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Actuaries To ‘Super Committee’: Slow Overall Health Spending, Not Just Medicare

By Marilyn Werber Serafini

September 12th, 2011, 11:26 AM

The deficit reduction “super committee” should act to slow the growth of health care spending overall – not just in Medicare – as it rolls up its sleeves, says the American Academy of Actuaries. “Achieving long-term sustainability for Medicare will require slowing the growth in overall health spending, not simply shifting costs from one payer to another,” said senior health fellow Cori Uccello.

Photo by Oliver Hammond via Flickr

In a letter to committee members, Edwin Hustead, who chairs the academy’s Medicare Steering Committee, said the nation cannot afford to have Medicare continue on its current financial path. Still, he urged the panel to consider the impact of proposals on “the viability of the Medicare program including cost, access and quality of care.”

The deficit reduction committee, made up of six senators and six House members, is charged with identifying $1.2 billion in budget savings by late November.  With Medicare spending growing faster than the overall economy, the program is expected to be a major issue in the panel’s deliberations.

3 Responses to “Actuaries To ‘Super Committee’: Slow Overall Health Spending, Not Just Medicare”

  1. JRR says:

    Discourse on health care costs always seems to hover around cost shifting or tinkering around the edges but never questions the fundamental tenet of the health care system – the freedom given to providers to charge whatever they think the “market” – meaning Medicare/Medicaid and private insurance carriers – will bear. We see study after study after study, but none ask why an overnight at a hospital costs close to $3,000, an MRI procedure $1,100 and use of surgery room several thousand dollars an hour! Our health care system, if it’s not run by people in white cloaks, would be subject to RICO!

  2. PSH says:

    More than 90 percent of Americans face hospital markets that are “highly concentrated”, according to FTC standards. Ten percent of markets have only one system, meaning there is no possibility of competition. The upshot is that we have price controls in the form of price fixing by monopolists and oligopolists. When providers can pass on costs at will onto private payers, it breeds bloated cost structures and low productivity. Massive productivity gains–upwards of 30 percent–are well within the reach of American medicine. The only thing that stands in the way is the lack of a business case, in the form of price pressures. There are established mechanisms for dealing with monopoly in America, ranging from deconcentration to price regulation. There is a reason why telephone repairmen don’t make a quarter of a million a year. It’s time to apply the same principles to health markets.

  3. CEZ says:

    In every other industry, advancements in technology translate into reduced costs through greater efficiency. Health care is a polar opposite–any advance in technology is an excuse to increase costs through greater billing for services. In an era where the consumer has never been so well-informed as to price offerings in market spaces (mainly thanks to the Internet), never has the consumer been so much in the dark about pricing and cost structures pertaining to his own health. That’s where solutions need to begin.