Talking Points: HHS Secretary Leavitt on FY2009 budget

Department of Health and Human Services Secretary Leavitt began his press conference on the FY2009 budget by warning that Medicare in its current form will be bankrupt within 11 years. Unlike Social Security, which he called "a math problem," Medicare will need to be heavily reformed in order to remain functional. He said that some people will see this budget's attempts to bring Medicare "into a more sustainable" form as a cut, but the changes in the new budget are aimed at improving the program's sustainability by improving efficiency and bringing in market forces, citing the Medicare prescription drug reforms as a positive example. He also said that the changes reduce the premiums that beneficiaries pay.

Leavitt also said work needed to be done to remove the tax discrimination against people who do not buy health insurance through their employer, saying up to an additional 20 million people might be covered if that change were made.

Leavitt said that the SCHIP program retains coverage of people with gross incomes of up to 200% of the poverty line, and it allows states to cover people up to 250% of the poverty line.

Dr. Peter Orszag Shares Congressional Budget Office's Findings Regarding Health Care Spending With the Senate Budget Committee

Dr. Peter Orszag, Director of the Congressional Budget Office (CBO), testified today before the Senate Budget Committee regarding the crisis generated by increasing health care costs.

In testimony that Chairman Kent Conrad (D-ND) called “sobering,” Dr. Orszag displayed CBO’s projections that health care spending could double by 2035 and become 20% of the economy by 2082 should current policies and practices remain in place. He stated that such high expenditures cannot be allowed to take place.

CBO’s analysis finds that non-Medicare, non-Medicaid health care costs are rising at alarming rates, due in large part to rapid expansion in medical technologies and capabilities; that is, the variety of care continues to increase, expanding costs. Other factors contributing to this increase include increased incidence of obesity, spending per obese person, aging of the population, and industry incentives to provide more health care regardless of quality.

Dr. Orszag highlighted extreme expenditure differences across regions and examples of some hospitals spending up to twice as much as others for the same treatment. He that in his research he had been faced with the ironic question, “How can the best medical care in the world cost twice as much as the best medical care in the world?”

Given the severity of the consequences of inaction, Chairman Kent Conrad (D-ND) and ranking member Judd Gregg (R-NH) shared their intention of going to mark-up on a proposal to resolve this crisis in a bipartisan fashion.