January 14, 2009 / 11:45 PM / 10 years ago

Outgoing Bush health chief urges Medicare changes

WASHINGTON (Reuters) - Congress and the incoming Obama administration should include Medicare reform in their efforts this year to improve the U.S. health care system, the outgoing Bush administration’s health chief said on Wednesday.

“Medicare and its reform needs to be at the heart of health care reform,” said Health and Human Services Secretary Mike Leavitt, who called it “an unsustainable government entitlement program.”

Medicare provides health insurance for Americans 65 and older and the disabled. In a briefing with reporters ahead of the end of his tenure next week, Leavitt pressed his view that “Medicare is drifting toward disaster.”

“It is not just important to the health care system. It’s important to the financial viability of our government in the long term. It has the potential to be an economy killing problem if we don’t solve it, if we don’t begin now to resolve it,” Leavitt said.

Leavitt added that he has expressed his concerns about Medicare to Tom Daschle, President-elect Barack Obama’s choice to head HHS. During his news briefing, he did not detail the Medicare changes he envisioned.

Daschle is set to play a lead role in Obama’s efforts along with the Democratic-controlled Congress to fashion legislation aimed at improving the quality and reducing the cost of the U.S. health care system, the world’s most expensive.

“It’s clear to me that they’re going to be focusing intensely on health care reform, and that’s something I applaud. It’s a discussion we need to have,” added Leavitt.

The Bush administration’s previous proposal to cut Medicare spending by $12.8 billion over five years drew sharp criticism from Democrats in Congress, illustrating the political risks of taking aim at a program that is of fundamental importance to millions of elderly people.

Last March, the Bush administration issued a report offering a gloomy assessment of the financial health of Medicare. The trustees of the program said in their annual report that the program’s hospital insurance fund outlays were forecast to exceed tax revenues for 2008 and all future years and it will be entirely exhausted in 2019.

Medicare uses a separate trust fund to pay for physician services and other outpatient care, and the report predicted a big increase in those costs.

Medicare, which currently covers about 44 million people, is forecast to come under growing stress as the members of post-World War Two baby boom generation begin to qualify for coverage. In 2007, it provided $425 billion in benefits.

Editing by Julie Steenhuysen and Cynthia Osterman

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