The Deficit Reduction Commission Recommendation proposed changes to Medicare

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The Deficit Reduction Commission Recommendation proposed changes to Medicare

Earlier this year, President Obama created the bipartisan National Commission on Fiscal Responsibility and Reform to propose recommendations that will improve America's fiscal viability. On November 10, the co-chairs of the Commission released a comprehensive plan reducing the deficit by cutting discretionary spending (including Defense); reforming the U.S. tax system to generate tax revenues amounting to 21 percent of gross domestic product (GDP); and reforming Social Security and Medicare.

The Deficit Reduction Commission Recommendation proposed changes to Medicare

President Obama created the bipartisan National Commission on Fiscal Responsibility and Reform (i.e the Deficit Reduction Commission) on February 18, 2010 to address the nation's fiscal challenges. The Commission is charged with identifying policies and proposing recommendations to improve America's fiscal situation in the medium term and to achieve fiscal sustainability over the long run. The 18-member Commission is chaired by Senator Alan Simpson (former Republican Senator from Wyoming) and Erskine Bowles (Former Chief of Staff to President Clinton).

On November 10, the co-chairs of the Commission released a comprehensive plan to reduce the deficit by about $100 billion each year for the next five years.

In order to reduce the budget deficit to a more manageable size, the plan outlines changes to mandatory federal spending including: cutting discretionary spending (including Defense) amounting to almost $10 trillion by 2020; reforming the U.S. tax system to generate tax revenues amounting to 21 percent of gross domestic product (GDP); and making changes Social Security and Medicare.

In this proposal, the co-chairs wrote that the "Doc Fix" should not be addressed through deficit spending but instead through savings from payment reforms, cost-sharing, malpractice reform, and long-term measures to control health care cost growth.

The proposed plan will require the cost of the "Doc Fix" to be fully paid for by asking physicians and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth. The offset includes:

Pay doctors and other providers less, improve efficiency, and reward quality by speeding up payment reforms and increasing drug rebates
- Replace cuts required by SGR through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality and;
- Require rebates for brand-name drugs as a requirement for participating in Medicare Part D.
Pay attorneys less and reduce the cost of defensive medicine by adopting comprehensive tort reform;
Expand cost-sharing in Medicare to promote informed consumer health choices and spending;
Expand successful cost containment demonstrations;
Strengthen the Independent Payment Advisory Board (IPAB) and;
Contain growth in total federal health spending to GDP+1 percent after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed to achieve these savings.

While the Commission intended to create a joint proposal, the co-chairs opted to develop their own plan when the Commissioners would not reach a compromise. At least 14 members of the 18-member bipartisan Commission must approve the final product for it to be considered for a vote in Congress.

The Commission'ss Final Report must be completed and voted on by the Committee members no later than December 1, 2010. The Society will continue to follow the Commission's recommendations regarding physician compensation, Medicare spending and other related developments. For more information, please visit the Commission's website.