISSION STRUCTURE: IMPASSE LIKELY

Members: The Commission has 18 members: six appointed by President Obama; six current Republican lawmakers; and six current Democratic lawmakers.

Key obstacle: Any proposal must receive at least 14 of 18 votes, but six Republican lawmakers are expected to oppose any tax increases, prompting Democrats to veto entitlement cuts.Ìý

Swing vote? Senator Judd Gregg, R-N. H., is not running for re-election, and he co-sponsored a Senate bill for a bipartisan commission. He could try to broker a deal with Democrats.

IT’S ACADEMIC

The Senate bill, which was defeated, would have created the same commission but also required that Congress vote on the panel’s recommendations, which are due Dec. 1.

Because President Obama created the deficit commission by executive order, Congress is free to ignore the proposals. But political analysts say the commission could still be important in framing the real battle that will probably take place in Congress after the midterm elections.

READING THE CHAIRMEN

Both co-chairmen, Republican Alan Simpson and Democrat Erskine Bowles, are skilled dealmakers who have been willing to defy party orthodoxy.

What to watch on day one: How high do they set expectations? Is the goal to agree on proposals, or just to agree on the problem?

What to watch after day one: Do they float novel compromises that could provide templates for lawmakers next year?

HINTS OF MOVEMENT ON KEY ISSUES:

Social Security: Do Democrats hint at willingness to trim future Social Security benefits? Any favorable mention of specific ideas, like raising the minimum benefit age or tweaking cost-of-living adjustments?

Do Republicans resurrect former President George W. Bush’s plan to partly privatize Social Security – a nonstarter for Democrats?

Medicare: Do Republicans distance themselves from the “Roadmap” proposal by Rep. Paul Ryan, a GOP panel member, which Democrats say would eventually eviscerate Medicare?

Tax increases: Many Republican lawmakers have vowed to fight any tax increases, though the vast majority of budget analysts say long-run deficits are too big to be closed without tax hikes of some kind. Will Republican panel members hint at any flexibility?

President Obama has promised not to raise taxes for any family earning less than $250,000 year – which many budget experts also criticize as impractical. Will Democrats soften that pledge?

Tax reform: Is there any support for eliminating many tax breaks, possibly while cutting overall rates, as a way to increase revenue?

Hints of movement: Republicans soften their insistence on “revenue-neutral” tax reform; Democrats criticize “middle-class” breaks, like the home mortgage deduction.

Red herring alert: Proposals for a value-added tax, a form of national sales tax. Though increasingly popular among Democrats, the VAT idea provokes instant furor among conservatives and is considered politically unfeasible by the Obama White House.

BOILERPLATE GUIDE:

“Everything is on the table.” Official stance of President Obama and the commission’s co-chairmen on reducing the deficit, but the Democratic subtext is that tax increases have to be part of any plan.

“Spending is the problem.”  Republican refrain, meaning that tax increases should not be part of any deal and that the key is to slow the growth of entitlements.Ìý

“Spending Commission.”  Republican nickname for their idea of a deficit-reduction commission that

“Deficit hawks.” Originally a fairly neutral nickname for fiscal conservatives, but now used as a by some liberal groups to describe people whose real goal is to cut Social Security. See also “Deficit Hysteria” and “Wall Streeters.”

This <a target="_blank" href="/news/deficit-commission-guide-ft/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

This story comes from our partner

If the government pushes hospitals and doctors to become more productive and less wasteful, does that mean it will happen?

That question permeated the long battle in Congress over President Obama’s health care reform bill.Ìý   Supporters of reform said there had to be a better way.Ìý Productivity in health care has lagged behind the rest of the economy for decades, and health care costs are now far higher for Americans  than for citizens of most other industrial nations.Ìý

Now, as became clear on Thursday in the latest report from the trustees for Medicare and Social Security, it is time to put the theory to the test.

The trustees that the new health care law could generate so much better productivity that the Medicare trust fund would stay solvent until 2029 – 12 years longer than predicted just one year ago.

The new estimates offer  few clues about where that new efficiency will come from.Ìý  They are simply based on the fact that the new health care law requires that Medicare payments to hospitals and doctors will be adjusted to reflect higher productivity. At least initially, it won’t matter whether that productivity actually occurs.Ìý 

The new law calls for a raft of pilot programs and a new research center to test experimental approaches for delivering health care and charging for it.Ìý But it’s anybody’s guess which ideas will work and when – if ever — the savings will materialize.Ìý

What if the improvements don’t occur?  At some point, the Congress would face a grim choice: let Medicare pay more than it planned, or watch legions of health care providers refuse to serve Medicare patients.Ìý  That’s exactly what has happened, year after year, as Congress temporarily waived rules aimed at slowing physician reimbursements.

