Orszag: Medicare, Medicaid cuts key part of overall spending reductions

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Peter Orszag, who is director-designate of the White House Office of Management and Budget, discussed the need for Medicare and Medicaid spending reductions at his Senate confirmation hearing Tuesday.

Spending on the programs could account for 20% of the nation's gross domestic product by the year 2050, Orszag told the Senate Budget Committee. But trying to slow Medicare and Medicaid spending without addressing the rising costs of healthcare in general will only lead to access problems for beneficiaries, he said. Only by combining broad efforts at reducing healthcare costs with cuts to Medicare and Medicaid payments can the nation's long-term budget issues be better addressed, Orszag argued.

Increased use of healthcare IT, analysis of regional differences in healthcare costs and improved preventive care measures are all good potential ways to reduce healthcare costs, Orszag said. He was quick to point out that there are many other approaches worthy of investigation. The Senate will vote on Orszag's confirmation after Barack Obama officially takes office on Tuesday.