Committee for a Responsible Federal Budget

Ways and Means Committee Continues Work on Entitlement Reform

Aug 9, 2013 | Health Care| Social Security

While everyone is focused on tax reform developments these days, we cannot forget about the need for entitlement reform. In an attempt to devise a solution, the Ways and Means Committee held a bipartisan hearing series on reforms to entitlement programs in April. They have since opened the floor up to the public by encouraging the submission of comments on any of the plans and have also released discussion drafts from each of the hearings. We previously talked about their discussion draft for switching to the chained CPI for Social Security cost-of-living adjustments (COLAs).

The Committee has released three additional discussion drafts recently on both Social Security and Medicare, and they are receiving comments during the month of August. The comment period for the chained CPI will end tomorrow, cost-sharing on August 16th, and benefit adjustments and post-acute care at the end of the month.

Social Security: For Social Security, the newest discussion draft goes into benefit adjustments, using policies from the Simpson-Bowles and Domenici-Rivlin plans. These policies include adjusting benefits based on increases in life expectancy, creating new minimum benefits for low-wage workers, and adjusting the benefit formula itself.

Medicare Cost-Sharing: The proposals to reform Medicare cost-sharing are also mostly drawn from the President's budget and include increasing means-testing of premiums and increasing the Part B deductible. We've written before about more comprehensive proposals to overhaul and simplify cost-sharing and Medigap rules, although the draft does not include these types of provisions. On the Medicare side, they have released two discussion drafts, one on post-acute care payment reform and the other on modernizing beneficiary cost-sharing.

Post-Acute Care Payment Reform: The payment reforms are largely drawn from the President's budget and consist of changing the annual updates to certain payments or making more structural reforms like bundled payments.

If we are to make these programs sustainable for future generations, action must be taken now to better shore up their finances and to give time for beneficiaries to adjust to changes. It is commendable that the Committee is continuing to move the process of entitlement reform forward.

To read the discussion drafts and submit comments to the Committee, click here.