“The outcomes are far from certain,” the new report cautioned.Ìý “Many experts doubt the feasibility of such sustained improvements and anticipate that over time the Medicare price constraints would become unworkable and that Congress would likely override them.”

In the meantime, the new report confirmed that both Social Security and Medicare are still headed toward insolvency as the nation’s 76 million baby-boomers reach retirement age in growing numbers.

Daunting Future

For the first time since 1983, outlays for Social Security this year are expected to exceed revenues from payroll taxes. The shortfall is expected to be $41 billion this year, which reflects the steep drop in revenues during the recession. But while the shortfalls are expected to disappear as the economic recovery gains speed, they are expected to reappear in 2015 and widen rapidly after that.Ìý

The long-term outlook for Social Security remains about as bleak as last year: Without action by Congress to either raise taxes or cut benefits, the trust fund’s reserves of $2.5 trillion will run out in 2037. At that point, the government would have to cut benefits by about 22 percent, and more in subsequent years, in order to balance incoming revenues with outlays.

Medicare faces a much more daunting future. Its main hospital insurance trust fund is already paying out more than it receives from payroll taxes, and will be insolvent in 2029, even if health care reform delivers on all its promises. And while the problems of Social Security stem mainly from the surging number of retirees, Medicare’s problems are compounded by health care prices that have climbed faster than inflation, year after year.

“The report shows that we have work left to do,” acknowledged Kathleen Sebelius, Secretary of Health and Human Services and one of the trustees. “To achieve the gains projected in this report, we must continue to work hard with our partners across the country to implement the reforms in the Affordable Care Act effectively and on time.”

John Rother, executive vice president of AARP, the premier senior citizen advocacy group, said the report from the Social Security trustees “reaffirms that the program is financially strong in the short-term and can be strengthened for the future with relatively modest adjustments.” Rother said the trustees’ report confirmed that Social Security can pay full benefits for decades, and approximately 75 percent into the future even if nothing is done. “AARP renews its call to act in the coming few years to shore up the system’s long-term ability to pay promised benefits to retirees, survivors and those with disabilities,” he added. “We should not wait for a crisis to develop to act. Americans should be confident that their earned benefits will be there for them when they need them.”

Betting on Productivity

The trustees’ new report was delayed by four months this year, as the program’s actuaries tried to calculate the health care law’s impact. The projections are prepared by the chief actuaries for the old-age programs, with heavy consultation from outsides experts and economists. In addition to Sebelius, the trustees include Treasury secretary Timothy Geithner, Labor secretary Hilda Solis and Michael J. Astrue, the Social Security commissioner. The trustees normally include two people from outside the government, one Republican and one Democrat, but those posts are vacant at the moment.

Virtually all the projected improvement in Medicare’s long-run outlook stems from a big bet on higher productivity. Under the law, Medicare is supposed to increase its reimbursements to hospitals and doctors more slowly, on the assumption that productivity in health care climbs as quickly as in the rest of the economy.

Because of changes enacted in 1983 to boost payroll taxes and gradually postpone the retirement age, the Social Security trust funds have accumulated a surplus of $2.5 trillion and also earn billions of dollars in interest. But the annual cash surplus in payroll taxes has been diminishing for years, and the deep economic recession briefly eliminated it this year – several years earlier than expected. The setback had no impact on benefits, because the trust fund simply dipped into its reserves, and the annual surpluses are expected to briefly reappear as the economic recovery gains strength. On Thursday, the trustees confirmed that Social Security will start running deficits again in 2015 and those will grow steadily wider until the trust fund is exhausted in 2037.

Former President George W. Bush waged an unsuccessful campaign to overhaul Social Security, both by cutting the growth in future benefits and by letting people divert some of their payroll taxes to private retirement accounts. The plan would have created enormous deficits for the next decade or so, and would have eventually led to a dramatic drop in guaranteed benefits. Democrats staunchly opposed the plan, and public opposition remained high. By 2006, Bush had abandoned his effort.

Analysts say Social Security’s could be fixed by relatively modest adjustments to taxes and future benefits. Those adjustments include another postponement in the so-called , which is now 66 but will hit 67 in 2022. Other ideas include raising the amount of annual income that is subject to payroll taxes. At the moment, taxes are not imposed on annual income above $106,800. would slow the growth of future benefits by indexing them less to the rise in wages than to inflation.Ìý

Complex Problems

The outlook for Medicare actually improved from last year, mainly because the trustees expect that cost reductions in the health care reform bill will take a bit of pressure off its long-term problems. The Obama administration foreshadowed that conclusion earlier this week, when the Center on Medicare and Medicaid Services that the new law will save Medicare $575 billion over the next decade. As a result, the trustees said, Medicare’s main hospital insurance trust fund will not reach insolvency until 2029.Ìý

Even so, the trustees warned that Medicare’s problems are much bigger and far more complex than those of Social Security. For one thing, it isn’t certain that the savings projected from increased productivity and from by the new Independent Medicare Advisory Board will .Ìý

But even if those savings do occur, the main trust fund is already running sizeable deficits that are expected to get much worse. Even staunch supporters of the new health care law say it marks only a small first step toward slowing the out-of-control rise in the cost of health care services.

