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Expert Advice on Finding Medicare Savings

The kindest cuts the super-committee could consider

En español | With great fanfare a bipartisan congressional deficit "super-committee" is working to close the huge gap between what government spends and what money it collects in taxes and fees.

See also: Congressional budget cuts and Medicare.

By Thanksgiving the "gang of 12" Democrats and Republicans must find ways to reduce the deficit by $1.2 trillion over the next 10 years — through spending cuts, increases in revenue or both. If they fail, a series of painful cuts automatically kicks in.

Woman holds sign that reads Medicare for All, options for cutting Medicare costs.

Congress faces a challenge in cutting Medicare costs to reduce the deficit. — Photo by Chris Hondros/Getty Images

The committee will certainly look at Medicare, but the program's future spending already has been reduced by $500 billion under the new health care law. Finding further savings won't be easy.

"The number of painless policy options is about zero," says Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities.

Given that reality, the AARP Bulletin asked conservative, liberal and moderate policy analysts to list the least painful and fairest options for achieving more Medicare savings over the next 10 years. Here are some of their ideas. All face stiff opposition in Congress.

Increase Medicare payroll tax. Savings: $651 billion

Liberal and many moderate groups say that to be fair, the total savings wrung from Medicare to help reduce the deficit should be 50 percent from cuts and 50 percent from new revenue. The Congressional Budget Office (CBO) says raising the Medicare payroll tax to 3.9 percent from 2.9 percent would raise $651 billion.

Crack down on Medicare fraud. Savings: $9 billion

Added money and legal authority would take an even bigger bite out of Medicare crime, said the bipartisan National Commission on Fiscal Responsibility and Reform, appointed by the president.

Streamline copayments, limit medigap coverage. Savings: $148 billion

Conservative and some moderate analysts favor this one, contending that asking people to pay more for Medicare services would make them more aware of medical costs. This would "discourage unnecessary" use of medical services, says James Capretta, a fellow at the Ethics and Public Policy Center.

The bipartisan commission advised streamlining Medicare's array of copays and deductibles, replacing them with one annual deductible of $550 for hospital and doctor coverage. Medicare patients then would pay 20 percent of any expenses above that deductible, up to $7,500 a year, a savings of $110 billion.

The commission advised barring private supplemental Medicare insurance (medigap) from covering the first $500 in charges and limiting coverage to half of the next $5,000 in fees, for a savings of $38 billion.

Next: Tax sugary drinks. >>

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