CBO Says Implementing Medicare Advisory Council Could Save Money, But Not as Much as Hoped

Janice Simmons, for HealthLeaders Media , July 28, 2009

The Congressional Budget Office (CBO) said on Saturday that the Obama administration's proposal to give an independent panel--which it called the Independent Medicare Advisory Council (IMAC)--the power to control Medicare costs would only save about $2 billion over 10 years.

Overall, this is a tiny blip compared to the bill's cost of $1 trillion-plus price. However, that did not faze Office of Management and Budget Director Peter Orszog, who said in his White House blog, that the point of the proposal was "never to generate savings over the next decade."

In particular, under the administration's approach, the IMAC system would not even begin to make recommendations until 2015, he said. "Instead, the goal is to provide a mechanism for improving quality of care for beneficiaries and reducing costs over the long term," Orszag added.

In other words, in the "terminology of our 'belt and suspenders approach' to a fiscally responsible health reform, the IMAC is a game changer not a scoreable offset," he said.

However, if the legislation were to provide an independent advisory council with "broad authority, establish ambitious but feasible savings targets, and create a clear, fall back mechanism for instituting across the board reductions in net Medicare outlays," CBO said "such a council would identify steps that could eventually achieve annual savings equivalent to several percent of total spending on Medicare."

Achieving these savings, in addition to those resulting from the provisions in HR 3200, would govern Medicare's payment rates. This would probably require significant changes in the program's coverage, benefit design, and payment and delivery systems--and a council with the clear mandate, independence, and resources to propose such changes, according to CBO.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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