Posts Tagged ‘Medicare’
Health Care News
Accountable Care Organizations (ACOs)—a concept that a group of doctors and hospitals will work collectively to manage the care and costs of Medicare patients—were expected to transform the delivery of health care. Yet again, much like the rest of Obamacare, these promises appear to be falling short of expectations.
In writing for Heritage, founding member of the Galen Institute John Hoff explains:
ACOs, as described, are a strange hybrid of fee-for-service and managed care, subject to ongoing control by CMS [Centers for Medicare and Medicaid Services]. Like other hybrids, they are not likely to breed naturally. ACOs are a keystone of the PPACA [Patient Protection and Affordable Care Act], but they are unlikely to improve health care and reduce its costs. ACOs are further demonstration, if any is needed, that the PPACA is ill-conceived. CMS-directed change will not bring meaningful reform, but impede it.
Thus far, the experience of the first group of ACOs, the 32 “Pioneers” (as the government calls them), has been shaky, and some have suggested they might even drop out of the program.
The congressional formula that determines the annual Medicare payment update for physicians, the sustainable growth rate (SGR), was supposed to cut Medicare doctors’ pay each year starting in 2002. But that congressional formula is so flawed and unworkable that every year since 2003, Congress has stepped in to stop it from going into effect. In 2013, without another congressional “doc fix,” the physicians would have had a pay cut of 26.5 percent.
The formula is called the sustainable growth rate because it links Medicare physician pay increases to the performance of the general economy, not to the market-based conditions of supply and demand that would determine the price of medical services. So if Medicare physcians’ pay in any given year rises faster than economic growth, then their pay is automatically reduced the following year.
There’s an added dimension to this problem: Every year the pay cut is delayed, the size of the cut the following year is bigger.
Addressing our nation’s overspending problem cannot be done without reforming entitlements, especially Medicare and Medicaid. As Washington remains clearly divided over how to get it done, Senator Orrin Hatch (R–UT) has outlined 5 health care reforms that are bipartisan.
These reforms have had the support of both parties in the past and are capable of effectively reining in spending:
- Raise Medicare’s eligibility age. Hatch proposes raising the Medicare eligibility age gradually from 65 to 67, which would coincide with Social Security. This proposal enjoys a wide range of support from both sides of the aisle and would garner significant savings for the Medicare program. Heritage’s reform proposal would raise the eligibility age to 68, which would yield an estimated savings of $243.6 billion over 10 years.
- Reform Medigap to incentivize better behavior. Limiting Medicare supplemental plans that cover initial out-of-pocket costs would decrease the excessive utilization currently occurring. This would incentivize better behavior from seniors and lower Medicare’s costs over time.
The Congressional Budget Office (CBO) released its Budget and Economic Outlook for 2013–2023 today. Here are five major takeaways:
1) Health care entitlement spending is bypassing all other spending. Spending on Medicare, Medicaid, Obamacare subsidies, and the Children’s Health Insurance Program will be greater than all other spending—including Social Security and defense spending: “Spending for major health care programs will be nearly 5 percent of GDP [gross domestic product] in 2013, and such spending is projected to grow rapidly when provisions of [Obamacare] are fully implemented by middecade, reaching 6.2 percent of GDP in 2023.”
Health Care News
Not all surprises are good. When it comes to Obamacare, the original projections are turning into unfortunately different realities. For the next three days, Heritage is going to highlight one of the various changes in Obamacare projections (e.g., cost, enrollment, etc.) from when the law first passed until now.
Obamacare created the Independent Payment Advisory Board (IPAB), which consists of 15 unelected bureaucrats who are tasked with finding savings within Medicare to meet a new, fixed target for spending growth in the program. The board’s recommendations will be implemented unless Congress enacts an alternative proposal that amounts to the same level of savings.
In 2010, the Congressional Budget Office (CBO) projected that IPAB would result in Medicare savings of $15.5 billion from 2010–2019.
