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'Do no harm' in healthcare costs

Obama's healthcare legislation must lead to reform of Medicare.

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On this much, President Obama and Congress agree: A healthcare-reform package must not add to the federal deficit.

That's a necessary condition, and a tough one to fulfill. The last time Congress expanded coverage (a Medicare prescription drug benefit in 2003), it added substantially to America's healthcare tab. Last week, the nonpartisan Congressional Budget Office estimated that the House version of healthcare reform would actually increase federal budget deficits by $239 billion over 10 years.

But let's say lawmakers manage to "do no fiscal harm" and somehow pass a deficit-neutral package. Even that is not enough in an era of trillion-dollar deficits. Annual deficits add up to long-term debt. The US has dug a hole of debt all the way to China – the lar­gest holder of US bonds, and a worrywart about Uncle Sam's ability to pay.

By far the largest contributor to the country's ballooning debt is Medicare, the federal program for seniors. New healthcare legislation is the perfect place for lawmakers to commit to sopping up red ink from unmet Medicare obligations of nearly $40 trillion. [Editor’s note: An earlier version incorrectly compared unmet Medicare obligations with US economic output.]

The operative word in that paragraph is commit. Lawmakers may nip and tuck at Medicare in the final legislation, but actual overhaul is an unreasonable expectation. Simply getting to universal coverage – a historic change – will be hard enough without adding top-to-bottom reform of Medicare, which would be a complex and politically charged undertaking.


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