Posts filed under ‘Health Care Reform’
Six Solutions for Medicare Solvency and Reducing the Deficit
As lawmakers debate the future of Medicare as part of broader efforts to address the federal deficit, proposals have emerged that would have severe repercussions for beneficiaries and their families.[1] Sound solutions that would protect Medicare coverage while reducing costs to taxpayers have not been seriously addressed. The six solutions we propose would accomplish both of these goals.
These solutions, unlike many current proposals, do not shift costs to beneficiaries or completely restructure the Medicare program. They promote choice and competition while shoring up the solvency of Medicare. Adopting these solutions would be a responsible step in reducing our deficit the right way.
1. Negotiate Drug Prices with Pharmaceutical Companies
The Medicare prescription drug law passed in 2003 prohibits the Secretary of Health and Human Services from negotiating prices with pharmaceutical companies. These companies gained 47 million customers when Medicare began covering prescription drugs, but they did not have to adjust their prices in return. Requiring the Secretary to negotiate drug prices for Medicare would save taxpayers billions of dollars – potentially over $200 billion over ten years.[2] Taxpayers currently pay nearly 70% more for drugs in the Medicare program than through the Veteran’s Administration, which has direct negotiating power.[3] Savings realized from reducing Medicare drug cuts could be used to improve benefits for beneficiaries and reduce the deficit.
2. Stop Paying Private Medicare Plans Anything More Than Traditional Medicare
According to the Medicare Payment Advisory Commission (MedPAC), Medicare pays, on average, 10% more for beneficiaries enrolled in private insurance (Medicare Advantage or MA plans) than for comparable beneficiaries enrolled in traditional Medicare.[4] Despite these extra payments, beneficiaries in private plans who are in poor health, or who have chronic conditions, often have more limitations on coverage than they would under traditional Medicare.[5]
A large portion of the overpayments made to private plans actually goes to insurers rather than to benefit Medicare beneficiaries.[6] Although the Affordable Care Act (ACA) changed the payment formula for Medicare Advantage plans, some plans will continue to be paid as much as 115% of the average traditional Medicare payment rate for their county when the new rates are fully implemented. MedPAC estimates that by 2017Medicare Advantage payment benchmarks will average 101% of traditional Medicare. ACA also provides additional payments for plans that receive high quality ratings, increasing the likelihood that some MA plans will continue to be paid more than under traditional Medicare. Reducing private MA payments to 100% of traditional Medicare, as MedPAC proposed before the enactment of ACA, will increase the solvency of the Medicare program and curb costs for taxpayers. Private plans simply should not receive higher pay than traditional Medicare.
3. Include a Drug Benefit in Traditional Medicare
Offering a drug benefit in traditional Medicare would give beneficiaries a choice they do not now have, encourage people to stay in traditional Medicare, and save money for taxpayers. It would also provide an alternative to unchecked private plans that leave many with unexpected high out-of-pocket costs. A drug benefit in traditional Medicare would protect beneficiaries against expensive and sometimes abusive marketing practices. Further, traditional Medicare’s lower administrative costs could free up money for quality care, would result in lower drug prices for beneficiaries, and save taxpayers over $20 billion a year.[7]
4. Extend Medicaid Drug Rebates to Medicare Beneficiaries Who Are Dually Eligible or Part D Low-Income Subsidy Participants
Dual eligibles (people eligible for both Medicare and Medicaid) comprise one-fourth of all Medicare drug users, and are among the most costly beneficiaries. Because Medicare, rather than Medicaid, covers most of their drugs and because Medicare cannot negotiate drug prices, their drugs are not eligible for the same rebates as they would be under the traditional Medicaid program. Extending these rebates for dually eligible people as well as for those who qualify for the Part D Low-Income Subsidy – the poorest Medicare beneficiaries - would save approximately $135 billion over ten years.[8]
5. Lower the Age of Medicare Eligibility
People between 55 and 65 who are not disabled are currently unable to enroll in Medicare. Lowering the age of eligibility to enroll this healthier population in the Medicare program would add revenue from people who will likely need less care and fewer services than older and disabled enrollees.
