The Medicare Raid in Baucus Bill

J.D. Foster /

Senate Finance Committee Chairman Baucus’ (D-MT) health care reform proposal includes a number of reforms to reduce Medicare outlays. Medicare, as is now well established, is unsustainable in its current form. Projections of promised benefits far outstrip projections of program receipts, leaving the nation with an unfunded obligation of tens of trillions of dollars. While some of the specific Medicare reforms may be ill-advised, the willingness of the Chairman to propose such changes at this time is encouraging for the future of Medicare.

The Ensign Amendment. Sen. Ensign (R-NV) succeeded in adding a very important amendment to the Baucus proposal during the Finance Committee’s deliberations. The Ensign amendment stated simply that Medicare savings must be used to reduce Medicare’s unfunded obligation. Inclusion of this amendment is an important step toward making Medicare a sustainable, viable program for future generations of seniors.

However, the Ensign amendment would be a pyrrhic victory for seniors and for Medicare if health care reformers were permitted to use the savings from Medicare to finance other spending. Senators now need to take the next step to ensure that the straightforward interpretation of the amendment is reflected in any legislation adopted by the Committee: Whatever Medicare savings are eventually adopted need to be completely sequestered from the rest of the bill.

Sequestering Medicare savings can be achieved any number of ways. The most straightforward would be for Congress to move separate legislation reflecting the Medicare savings, thereby removing the Medicare reforms and associated savings from the Congressional Budget Office (CBO) tabulations of broader health care reform. Alternatively, Senators could instruct the CBO to present its analysis of the net cost of the bill after setting aside the Medicare savings. Whatever the method, this sequestration of Medicare’s savings is needed for the sake of the program and to so health care reform does not hinge on a budget flimflam.