In 2012, the CBO projected that the IPAB would result in zero savings for the years 2015–2019. According to the CBO, “…the IPAB mechanism will not affect Medicare spending during the 2011-2022 period.” Later, in a letter regarding the repeal of Obamacare, CBO estimated that the IPAB could save $3.1 billion over the 2013–2022 period, but cautioned “That estimate is extremely uncertain because it is not clear whether the mechanism for spending reductions under the IPAB authority will be triggered under current law over the next 10 years.”
Surprise: The IPAB is yet another Obamacare plan that not only sounds like a bad idea, it is a bad idea. The IPAB is like a fruit cake—and it’s time to regift.
12 Days of Obamacare Surprises:
9. Increased employer penalties…
8. More cuts to Medicare…
7. Loss of employer-sponsored insurance…
6. A 50/50 split on enrollment estimates…
5. More uninsured Americans…
4. Increased exchange subsidies…
3. Big tax increases…
2. The small business tax credit…
1. And the individual mandate.
Health Care News
As the discussions over the fiscal cliff continue, the debate over entitlement reform is getting confused. The issue is not only how much savings constitutes reform, but also the underlying policies that get you there. Thus far in the fiscal cliff negotiations, Republicans have pushed for greater spending cuts, namely in Medicare.
To that point, a National Journal article commented, “In just a few short weeks, the dominant Republican line on Medicare has shifted from attacking the Democrats for making cuts to the program to demanding a new round of cuts to reduce the federal deficit.”
But this claim cannot be taken at face value, as all spending reductions are not created equal.
There are major distinctions between Obamacare’s Medicare cuts and Medicare reforms that would reduce spending and extend the life of the program.
Health Care News
Retiring House Ways and Mean Health Care Subcommittee chairman Wally Herger (R–CA) has introduced the most complete and detailed major Medicare reform proposal in a decade.
Herger leaves a rich legacy with the Save and Strengthen Medicare Act (H.R. 6645). The bill moves Medicare to a defined-contribution model with competition between traditional fee-for-service Medicare and private insurance companies. Many of its provisions are closely aligned to Heritage’s Medicare reform outlined in Saving the American Dream.
Herger’s legislation would protect and enhance Medicare for low-income beneficiaries by offering them a more generous benefit, and it would protect future beneficiaries by making Medicare more financially sustainable. The act contains changes to traditional Medicare, but it also clearly lays out a transition to premium support with the federal contribution eventually based on the minimum bid from both private insurers and traditional fee-for-service.
Under current law, as amended by Obamacare, seniors enrolled in traditional Medicare can expect to face higher Part B and Part D premiums. Moreover, President Obama has planned in his 2013 budget proposal to increase income-related Part B and Part D premium coverage by 15 percent. As a result, out-of-pocket costs are expected to rise by 2017 under the president’s budget proposal.
Under Obama’s plan, “seniors will pay more — a lot more — and they will pay this steep price in many different ways,” Heritage’s Robert E. Moffit, Rea S. Hederman and Alyene Senger explain in a new paper analyzing the impact on seniors.
Americans may have diverse opinions on Medicare reform but what remains certain is that Medicare “as we know it” is already a thing of that past.
In recent weeks, liberal politicians, editorialists, and policy analysts have vigorously attacked reform of Medicare based on defined-contribution financing. In fact, this approach to reforming Medicare has a long bipartisan tradition going back to the 1980s and Representatives Richard Gephardt (D–MO) and David Stockman (R–MI). In fact, much of this criticism is distorted, misleading, or just plain wrong.
Here are some articles that set the record straight:
What is President Obama’s plan for Medicare—Obamacare’s changes and beyond?
Heritage has a new Issue Brief, “Obama’s Medicare Plan: Seniors Will Pay More,” that details the future increases in out-of-pocket costs for seniors under current law and President Obama’s 2013 budget proposal.
Over the next five years, under current law, seniors in traditional Medicare are projected to face higher Part B and D premiums, along with other out-of-pocket cost increases. Instead of structurally reforming Medicare, President Obama’s 2013 budget proposal would raise premiums even further for upper-income enrollees in Parts B and D, while also imposing additional deductibles and co-payments (in certain cases) on newly joining baby boomers beginning in 2017.
“Obama’s latest budgetary scheme for cost-shifting to seniors is just another indication that the Administration and its allies on Capitol Hill are running out of options,” the authors write.
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