Fix Health Care Policy

The Washington Post Agrees: It’s Time to Make a Down Payment on Medicare Reform

The editorial board of The Washington Post, no organ of conservative opinion, is absolutely right: “Medicare as we know it is not sustainable,” and the “ultimate solution” is structural reform. Bingo.

The right structural reform is to expand Medicare’s defined-contribution financing (routinely called “premium support”) as it broadly exists today in Medicare Part D to the entire Medicare program.

As the Post’s editors observe, consensus does not yet exist on Capitol Hill for comprehensive structural reform. However, there are several short-term, bipartisan proposals compatible with structural reform that can improve the program, trim the debt, and reduce the dangerous financial pressures that threaten Medicare’s viability.

The Post’s key recommendations—yielding an estimated 10-year savings of $420 billion—largely track The Heritage Foundation’s proposed changes for traditional Medicare as part of its comprehensive budgetary reform proposal, Saving the American Dream.

Read the rest on The Foundry…

Tags: defined-contribution financing, editorial board, Medicare reform, Saving the American Dream, structural reform, The Washington Post

Medicare Needs the Life Support of Premium Support

Medicare reform is coming soon; it has to if the program is going to survive. As budget expert J. D. Foster writes, “Medicare reform is inevitable because its demands on the federal budget are unsustainable.”

The Congressional Budget Office projects that by 2022, Medicare spending will exceed $1 trillion—almost 90 percent more than expected in 2012. In addition, the Medicare Part A trust fund is predicted to reach insolvency as soon as 2024.

The Heritage Foundation has put forth a model for premium support that would avert disaster and preserve Medicare for future generations. Moving to premium support would replace Medicare’s current defined-benefit system with one where seniors use a defined contribution to enroll in private plans of their choice. Writing for Heritage, expert James Capretta point outs, “Political momentum continues to build for premium support because of its potential to control health care costs through the power of consumer choice.”  (Read the rest on The Foundry…)

Tags: bankrupt program, budget, defined-benefits system, Medicare reform, premium support

Building a Better Medicare Program: The Burr–Coburn Proposal

Sen. Tom Coburn, R-Okla., left, and Sen. Richard Burr, R-N.C.,

Senators Richard Burr (R–NC) and Tom Coburn (R–OK) have just unveiled a bold Medicare reform proposal based on the free-market forces of choice and competition. The Senators’ proposal adds further momentum to the effort to reform and improve America’s largest and most challenging entitlement program.

“Premium support” is at the heart of the Burr–Coburn proposal: a financing arrangement where Medicare would make a generous contribution to health plans chosen by Medicare beneficiaries. The result would be an intense competition among health plans for enrollees’ business, just as there is today in Medicare Advantage, the Medicare Drug Program, and the 51-year old Federal Employees Health Benefits Program (FEHBP) that covers federal workers and retirees.  (Read the rest on The Foundry…)

Tags: FEHBP, Medicare beneficiaries, Medicare reform, premium support system, Sen. Richard Burr, Sen. Tom Coburn

“Lie of the Year” – Democrats’ Claims about Medicare Reform

Politics is home to some pretty exaggerated accusations, and this year was no exception, particularly in the area of health care. Case in point: Democrats’ claim that “Republicans voted to end Medicare.” In fact, the assertion was so off the wall that PolitiFact.com named it “Lie of the Year 2011.”

Democrats made the claim about House Budget Committee Chairman Paul Ryan’s (R-WI) FY 2012 “Path to Prosperity” budget, which included a proposal to provide premium support to Medicare enrollees, helping them to purchase a health care plan of their choice. PolitiFact reports on the left’s response to the proposal:

Democrats pounced. Just four days after the party-line vote, the Democratic Congressional Campaign Committee released a Web ad that said seniors will have to pay $12,500 more for health care “because Republicans voted to end Medicare.” 

(Read the rest on The Foundry…)

Tags: Lie of the Year, Medicare reform, Politifact.com, premium support, Rep. Paul Ryan

The Video AARP Hasn’t Made: Medicare’s Need for Structural Reform

Medicare—on its current path—cannot be sustained. At a recent hearing held by the Senate Special Committee on Aging, Ranking Member Senator Bob Corker (R–TN) stressed the importance of Medicare reform. According to Corker, in 2011, “The U.S. spent $572 billion on Medicare, and spending is projected to increase to $1 trillion in 2021.”