6. Let the Affordable Care Act Do Its Job
The Affordable Care Act includes many measures to control costs as well as models for reform that will increase the solvency of the Medicare program and lower the deficit while protecting Medicare’s guaranteed benefits. The Congressional Budget Office estimates that repealing or defunding ACA would add $230 billion to the deficit while ignoring the real issue of rising overall health care costs, which contribute heavily to the growing national debt. ACA includes strong measures to allow CMS to combat fraud, waste, and abuse that will bring down costs, as well as a variety of pilot and demonstration projects that aim to bring better care and quality to beneficiaries.[9] The bipartisan Bowles-Simpson Deficit Commission recommended that these projects be implemented as quickly as possible.[10] Allowing ACA to do its job will create a foundation on which to build by improving care and holding down costs for taxpayers.
Conclusion
“Protecting Medicare” by shifting costs from the federal government to beneficiaries and their families – whether through a voucher program or spending caps or other draconian measures – is a perversion of Medicare’s original intent: to protect older people and their families from illness and financial ruin due to health care costs. The Center for Medicare Advocacy’s Six Solutions promote the financial welfare of Medicare and the country, without doing so at the expense of older and disabled people.
[1]See previous Alerts from the Center, “Why Medicaid Matters to Medicare Beneficiaries and Their Families”, “What Happens to Current Nursing Home Residents if House Budget Resolution Becomes Law?”
[2]National Committee to Preserve Social Security and Medicare, available at http://www.ncpssm.org/pdf/price_negotiation_part_d.pdf
[3]Center for Economic and Policy Research, “Negotiating Prices with Drug Companies Could Save Medicare $30 Billion”, March 2007, available at http://www.cepr.net/index.php/press-releases/press-releases/negotiating-prices-with-drug-companies-could-save-medicare-30-billion.
[4]MedPAC, Report to the Congress, March 2011, Chapter 12 (March 2011), available at http://www.medpac.gov/documents/Mar11_EntireReport.pdf.
[5] Neuman P. Medicare Advantage: Key Issues and Implications for Beneficiaries. Testimony before the House Committee on the Budget, United States House of Representatives, June 28, 2007, available at http://www.allhealth.org/briefingmaterials/NeumanTestimony-830.pdf,
[6] Medicare Payment Advisory Commission. March 2009 Report to Congress, Chapter 3: The Medicare Advantage Program. P. 251-253, available at http://www.medpac.gov/chapters/Mar09_Ch03.pdf.
[7]Senator Dick Durbin, available at http://durbin.senate.gov/public/index.cfm/pressreleases?ID=555cc1e8-cc54-4ead-9d85-d5e6275b3789.
[8]Office of Management and Buget Congressional Budget Office, Living Within Our Means (September, 2011); Letter to Honorable Charles Rangel, available at http://www.cbo.gov/ftpdocs/104xx/doc10464/hr3200.pdf
[9]See previous Alert from the Center, “Combating Fraud, Waste, and Abuse in Health Care.”
[10]The National Commission on Fiscal Responsibility and Reform, “The Moment of Truth,” December 2010.
Medicare and Jobs: Not Mutually Exclusive!
The more people have health insurance, including Medicare, the more they stay healthy and are able to work. If health insurance is provided by Medicare or health care reform or any avenue outside the tired employer-based system, it reduces costs for employers and encourages hiring. Ask any employer.
Continuing to tie health insurance to employment only continues a system that COSTS jobs. It creates a disincentive for employers to hire. It creates an incentive for the new employment reality: Freelance, contract work, part-time, whatever you want to call the newly underemployed who do not have benefits and for whom employers do not pay into Medicare, Social Security, Unemployment, or Workers Comp. This is a big problem for everyone involved, including individual workers, their families, AND the solvency of important programs that Americans value and that have lifted generations out of poverty and provided fair access to health care.
Pay attention, people! We not only can have Medicare and jobs – we will have more jobs if we increase access to Medicare and health care. Don’t raid Medicare to pay for jobs. That will only reduce access to both.
We’re Not the Only Ones Saying It: Let ACA Work!
As the Center has written, letting the Affordable Care Act do its job is a key component to reducing rising health care costs. Lawmakers appointed to the “Super Committee,” tasked with finding $1.5 trillion in deficit-reductions, will be considering various options to meet their budgeting goals. While doing so, we urge them to heed the words of Paul Van de Water of the Center on Budget and Policy Priorities, who writes:
“The Affordable Care Act (ACA) holds the potential to vastly improve Medicare’s long-term financial outlook…These reforms will take time to plan, test, and implement. But they can succeed only if we give them a chance, and that won’t happen if health reform opponents succeed in repealing them.” (Read the rest of the Van de Water’s blog at: http://www.offthechartsblog.org/the-%E2%80%9Csupercommittee%E2%80%9D-and-medicare/)
Support health care reform and reasoned approaches to our national budget concerns. Let ACA work!
