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Gregg: Entitlement Solvency Remains Key

Even though seniors already have access to health insurance through the Medicare program, it’s important for them to carefully watch as Congress attempts to reform the health care system. There is little doubt that the final bill will include provisions that will have a large impact on the Medicare program and our nation’s seniors.

For example, the bill reported out of the Senate Health, Education, Labor and Pensions Committee last week includes a proposal authored by Sen. Edward Kennedy (D-Mass.) titled the Community Living Assistance Services and Supports Act. This

provision establishes a new federal program to provide community-based, long-term care for seniors who have trouble with daily tasks to help them stay in their residences rather than move to a nursing home.

By putting in place a program to help seniors stay in their homes, the CLASS Act is a step toward addressing the current requirement that individuals have to spend down their assets in order to be eligible for Medicaid’s long-term-care benefits.

However, if the CLASS Act is going to work for our senior citizens, our communities and our nation’s long-term fiscal health, it is important for Congress to be honest about this proposal’s costs as the U.S. confronts a looming fiscal crisis due to the ever-increasing cost of entitlement programs such as Medicare and Medicaid.

The original version of the CLASS Act underestimated the cost of the program and set premium rates far too low to enable the program to pay for itself and be on sound financial footing. This would have created yet another unfunded entitlement program costing taxpayers as much as $2 trillion over the long term. The federal government’s unfunded liabilities for existing entitlements are already staggering at $70 trillion, or approximately a $600,000 burden per American household. By setting premiums at unrealistically low levels, the CLASS Act would have made this entitlement crisis worse.

In addition, the CLASS Act’s long-term fiscal problems were disguised using some sleight-of-hand budgeting to create a short-term surplus to help pay for the health care reform bill. These are the types of scoring gimmicks that are simply unacceptable in a serious debate about health reform and the long-term fiscal health of our nation.

To eliminate these problems, I offered an amendment, which was ultimately accepted, that would require that CLASS Act premiums be based on a 75-year actuarial analysis of the program’s costs. My amendment ensures that instead of promising more than we can deliver, the program will be fiscally solvent and we won’t be passing the buck — or really, passing the debt — to future generations. I’m pleased the HELP Committee unanimously accepted this amendment. However, we still have a larger task: to ensure solvency for all of our entitlement programs that currently represent a serious threat to our fiscal and economic health.

Seniors also need to be wary of attempts to reduce Medicare spending to pay for expanding health care entitlements. More than 45 million senior citizens across the country depend on Medicare for their health care needs, including doctor’s visits and daily prescriptions. However, a recent Medicare Trustees report projects that Medicare will be insolvent in 2017, just eight years from now, and poses an unfunded price tag of $38 trillion. Under this dire backdrop, efforts to reform Medicare should not be immediately spent on expanding health care entitlements. We cannot rob Peter to pay Paul, especially when the health of millions of our nation’s seniors is at risk.

Alarmingly, there is no current plan for how our nation will pay for our tens of trillions of dollars in unfunded obligations. Like health care reform, meaningful solutions must be bipartisan in nature and set aside Beltway politics, or nothing will come of them. One approach is the Bipartisan Task Force for Responsible Fiscal Action Act, which I offered with Senate Budget Chairman Kent Conrad (D-N.D.). This task force would be required to send Congress bipartisan legislative proposals to address our entitlement crisis.

To prevent such proposals from getting sidetracked by special interests and political games, these proposals would be fast-tracked and guaranteed a final vote. Simply put, the task force legislation lays out a framework to meaningfully bring lawmakers together to tackle one of the most serious issues we face as a nation. Now all we need is to finally have the will to take up this challenge and not pass our legacy of debt to our children.

Sen. Judd Gregg (R-N.H.) is the ranking member of the Budget Committee and also serves on the Appropriations and Health, Education, Labor and Pensions committees.

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