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Commentary

Health Policy on a Budget
Joseph R. Antos, Ph.D., Health Policy Outlook, American Enterprise Institute, 3-10-05

Antos says that mounting federal Medicare outlays are a “hot potato [that] has landed squarely in the lap of Congress, and we can only hope that it does not drop it. The president’s major objectives - to cut the deficit in half over the next four years, reduce taxes, and reform Social Security - require an extraordinary degree of political cooperation on Capitol Hill and willingness to make hard calls on where to reduce federal outlays.”

While the media have focused on the costs of the drug benefit and demands from some sectors for the government to “negotiate” (translation: set prices) with drug manufacturers, the reality is that “even without the drug benefit, Medicare would face a $45 trillion obligation that would have to be paid over and above the revenues that are specifically earmarked for the program. Consequently, the political focus on setting drug prices misses a larger point: Medicare’s fiscal crisis is a product of its own design, not solely the result of adding an expensive new benefit. Until we come to grips with the defects of a program that rewards providers for more services, not more results, we will see unnecessary costs mount inexorably.”



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