Sen. Lieberman: Wrong Way on Medicare
We’re sorry – Connecticut’s Senior Senator has once again entered the Medicare “reform” debate with the wrong perspective. Instead of looking to insure more people while lowering costs, Senator Lieberman, and his colleague Sen. Coburn, unveiled a plan on June 28th that is misdirected – reducing the number of people covered by Medicare, and foregoing major opportunities to bring down costs.
The Lieberman-Coburn proposal would raise the age of eligibility for Medicare, raise the cost of Medicare for beneficiaries, limit the ability to purchase supplemental insurance to fill Medicare’s gaps, and continue billions of dollars of wasteful overpayments to pharmaceutical companies and private Medicare plans.
Listen carefully folks, this is not the right direction for Medicare!
Read more of Judith Stein’s comments on the plan nobody is going to like in the CT Mirror at http://www.ctmirror.org/story/13101/liebermancoburn
So – What Would You Do? Real Solutions for Medicare Solvency and Reducing the Deficit
As lawmakers debate the future of Medicare as part of broader efforts to address the federal deficit, proposals have emerged from Congress that would have severe repercussions for beneficiaries and their families.[1] Sound and measured solutions that would protect Medicare coverage while reducing costs to taxpayers have not been seriously addressed. The six solutions we propose would accomplish both of these goals.
These solutions, unlike current proposals, do not shift costs to beneficiaries or completely restructure theMedicare program. They promote choice and competition while shoring up the solvency ofMedicare. Adopting these solutions would be a responsible step in reducing our deficit the right way.
1. Negotiate Drug Prices with Pharmaceutical Companies
The Medicare prescription drug law passed in 2003 prohibits the Secretary of Health and Human Services from negotiating prices with pharmaceutical companies. These companies gained 44 million customers when Medicare began covering prescription drugs, but they did not have to adjust their prices in return. Requiring the Secretary to negotiate drug prices for Medicare would save taxpayers billions of dollars – potentially over $200 billion over ten years.[2] Taxpayers currently pay nearly 70% more for drugs in the Medicare program than through the Veteran’s Administration, which has direct negotiating power.[3] Savings realized from reducingMedicare drug cuts could be used to improve benefits for beneficiaries and reduce the deficit.
2. Stop Paying Private Medicare Plans Anything More Than Traditional Medicare
According to the Medicare Payment Advisory Commission (MedPAC), Medicare pays, on average, 10% more for beneficiaries enrolled in private insurance (Medicare Advantage or MA plans) than for comparable beneficiaries enrolled in traditional Medicare.[4] Despite these extra payments, beneficiaries in private plans who are in poor health, or who have chronic conditions, often have more limitations on coverage than they would under traditional Medicare.[5]
A large portion of the overpayments made to private plans actually goes to insurers rather than to benefit Medicare beneficiaries.[6] Although the Affordable Care Act (ACA) changed the payment formula forMedicare Advantage plans, some plans will continue to be paid as much as 115% of the average traditionalMedicare payment rate for their county when the new rates are fully implemented. MedPAC estimates that by 2017Medicare Advantage payment benchmarks will average 101% of traditionalMedicare. ACA also provides additional payments for plans that receive high quality ratings, increasing the likelihood that some MA plans will continue to be paid more than under traditionalMedicare. Reducing private MA payments to 100% of traditionalMedicare, as MedPAC proposed before the enactment of ACA, will increase the solvency of theMedicare program and curb costs for taxpayers. Private plans simply should not receive higher pay than traditionalMedicare.
3. Include a Drug Benefit in Traditional Medicare
Offering a drug benefit in traditional Medicare would give beneficiaries a choice they do not now have, encourage people to stay in traditional Medicare, and save money for taxpayers. It would also provide an alternative to unchecked private plans that leave many with unexpected high out-of-pocket costs. A drug benefit in traditional Medicare would protect beneficiaries against expensive and sometimes abusive marketing practices. Further, traditional Medicare’s lower administrative costs could free up money for quality care, would result in lower drug prices for beneficiaries, and save taxpayers over $20 billion a year.[7]
4. Extend Medicaid Drug Rebates to Medicare Dual Eligibles
Dual eligibles (people eligible for both Medicare and Medicaid) comprise one-fourth of all Medicare drug users, and are among the most costly beneficiaries. Because Medicare, rather than Medicaid, covers most of their drugs and because Medicare cannot negotiate drug prices, their drugs are not eligible for the same rebates as they would be under the traditional Medicaid program. Extending these rebates for dual eligibles would save at least $30 billion over ten years.[8]
5. Lower the Age of Medicare Eligibility
People between 55 and 65 who are not disabled are currently unable to enroll in Medicare. Lowering the age of eligibility to allow this healthier population to enroll in the Medicare program would add revenue for people who will likely need less care and fewer services than older and disabled enrollees.