This <a target="_blank" href="/medicare/ft-new-medicare-report/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

This story comes from our partner

The charged with recommending proposals for reducing the long-term deficit will meet for the first time today, with opening remarks at the White House by President Obama. The Democratic and Republican co-chairmen of the 18-member commission say that there is no way the U.S. can “grow its way” out of a budget deficit likely to total $1.4 trillion this year, and that both spending cuts and tax increases will have to be considered.

With questions abounding about the makeup and mandate of the National Commission on Fiscal Responsibility and Reform, here is a handy guide for following the deliberations in the coming months and making sense of the rhetoric and terminology:

COMMISSION GOALS: LESS THAN A BALANCED BUDGET

Main goal: Proposals that would create a “primary budget balance” by 2015. “Primary balance” does NOT mean a balanced budget. Revenues would cover all spending – EXCEPT for interest payments on the debt, which the White House estimates will total $571 billion, or 3 percent of GDP, in 2015.

Secondary goal: Come up with longer-term recommendations to deal with projected explosion in Medicare and Social Security benefits. No specific deficit reduction numbers here.

THE COMMISSION STRUCTURE: IMPASSE LIKELY

Members: The Commission has 18 members: six appointed by President Obama; six current Republican lawmakers; and six current Democratic lawmakers.

Key obstacle: Any proposal must receive at least 14 of 18 votes, but six Republican lawmakers are expected to oppose any tax increases, prompting Democrats to veto entitlement cuts.Ìý

Swing vote? Senator Judd Gregg, R-N. H., is not running for re-election, and he co-sponsored a Senate bill for a bipartisan commission. He could try to broker a deal with Democrats.

IT’S ACADEMIC

The Senate bill, which was defeated, would have created the same commission but also required that Congress vote on the panel’s recommendations, which are due Dec. 1.

Because President Obama created the deficit commission by executive order, Congress is free to ignore the proposals. But political analysts say the commission could still be important in framing the real battle that will probably take place in Congress after the midterm elections.

READING THE CHAIRMEN

Both co-chairmen, Republican Alan Simpson and Democrat Erskine Bowles, are skilled dealmakers who have been willing to defy party orthodoxy.

What to watch on day one: How high do they set expectations? Is the goal to agree on proposals, or just to agree on the problem?

What to watch after day one: Do they float novel compromises that could provide templates for lawmakers next year?

HINTS OF MOVEMENT ON KEY ISSUES:

Social Security: Do Democrats hint at willingness to trim future Social Security benefits? Any favorable mention of specific ideas, like raising the minimum benefit age or tweaking cost-of-living adjustments?

Do Republicans resurrect former President George W. Bush’s plan to partly privatize Social Security – a nonstarter for Democrats?

Medicare: Do Republicans distance themselves from the “Roadmap” proposal by Rep. Paul Ryan, a GOP panel member, which Democrats say would eventually eviscerate Medicare?

Tax increases: Many Republican lawmakers have vowed to fight any tax increases, though the vast majority of budget analysts say long-run deficits are too big to be closed without tax hikes of some kind. Will Republican panel members hint at any flexibility?

President Obama has promised not to raise taxes for any family earning less than $250,000 year – which many budget experts also criticize as impractical. Will Democrats soften that pledge?

Tax reform: Is there any support for eliminating many tax breaks, possibly while cutting overall rates, as a way to increase revenue?

Hints of movement: Republicans soften their insistence on “revenue-neutral” tax reform; Democrats criticize “middle-class” breaks, like the home mortgage deduction.

Red herring alert: Proposals for a value-added tax, a form of national sales tax. Though increasingly popular among Democrats, the VAT idea provokes instant furor among conservatives and is considered politically unfeasible by the Obama White House.

BOILERPLATE GUIDE:

“Everything is on the table.” Official stance of President Obama and the commission’s co-chairmen on reducing the deficit, but the Democratic subtext is that tax increases have to be part of any plan.

“Spending is the problem.”  Republican refrain, meaning that tax increases should not be part of any deal and that the key is to slow the growth of entitlements.Ìý

“Spending Commission.”  Republican nickname for their idea of a deficit-reduction commission that

“Deficit hawks.” Originally a fairly neutral nickname for fiscal conservatives, but now used as a by some liberal groups to describe people whose real goal is to cut Social Security. See also “Deficit Hysteria” and “Wall Streeters.”

This <a target="_blank" href="/news/deficit-commission-guide-ft/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">