Healthcare Business News

Healthcare looms large as debt-reduction target in CBO analysis

By Rich Daly
Posted: November 9, 2012 - 1:00 pm ET

Federal healthcare programs were prominent targets in a new Congressional Budget Office analysis (PDF) of debt-reduction options for policymakers expected to tackle that issue soon.

The nonpartisan CBO noted that without “significant changes,” federal healthcare spending is projected to continue growing much faster than the economy and the revenue necessary to pay for it. Specifically, an aging population is expected to accelerate growth of both Medicare and the long-term-care services financed through Medicaid.

The report outlines healthcare cuts that would provide $420 billion in annual deficit reductions by 2020, or the bulk of the $750 billion the CBO offered as a goal of deficit-reduction talks expected to start in the final weeks of this year or early next year.

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“Of the health-related proposals for which CBO has published an estimate, the one with the largest savings would repeal provisions of the Affordable Care Act that expand health insurance coverage (while leaving other provisions of that law unchanged),” wrote the CBO.

That cut would reduce the deficit by roughly $150 billion in 2020, the CBO estimated, but decrease the number of people who would gain health insurance coverage through the health law by about 29 million.

Other health policy changes offered by the CBO would save from $5 billion to $50 billion each by 2020, including $50 billion from block granting long-term-care services for Medicaid and $40 billion for repealing the law's insurance mandate.

Hospital cuts include a projected $10 billion from eliminating Medicare's critical-access hospital, Medicare-dependent hospital and sole community hospital programs.

At least some Washington health policy experts have said since the election that they expect federal health program payments to hospitals to be a major source of funding for any deficit-reduction deal because that spending is a large share of those programs.

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