The relationship between the amount citizens pay in to Medicare and the benefits they receive presents another losing equation for taxpayers. If an average couple combined makes $87,000 a year, they will pay $119,000 (including their employers’ contributions) into Medicare in their lifetimes but receive $357,000 in benefits. This disparity points to a clear structural flaw that must be addressed. As Joseph Antos of the American Enterprise Institute pointed out, “Business as usual with a few tweaks will not be effective in preserving Medicare for the long term.”

Saving Medicare will require transitioning the program to a premium-support system, which would allow seniors to choose a private health plan that works best for them, using a government contribution and requiring insurers to compete for their business like they currently do in Medicare Advantage and Medicare Part D. Heritage’s Saving the American Dream plan outlines how to achieve this.  (Read the rest on The Foundry…)

Tags: AARP, AEI, benefits, Medicare reform, Saving the American Dream, taxpayer subsidies

No More Bad Medicare Policies for a Debt Limit Deal: They Cost Too Much!

The Hill reports that conservatives in Congress are considering extending Medicaid drug rebates to low-income seniors participating in the Medicare prescription drug program (Part D) as part of a deficit reduction deal to increase the debt limit.

Transforming certain federal health programs—i.e., Medicare and Medicaid—is crucial to making a meaningful dent in the debt, but ideas like this one are best left in the Pandora’s box of bad health policy.

Low-income seniors dually eligible for Medicare and Medicaid used to receive drug coverage solely from Medicaid, but after the advent of Medicare Part D, they were placed into this defined contribution drug system, where they currently enjoy wide access to a number of affordable, private options. The proposal on the table would require drug manufacturers to return a portion of beneficiaries’ drug costs back to the federal government, creating an indirect price-control scheme.  (Read the rest on The Foundry…)

Tags: affordable care, Medicare reform, Part D, prescription drug program, price-control schemes

Two Cheers for the Coburn–Lieberman Medicare Proposal

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.  (Read the rest on The Foundry…)

Tags: deficit, entitlement reform, Medicare reform, Sen. Joe Lieberman, Sen. Tom Coburn

Hospitals’ Skepticism of New Obamacare Medicare Payment Scheme Grows

A frequent accusation against conservative Medicare reform proposals is that they would “end Medicare as we know it.” But the reality is that Obamacare has already accomplished this. One example is a new program that will, for the first time, attempt to pay for quality by penalizing hospitals that fail to meet bureaucratically created standards for quality and efficiency.

Achieving better value in Medicare should be a goal of any serious reform plan, but the new law’s solution is unlikely to succeed. Instead, it will negatively impact patients and the hospitals that serve them.

Obamacare sets up “value-based purchasing” for hospital payments under Medicare. Starting in October 2012, hospitals and other providers will see payments redistributed based on performance scores calculated according to the methodology chosen by the Obama Administration. Payments will be reduced across the board to a new, lower “base” payment, after which hospitals could receive “bonuses” for performing well on the quality measures.  (Read the rest on The Foundry…)

Tags: Medicare reform, Obama administration, ObamaCare, physician payments

VIDEO: Ryan Goes on Offense, from the White House to the U.S. House

“We have a budget crisis. We’ve got a $1.5 trillion deficit. We’ve got a debt that is getting out of our control. And what do you do when you have a problem like that? You pass a budget,” said House Budget Committee Chairman Paul Ryan (R-WI) Wednesday from the House floor.

His remarks came hours after a meeting between House Republicans and President Barack Obama, where Ryan reportedly took the President to task over the continued demagoguery from the left over Ryan’s plan to reform Medicare. The Washington Post reports on Ryan’s remarks following the meeting, in which he described his exchange with the President:

I simply explained what our plan is, how it works,” Ryan said, standing before a bank of cameras outside the White House. “It’s been misdescribed by the president and many others. So we simply described to him what it is we’ve been proposing so that he hears from us how our proposal works.” (Read the rest on The Foundry…)

Tags: budget crisis, House budget, Medicare reform, Rep. Paul Ryan