With a divided Congress and a presidential election swiftly approaching, any hope for bipartisan solutions in Washington may seem far-fetched, but I believe the 12-member Joint Select Committee on Deficit Reduction may be the last best chance this Congress has to do something meaningful to put our country back on a path to fiscal sanity and long-term growth. And we can't afford to wait until after the next election to act.
I'm part of a group of 45 senators — 23 Republicans, 21 Democrats and one independent — asking the committee to achieve at least $4 trillion in total deficit reduction. To do this, we must make real budget cuts, flatten and simplify our tax code, reform our entitlements so they survive over the long term, and make our country a place where people want to do business again. This is tough medicine that is required to ensure America retains its greatness.
Medicare reform must be part of the solution. Any attempt to reduce spending without addressing this program would be like rearranging the deck chairs on the Titanic. Powerful special interests on both sides of the aisle will be working hard to push members of Congress to do nothing and maintain the status quo. But that is unacceptable.
According to a recent study by the Urban Institute, a married couple each making $43,500 per year will contribute $119,000, including their employer contributions, into Medicare during their time in the workforce and receive $357,000 in Medicare benefits over their lifetimes. (All amounts are in today’s dollars and adjusted for inflation). Common sense tells us this math doesn't add up: Medicare beneficiaries are receiving far more in benefits than they are paying in.
Medicare's balance sheet gets worse when we take into account the 20 million Baby Boomers that will join the program in the next 10 years as health care costs keep going up. Medicare trustees estimate the program has $38 trillion in unfunded liabilities and will be insolvent in 2024. Medicare spending topped $572 billion in 2011 and is expected to be more than $1 trillion in 2021, a 56 percent increase in just 10 years, according to conservative estimates by the Congressional Budget Office. Future Medicare spending is projected to keep growing faster than gross domestic product. Financing this rate of spending growth by a federal government that is already borrowing 40 cents of every dollar it spends will ultimately bankrupt our nation.
Rather than continuing on this course, we can modestly reform the program now to achieve trillions of dollars in savings over the next few decades. With that in mind, I have offered to the committee some specific policy alternatives for controlling the short and long-term growth of Medicare spending that I believe can be embraced by members of both parties:
•Decrease over-utilization: Limiting Medigap's coverage for deductibles and co-insurance, when done in combination with standardizing beneficiaries' cost-sharing for hospital and physician services, produces an estimated $93 billion in savings over 10 years.
•Coordinate health care services for Medicare and Medicaid beneficiaries: It is estimated that over a 10-year period, $148 billion could be saved by coordinating services for our poorest, sickest, and most expensive beneficiaries while also improving their quality of care.
•Examine eligibility age and premiums levels: With our nation's population continuing to live longer, we should, over a reasonable period of time, consider raising the eligibility age from 65 to 67, just like Social Security did almost 30 years ago. By doing so, Medicare would save almost $125 billion over 10 years. Additionally, I believe Americans like me who are financially secure should be required to pay higher premiums into the system, while low-income enrollees should continue to pay less. Such a change would mean almost $28 billion in savings to Medicare over a decade.
•Eliminate fraud: Experts believe fraud is eating up as much as 20% of the funds that flow out of Medicare. We could save tens of billions a year by cracking down on criminals who are stealing resources from those in need. We need to pass a measure like the bipartisan "Fighting Fraud and Abuse to Save Taxpayer Dollars Act," sponsored by Senators Carper and Coburn, to stop fraud before it happens and enforce the recovery of stolen money.
To truly fix Medicare and control health care costs, we must transform our fee-for-service health care system to one that pays for quality rather than quantity. If the select committee just agreed on the above solutions, it would make Medicare stronger and improve our nation's financial condition as we continue to move toward a patient-centered Medicare system. Coupled with other common sense measures like cutting spending and reforming our tax system, taking steps to reduce Medicare spending will demonstrate that we are beginning to put our country back on a path toward solvency.
Medicare is America's largest fiscal and health care challenge, and it is getting more difficult to solve every day we do not address it. Continuing to kick the can down the road is a disservice to the American people.
Having both sides of the aisle equally represented on the super committee with equal skin in the game — meaning both parties are positioned to take risks and make the tough choices we all know are required — creates an opportunity unlike I've seen in my short tenure in Washington. I encourage these 12 members to buck the cynics and special interests and advance a proposal that recognizes the dire challenges our country faces