More work needed to cut health costs: White House

A doctor puts his hand over his chest during a ''House call'' rally against proposed healthcare reform legislation on Capitol Hill, November 5, 2009.

WASHINGTON (Reuters) - Congressional efforts to revamp the U.S. healthcare system are not enough to stem soaring health costs or close the nation's budget gap, a top Obama administration official said on Wednesday, adding that current bills must be strengthened to help rein in spending.

White House budget director Peter Orszag did not say what other steps President Barack Obama might take in his next budget proposal in February. But he did say that the current healthcare reform legislation alone will not reduce the U.S. deficit -- now at $1.4 trillion.

"Fiscally responsible health reform is necessary but not sufficient to address our immediate-term deficit and long-term deficit problem, and there is more that will be necessary," Orszag told reporters at the National Press Club. "We'll be talking more about that next year."

His comments come as U.S. senators launch a contentious debate over Democrats' $849 billion proposal to expand access to medical insurance by saving money elsewhere in the nation's $2.5 trillion healthcare sector.

Healthcare costs now devour about 16 percent of the U.S. economy and are currently forecast to reach 20 percent by 2017.

Orszag, director of the White House Office of Management and Budget, said plans by Democratic lawmakers could still use "further tweaking" to strengthen them and further reduce costs, but he declined to mention specifics.

The U.S. House of Representatives passed its bill last month, but its $1 trillion measure must eventually be combined with whatever the Senate passes.

Republicans and other critics have said the proposals cost too much and that savings forecast by the nonpartisan Congressional Budget Office either are not realistic or could evaporate over time.

Although the Senate bill still faces potential changes, it will put a new healthcare "infrastructure" in place aimed at lowering costs over time, Orszag said.

For example, Orszag pointed to the Senate bill's creation of an independent commission to manage Medicare, the huge government health insurance program for the elderly and disabled, and continually make decisions about costs and coverage.

Medicare covers about 45 million Americans and is expected to run out of funds by 2017 if steps are not taken. The bill would limit the commission's action on certain parts of the program and excludes some big-ticket items such as hospital payments.

Even more crucial to the bill's success in saving healthcare dollars is how well any final law is put into place, Orszag said.

The U.S. Centers for Medicare and Medicaid Services would likely be charged with carrying out a significant part of the legislation. It is the only U.S. health agency in which Obama has not appointed a director.

Asked whether the agency has the staff and funding to do so, Orszag said the administration is focused on ensuring there are sufficient resources to carry out the task, adding that the bills allow enough time before certain provisions take effect to give health officials "time to get the details right."

(Editing by Will Dunham)