Last month, Sen. Joe Lieberman (I., Conn.) voted against the House Republican budget authored by Rep. Paul Ryan (R., Wis.), which includes significant reforms to Medicare. After doing so, the former Democrat says, he could not in good conscience do nothing, as that would signal an endorsement of the status quo, which when it comes to Medicare, as well as the national debt, is simply unsustainable. Indeed, the program’s own trustees admit as much.
So Lieberman took to the pages of the Washington Post to offer his own plan to preserve Medicare for future generations. Sen. Tom Coburn (R., Okla.) took notice, contacted Lieberman, and offered to work on a bipartisan proposal to present to Congress. The pair unveiled their plan Tuesday at a press conference on Capitol Hill. “We can’t save Medicare as we know it,” said Lieberman. “We can only save Medicare if we change it.”
The senators’ plan would save an estimated $600 billion over ten years and extend Medicare’s solvencey by “at least 30 years” by instituting a number of cost-saving structural reforms. These include:
“Streamlining” the program by combining the Part A and Part B deductibles.
Raising the age of eligibility from 65 to 67 by the year 2025 (a rate of two months each year) to reflect the dramatic increase in life expectancy since Medicare was passed (from 70.2 in 1965 to 77.7 in 2006).
Means-testing requiring wealthy individuals to cover a larger percentage of their premiums and pay higher out-of-pocket costs. “We simply do not believe that tax dollars should be used to pay premiums for those who can afford to pay on their own,” Lieberman said.
The plan would also impose a cap on seniors’ out-of-pocket costs depending on their income, which would limit the amount individuals seniors must pay for health care on an annual basis. The cap would be set at $7,500 for individuals making $85,000 or less per year (the lowest bracket), and $22,500 for those making $160,000 or more per year (the highest bracket).
The key to reining in costs, Coburn argued, was to introduce “a little bit of market force” into the health-care sector in a way that gives patients a greater awareness regarding the cost of care. “It just doesn’t work because everybody thinks somebody else is paying for their health care,” he said. “That’s not just in Medicare, that’s everywhere.”
All told, the senators said their plan would reduce Medicare’s massive 75-year unfunded liabilities by $10 trillion and significantly lessen the program’s strain on the federal budget. Neither expected the plan to very popular among their colleagues. “Nobody’s going to like this plan,” Coburn said. “We understand that.”
“We know that each part of our proposal will make some group of people unhappy and will provide easy targets for attack from those who understandably want to preserve the status quo,” added Lieberman. “But the status quo only leads to the collapse of Medicare and fiscal disaster for our country. We’re way past the point where we can save Medicare and cut the debt while keeping all of the interest groups and all of our constituents happy.”
It wasn’t long before their colleagues proved them right, at least on the Democratic side.
Senate Majority Leader Harry Reid (D., Nev.) reiterated his opposition to Lieberman’s original plan, calling it a “bad idea.” House Minority Leader Nancy Pelosi (D., Calif.) called it “unacceptable.”
“Any changes to Medicare must strengthen the Medicare system and improve the health of our seniors,” Pelosi said in a statement. “It is unfair to ask seniors to get less in benefits and wait longer to get onto Medicare — all while Republicans back tax breaks for Big Oil and corporations that ship American jobs overseas.”
Senate Minority Leader Mitch McConnell (R., Ky.) stopped short of endorsing the plan, but applauded the senators’ effort, saying it “underscores the necessity” of reforming entitlement programs. “I don’t see how we can have a credible large, or frankly even small package to address [the deficit] and leave entitlements sitting on the sidelines,” he told reporters.
Still, Coburn and Lieberman expressed hope that their plan could serve as a “bipartisan beachhead” in the ongoing debt-ceiling negotiations. Lieberman said, “At a minimum, maybe we have offered some ideas here” for President Obama and congressional leaders to consider as they work to reach a deal.
Coburn insisted that any serious deal must do something to rein in Medicare costs. “Medicare has to be fixed,” he said. “You can live in la-la land and say, no, it’s going to stay the same — it isn’t going to stay the same. Even if the Congress doesn’t do anything, it isn’t going to stay the same. We’re not going to be able to borrow enough money to afford it.”
And while there are elements of the plan he personally disagrees with, Coburn said the situation was too urgent to get hung up on partisan objections. “The option is not to do nothing, the option is how do we find a way forward that preserves Medicare in a way that we can get it through Congress that also preserves the country,” he said. “We need to shake the political shackles and start doing what’s best for the country, not what’s best for any party.”
Lieberman concurred, calling Medicare a “sick” program in dire need of reform. The longer Congress waits to act, the more painful the changes that will be required. “The sooner you take the strong medicine, the sooner you’ll get healthy again,” he said.
Go here for more details about the plan.