Two Cheers for the Coburn–Lieberman Medicare Proposal

Robert Moffit /

Senators Tom Coburn (R–OK) and Joseph Lieberman (I–CT) unveiled a major Medicare proposal. Based on preliminary estimates provided by the Congressional Budget Office (CBO), the proposal would reduce total Medicare spending by more than $600 billion in the next 10 years and cut the program’s long-term (75-year) unfunded liability by approximately $10 trillion.

This is a serious start. Without remedial action, Medicare faces a long-term unfunded liability of almost $37 trillion. The Medicare hospitalization trust fund is running a deficit of $34.1 billion this year alone. While the program has become an engine of deficits and debt, the first step toward reform is revamping the traditional Medicare program. That is what the Coburn–Lieberman proposal would accomplish. The next step would be to move the program from a defined benefit to a defined contribution for the coming generation of retirees.

While legislative language is not yet available, if the legislative language comports with the narrative description of the proposal, these would be welcome changes to the traditional Medicare program. These changes are consistent with long-term Medicare reform. A number of these proposals, while differing in certain details, are also broadly similar to the Medicare policy prescriptions embodied in The Heritage Foundation’s comprehensive budget, tax and entitlement reform proposal, “Saving the American Dream.” Specifically, the Coburn–Lieberman proposal would:

The Coburn–Lieberman proposal is a serious step toward comprehensive Medicare reform. Beyond changes in the traditional program, full-scale reform would include the creation of a premium support system of Medicare financing that would allow seniors to take their private coverage into retirement and allow choice of plans other than traditional Medicare fee for service. But the addition of a catastrophic benefit, the broader application of income-related taxpayer subsidies, a rational increase in Medicare Part B and D premiums, and an increase in the age of eligibility are all policy prescriptions advanced by The Heritage Foundation and other reformers. If America is to be rescued from ruinous debt and crushing taxation, further Medicare reform is indispensable.

A senior fellow at Heritage’s Center for Policy Innovation, Moffitt is the co-author of Why Obamacare is Wrong for America (HarperCollins/Broadside, 2011).