* CBO lowers Medicare, Medicaid spending forecasts
* Analysts see lower spending on doctors, hospitals, drugs
By David Morgan
WASHINGTON, Aug 22 Medicare, the popular
healthcare program for the elderly that both political parties
vow to rescue from financial ruin, will spend less money over
the coming decade than previously expected, U.S. analysts said
In a report on the U.S. economy and budget, the non-partisan
Congressional Budget Office reduced its spending forecasts for
Medicare by $19 billion for 2012 and by $169 billion over the
coming decade from earlier this year. Total Medicare spending is
projected at $7.7 trillion for the 10 years ending in 2022.
The change reflects lower spending growth for doctors,
hospitals and prescription drugs since the U.S. economy fell
into recession in 2007. "The slower growth of Medicare that
we've seen is consistent with slower growth in healthcare costs
more generally in the economy," CBO director Doug Elmendorf told
a news conference.
Medicare, which provides benefits to nearly 50 million
elderly and disabled people, has vaulted to the forefront of the
presidential election campaign since Republican Mitt Romney
chose Wisconsin congressman Paul Ryan, a budget hawk, as his
running mate. Analysts now believe the program could play a key
role in the outcome of the Nov. 6 elections.
Representing 15.4 percent of current federal spending,
Medicare is a prime target for deficit reduction. That is partly
because retiring Baby Boomers are swelling its ranks and its
costs tend to rise -- with overall healthcare prices -- at rates
above general inflation. The program, which CBO expects to spend
$550 billion this year, is classed as "mandatory" spending, as
opposed to discretionary, because the government is legally
obligated to pay for the claims of beneficiaries.
Medicare also faces a potential financial crisis in 2024,
when its trustees believe a government trust fund that helps pay
for hospital benefits will be exhausted. Wednesday's lower CBO
spending figures are not enough to forestall that event.
Ryan has proposed altering Medicare by converting its
offering of guaranteed health benefits into a voucher system
that would instead provide future beneficiaries with a fixed
payment for purchasing health coverage.
Obama's healthcare overhaul would retain the current
Medicare structure while reducing payment rates for healthcare
providers. It would also attempt innovations designed to move
the program away from its costly fee-for-service approach.
OPPOSITION FROM SENIORS
Senior citizens, who ordinarily favor Republicans and could
sway the outcome of the Nov. 6 election in several swing states
including Florida, oppose the Ryan plan by 55 percent to 24
percent, according a new Pew Research poll.
As a result, Medicare is at the center of intensifying
partisan battle in which Democrats accuse Romney and Ryan of
wanting to "end Medicare as we know it," while Republicans claim
Democrats would "cut" Medicare by hundreds of billions of
dollars to finance "Obamacare."
Meanwhile, Elmendorf said 2012 has proved to be the third
consecutive year that CBO has had to reduce its forecasts for
This year's reduction comes despite CBO's prediction of $136
billion more in payments to Medicare healthcare providers than
its previous estimate for the next 10 years, spurred by
increased reimbursement rates.
Overall annual U.S. healthcare spending growth is expected
to hover near historic lows of around 4 percent through 2013
before accelerating later in the decade, according to the
federal Centers for Medicare and Medicaid Services. Healthcare
spending should outpace economic growth by about 2 percentage
points on average for most of the decade.
CBO also predicted that Medicare's sister program, Medicaid,
which provides health coverage to the poor, would also spend
less money -- $375 billion or 7 percent less than expected over
the coming decade, largely as the result of the Supreme Court's
June decision on President Barack Obama's healthcare reform law.
The court allowed states to opt out of an expansion of
Medicaid intended to extend health coverage to 16 million
uninsured poor people beginning in 2014.
CBO lowered its spending estimate by $288 billion to reflect
the likelihood that some states will either not participate in
the expansion or expand Medicaid coverage to lower levels than
authorized by the Patient Protection and Affordable Care Act.