House Committee Approves ‘Brighter America’ Spending Reforms

Published July 12, 2018

A comprehensive resolution setting federal government spending recommendations for Fiscal Year 2019 approved by the U.S. House Budget Committee would reduce the federal deficit by $8.1 trillion over the next 10 years.

Most of the savings would come from a $5.4 trillion reduction of spending on entitlement programs such as Medicare and Medicaid.

The House Budget Committee approved the Concurrent Resolution on the Budget for Fiscal Year 2019, titled “A Budget for a Brighter America,” on June 21.

The full House has not yet scheduled a vote on the resolution. The Congressional Budget and Impoundment Control Act of 1974 requires Congress to approve a Concurrent Resolution for the next Fiscal Year on or before April 15 of each year.

Suggests Market Fix

Peter Ferrara, a senior fellow at The Heartland Institute, which publishes Budget & Tax News, says the model for fixing Medicare is already in place.

“You need to change the way the program operates, so that it operates more efficiently and at less cost,” said Ferrara. “Medicare comes in four parts: A, B, C and D. In C and D, the government offers you some money and you can use that money for the service provider of your choice. In Medicare Part C, you can choose private insurance for all your benefits. In Medicare Part D, you choose your private health care plan for your drug benefits.

“Those reforms are saving the federal taxpayers tons of money,” Ferrara said. “The drug benefits are costing far less than originally projected, because it’s actually used in the free market where there’s more competition, innovation, and consumer choice.”

Ferrara says Congress should use proven free-market principles to reform health care.

“The way to reform Medicare is to extend the reforms of Parts C and D to Medicare Parts A and B,” Ferrara said. “You have to shift it all to private-market competition, like you have in C and D.”

‘Deep Financial Trouble’

If Congress fails to fix Medicare, warnings issued by the Medicare Board of Trustees, the government board responsible for administering the program, will become much louder, says Robert Moffit, a senior fellow in domestic policy studies at The Heritage Foundation.

“We know Medicare is in deep financial trouble,’ Moffit said. “General revenue funding is going to exceed 45 percent of the total cost of the program. [If that happens,] under current law, the trustees must then submit a ‘Medicare Funding Warning.’ Then, within 15 days of submitting his budget, Donald Trump must submit a plan for dealing with Medicare’s excessive costs.”

‘It’s Not a Spending Cut’

Moffit says the Concurrent Resolution is a spending reform, not a reduction.

“It’s not a spending cut,” Moffit said. “It is a budget proposal talking about putting Medicaid spending on a per-capita basis, just like [President] Bill Clinton proposed back in 1995. It would apply to different types of Medicaid patients. In other words, it would be an increase based on demographic characteristics for people who are young and poor, with separate increases for the disabled and elderly.

“It’s just a much more rational way of allocating limited resources in Medicaid to actually target the funding where there is a need, and that seems perfectly reasonable,” Moffit said.

‘A Rough and Terrible Justice’

Moffitt says the spending problem will only worsen with time, unless addressed soon.

“There is kind of a rough and terrible justice to all of this, because it doesn’t make any difference what people think,” Moffit said. “It’s like arguing with the ocean. The reality is we are faced with an enormous entitlement challenge, and we’re either going to have to raise taxes very high, cut benefits, or find another way of doing it.”

‘A Far Better Medicare’

A reformed Medicare program would be better for recipients as well as taxpayers, Ferrara says.

“They may say this is the end of Medicare as we know it, to which I would say, ‘Thank God!'” Ferrara said. “You’re getting a far better Medicare when you get the freedom to choose your own medical insurance in the private sector, at less cost.”