CMA Health Policy Blog

Improve Medicare for the Health of Our Country

April 22, 2009 at 8:23 pm Judith Stein Leave a comment

As discussions regarding health care and Medicare reform heat up, the Center for Medicare Advocacy reminds policy-makers that Medicare, the country’s only national health insurance, has a lot to teach about how best to provide health care coverage cost-effectively – and how not to.

For over 40 years, until it was morphed into a system of expensive private plans in 2003, Medicare was a resoundingly successful public/private partnership. Before Medicare began in 1965, half of all older people had no health insurance and nearly 35% lived in poverty. Today, poverty among older people has dropped by two-thirds and the vast majority of Americans over 65 and people with significant disabilities have Medicare health insurance.

Our top priority must certainly be getting the economy back on track. But improving Medicare is an essential part of that effort. Good Medicare reform could help save taxpayers and Medicare beneficiaries billions of dollars, while also improving access to health care. The following improvements could cut costs and also improve quality of care:

1.  Eliminate the wasteful subsidies being paid by taxpayers to keep private Medicare Advantage plans afloat. According to the President’s budget, this would save approximately $176 billion over the next ten years. Numerous studies from the Congressional Budget Office, MedPAC, scholars, and foundations report that it costs about 14% more to provide care through private Medicare Advantage plans than through the traditional public Medicare program. Further, administrative costs account for approximately 11% of private Medicare spending, compared to approximately 2% in the traditional Medicare program. This kind of wasteful spending can not be justified, especially now, when the country’s economy is reeling, taxpayers are scrimping, and millions of Americans are underinsured or lack health insurance altogether.

2.  Repeal the Medicare Part D prescription drug benefit, which is currently provided only by private companies, and replace it with a stable prescription drug benefit in traditional Medicare, modeled after Part B, that reflects beneficiaries’ needs instead of business interests. At the very least, a prescription drug benefit should be added to the traditional Medicare program, as proposed by the Medicare Prescription Drug Savings and Choice Act of 2009 (HR 684).

Whatever form the Medicare prescription drug benefit takes, Medicare should be mandated to negotiate prices on behalf of all 45 million beneficiaries. As any Walmart shopper knows, buying in bulk drives prices down. Amazingly, however, the Medicare Modernization Act of 2003 explicitly prohibits Medicare from negotiating prices for the medications it covers; this prohibition should be repealed and replaced with a requirement to negotiate prices.

3. Add a coordinated care benefit to traditional Medicare so health care providers can be reimbursed for communicating with each other about patient care and primary care providers can coordinate the various aspects of individual patient needs. This kind of care coordination is a key component of health and wellness and should be built into traditional Medicare.

Other Medicare coverage and policy changes for low-tech services ought to be considered that will help people stay as well as possible as long as possible – and in the community. This is not only good common sense and good for the individual, it would also help lower health care costs by reducing the need for higher cost care.  Examples of these kinds of services, currently lacking Medicare coverage include:

• Coverage for annual physicals and preventive care that meets contemporary standards of care;

• Coverage for home health aide care for people who need these hands-on services in order to live at home, but do not need regular nursing or physical or speech therapy;

• Coverage for quality discharge planning for individuals leaving a hospital for community care, home health care, or nursing home care, including post discharge monitoring to ensure the intended follow-up care is actually provided

• Coverage for basic dental care, including an annual check-up;

• Consistent coverage, as required by law, for on-going therapy and nursing services to maintain the function of people with chronic conditions.

The standard for any health care program should be what’s best for its beneficiaries and what’s most cost-effective for taxpayers. Until it was privatized, Medicare met that standard; it worked well for older people and people with disabilities, and it was cost effective for taxpayers. Medicare should be improved again to offer access to necessary care in the most cost-efficient manner possible.

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