6. Let the Affordable Care Act Do Its Job
The Affordable Care Act includes many measures to control costs as well as models for reform that will increase the solvency of the Medicare program and lower the deficit while protecting Medicare’s guaranteed benefits. The Congressional Budget Office estimates that repealing or defunding ACA would add $230 billion to the deficit while ignoring the real issue of rising overall health care costs, which contribute heavily to the growing national debt. ACA includes strong measures to allow CMS to combat fraud, waste, and abuse that will bring down costs, as well as a variety of pilot and demonstration projects that aim to bring better care and quality to beneficiaries.[9] The bipartisan Bowles-Simpson Deficit Commission recommended that these projects be implemented as quickly as possible.[10] Allowing ACA to do its job will create a foundation on which to build by improving care and holding down costs for taxpayers.
Conclusion
Protecting”Medicare by shifting costs from the federal government to beneficiaries and their families – whether through the creation of a voucher program or through measures that would be required by spending caps – is a perversion of Medicare’s original purpose, which was to protect older people and their families from illness and financial ruin due to health care costs. The solutions proposed by the Center forMedicare Advocacy promote financial solvency without doing it at the expense of beneficiaries.
[1]See previous Alerts from the Center, “Why Medicaid Matters to Medicare Beneficiaries and Their Families”, “What Happens to Current Nursing Home Residents if House Budget Resolution Becomes Law?”
[2]National Committee to Preserve Social Security and Medicare, available at http://www.ncpssm.org/pdf/price_negotiation_part_d.pdf
[3]Center for Economic and Policy Research, “Negotiating Prices with Drug Companies Could Save Medicare $30 Billion”, March 2007, available at http://www.cepr.net/index.php/press-releases/press-releases/negotiating-prices-with-drug-companies-could-save-medicare-30-billion.
[4]MedPAC, Report to the Congress, March 2011, Chapter 12 (March 2011), available at http://www.medpac.gov/documents/Mar11_EntireReport.pdf.
[5] Neuman P. Medicare Advantage: Key Issues and Implications for Beneficiaries. Testimony before the House Committee on the Budget, United States House of Representatives, June 28, 2007, available at http://www.allhealth.org/briefingmaterials/NeumanTestimony-830.pdf,
[6] Medicare Payment Advisory Commission. March 2009 Report to Congress, Chapter 3: The Medicare Advantage Program. P. 251-253, available at http://www.medpac.gov/chapters/Mar09_Ch03.pdf.
[7]Senator Dick Durbin, available at http://durbin.senate.gov/public/index.cfm/pressreleases?ID=555cc1e8-cc54-4ead-9d85-d5e6275b3789.
[8]Congressional Budget Office, Letter to Honorable Charles Rangel, available at http://www.cbo.gov/ftpdocs/104xx/doc10464/hr3200.pdf
[9]See previous Alert from the Center, “Combating Fraud, Waste, and Abuse in Health Care.”
[10]The National Commission on Fiscal Responsibility and Reform, “The Moment of Truth,” December 2010.
New York Says No
New York voted for Medicare yesterday. In a traditionally Republican district, Democrat Kathy Hochul won a special election for an open Congressional seat. The major issue in the campaign was the budget recently passed by Republicans in the House of Representatives that eliminates Medicare as a defined benefit program. Candidate Hochul opposed this change, recognizing it for what it is - an end to Medicare. Voters agreed with her.
The New York vote reminds us that Americans value Medicare. They understand that the Republican Budget won’t save Medicare; it will replace it with individual vouchers toward the cost of purchasing private insurance.
Under the Republican plan, beginning in 2022, people who become eligible for Medicare would instead receive a voucher, worth about $8,000. No one knows what private plans would be available for purchase, what geographic regions would be included, or what health services and providers would be covered. We do know that Medicare guarantees certain coverages, and it has worked to bring quality health care to older and disabled people for 46 years. When Medicare was enacted in 1965, half of all Americans 65 or older had no insurance. Private insurance did not want to cover them. Now, because of Medicare, 95% of people 65+ are covered.
