Taken together, the costs of administering Social Security, Medicare, and Medicaid entitlement programs account for around 40% of federal spending. The Obama administration has given very little face time to the rather unsexy topic of entitlement cost-containment. Amid the current health policy topic du jour — debate on the pending reform bill — the stealthy nature of the cost of the administrative heft to run these programs has a way of keeping organizations’ healthcare economists up at night. Up until now, the Obama administration has focused on cost-containment as a function of the future sustainability of current reform efforts in stemming those costs; that is, reform legislation would carry essential built-in provisions^[1] to indirectly stem costs of government run programs well into the next decade.

Two senators^[2] have introduced legislation to address this issue which calls for the formation of a bipartisan “entitlement commission” as a way of approaching the so-called cost curve, the graphical representation of the trajectory of future costs to healthcare. On the surface, the formation of a bipartisan commission to monitor such spending falls right in line with Obama’s stern admonitions of administrative transparency; however, such bodies have a mixed track record^[3], and the creation of another administrative body to oversee healthcare spending may have to do more with healthcare politics than with analytics. | LINK

1. The Obama administration has said that the fiscal 2011 budget now being drafted would include program cuts that would help to control the deficit and go a long way toward maintaining solvency in healthcare spending. [↩]
2. Senate Budget Committee Chairman Kent Conrad [D-ND] and Republican Sen. Judd Gregg of New Hampshire. [↩]
3. A bipartisan senate commission formed in 1994 during the Clinton administration did little to address the long term budgetary challenges of providing health care and retirement benefits to the baby-boom generation as the required 60 votes to raise the retirement age to 70 and produce cuts in SS benefits never materialized. [↩]

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