Nov. 14—The Congressional Budget Office (CBO) offered legislators 16 ways healthcare cuts could help reduce the historic federal debt, including several new options.

The healthcare deficit-reduction options were among a range of government-wide alternatives offered by the nonpartisan CBO Nov. 13 as a congressional panel aims to produce a broad spending framework one month from now. 

The CBO options include 11 healthcare savings options that were previously suggested by CBO, as well as five new options, including the creation of Medicaid spending caps and the conversion of Medicare to a premium support system.

Other new options offered included changing Medicare’s cost-sharing rules and restricting Medigap insurance; bundling Medicare payments to health care providers; and reducing tax preferences for employment-based health insurance.

Options for Savings: Taking a Closer Look

The report also noted that the long-shot repeal of the Affordable Care Act’s (ACA’s) Medicaid expansion and insurance subsidies would save $1.4 trillion over the next 10 years.

Savings from the various options included $16.6 billion in 10-year spending from bundling Medicare providers’ payments for inpatient care. The federal government would save $46.6 billion from bundling payments for both inpatient care and 90 days of postacute care. 

Such savings would likely depend, according to the CBO report, on whether the Centers for Medicare & Medicaid Services made provider participation mandatory. Limited bundled payment pilots authorized by the ACA and underway include about 300 hospitals that have volunteered to participate.

“Legislation specifying a mandatory shift to episode-based bundled payment over the next several

years, however, could generate federal savings because such a shift would probably represent a more aggressive approach than CMS will pursue under its current authority,” stated the CBO report.

Other savings in the report included $106 billion to $606 billion in reduced federal spending from various types of caps on Medicaid. The federal government could convert Medicare to a premium support model and produce 10-year savings ranging from $22 billion to $275 billion, depending on the approach used.

Establishing uniform cost sharing for Medicare beneficiaries would save $52 billion over 10 years, while $58 would be saved by restricting the use of Medigap plans, which provide first-dollar coverage for beneficiaries.

Publication Date: Thursday, November 14, 2013