Yesterday, Joe Courtney, the Congressman who represents the district of the Center’s home office also said yes to Medicare and no to vouchers. ( VIDEO: Courtney decries GOP plan to end Medicare as we know it.)
Fortunately, when Kathy Hochul takes her seat in Congress to represent New York, Congressman Courtney will have another ally in efforts to preserve Medicare.
President Obama Supports Medicare
Thank you, President Obama, for proposals that strengthen Medicare. We are so pleased, and relieved, to have a leader in the White House who’s drawn a line, refusing to pretend the elimination of Medicare and Medicaid are necessary to protect America’s future. Instead, he’s called for real, shared responsibility and is continuing efforts to provide affordable health care for all.
The President’s framework for fiscal responsibility protects the integrity of Medicare and Medicaid by building upon the progress made in the Affordable Care Act to cut overall health care costs. His proposals strengthen both programs while achieving savings by addressing Medicare physician payment reforms; reducing overpayments; improving care for those who are eligible for both Medicare and Medicaid; and focusing on wasteful spending and cost growth.
The President was explicit about his vision for Medicare and Medicaid when he said:
…”let me be absolutely clear: I will preserve these health care programs as a promise we make to each other in this society. I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves. We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations.”
The Center for Medicare Advocacy applauds the President for his work to preserve Medicare, Medicaid and the well-being of American families who are already struggling in today’s economy. We thank the President for recognizing that fiscal responsibility for the federal government does not mean eliminating programs like Medicare and Medicaid that work to provide access to health care for vulnerable populations. Nor does it mean saving federal dollars by shifting costs to states, families and taxpayers.
What a breath of fresh air!
Rationing Medicare & Health Care?
The budget released on April 5th by the House of Representatives purports to benefit Main Street Americans.
Once again we’re hearing proposals to “reform” Medicare and to cut the federal deficit. These plans are not about reform or even dedicated to deficit reduction. They are about a long held desire to do away with Medicare, shifting costs to American families who are already struggling.
Newt Gingrich said in the 1990s that he might not be able to eliminate Medicare, but he could watch it wither on the vine. This time, the House of Representatives’ Republican budget actually does eliminate Medicare, replacing it with vouchers to purchase private insurance.
This proposal is reckless and extreme. As with Medicare Advantage and Medicare Part D, it will cost beneficiaries and taxpayers more than the traditional Medicare program. With a capped annual voucher to purchase insurance, Medicare beneficiaries will pay more out-of-pocket, get less coverage, and have less access to health care.
Sounds like rationing to us.
What’s The Benefit of De-Funding Health Care Reform?
The House of Representatives will vote today on an amendment to the 2011 Continuing Budget Resolution that would prevent all spending to implement the Affordable Care Act, the health reform law enacted almost one year ago. “This amendment is not in the interest of Medicare, the current fiscal crisis, or families,” says Judith Stein, executive director of the Center for Medicare Advocacy. “Defunding health care reform would endanger children who have pre-existing conditions, deprive uninsured young adults from coverage under their parents’ plans, limit Medicare coverage for preventive services, and end important consumer protections for Americans of all ages.” The amendment to defund health care reform would also eliminate tax credits to small business for providing health coverage to their employees, and would increase the deficit by over $200 billion over the next 10 years.
The Center for Medicare Advocacy has already seen how health reform has improved the lives of millions of people. For example:
• Our clients who are Medicare beneficiaries no longer have to pay cost-sharing for preventive services, and they are now eligible for an annual wellness visit.
• Those with high prescription drug costs will pay less out of pocket for their medicine when they enter the prescription drug donut hole or coverage gap.
• Fewer older people with both Medicare and Medicaid had to change their prescription drug plan in order to be in $0-premium Medicare drug plan.
• Four of our own Center staff members have young adult children who are now covered by the Center’s health plan; without the coverage they would be uninsured.
If the House votes to defund implementation of health reform, all of these people, and millions like them throughout the country, will lose the protections they have already received.
“This amendment is driven by ideology, not serious concern for the welfare of Americans, Medicare, small business, or the American economy,” continues Ms. Stein. We urge Congress not to move backwards by depriving Americans of increased access to fair, affordable health care. Implementation of the Affordable Care Act should be fully funded and should go forward so that, by 2014, all Americans have health insurance, regardless of their age, income, or health status.
