Considerations
Medicare Considerations
In order to insure the long term solvency of the Medicare Program, there are many steps that might be taken to accomplish this important national priority. However, the options to reach this important goal come down to increasing the Medicare taxes to support the program, increasing payments from beneficiaries, lowering the benefits provided to beneficiaries, or lowering expenditures to providers. Where the information is available, we will note the effect on the overall annual Federal deficit (i.e., in 2. below under beneficiary payment increases, we note ‘This would reduce the deficit by $11 billion annually’) as well as the current estimate of the effect on closing the solvency gap within just the Medicare program (i.e., in 1. below under taxes, we note ‘This will cover 100% of Medicare deficit.’).
For tax increases to support the Medicare Program, listed below are some of the options that have been put forward.
1. Raise the payroll tax rate by .5% for both the employer and employee. This will cover 100% of the Medicare deficit.
For beneficiary payment increases, listed below are some of the options that have been put forward.
1. Increase the Medicare Part B and Part D premiums to beneficiaries.
2. Streamline the deductible and cost sharing portions of the Part A and Part B Medicare program so that it is more understandable and incentivizes more economic behavior. This will reduce the deficit by $11 billion annually.
3. Modify the supplemental insurance products that cover Medicare deductibles and coinsurance so they do not offer first dollar coverage thereby incentivizing more cost conscious use of healthcare resources. This will reduce the deficit by $4 billion annually.
4. Increase the costs of supplemental insurance products.
5. Raise premiums for higher income beneficiaries for Part B and Part D services to cover the full average costs of their insurance rather than continuing to subsidize this insurance through general taxation.
6. Change Medicare to a premium support plan rather than the current insurance plan it is currently.
7. Add copayments from beneficiaries for lab services, home health services, and skilled nursing services. This will save $7 billion per year.
8. Strengthen the Independent Payment Advisory Board. That Board can currently make recommendations to hold down provider costs. It should also have power to make recommendations to increase beneficiary premiums as well as cut benefits.
For benefit decreases, listed below are some of the options that have been put forward.
1. Increase the eligibility age from 65 to 67. This would save $24 billion annually.
2. Strengthen the Independent Payment Advisory Board. That Board can currently make recommendations to hold down provider costs. It should also have power to make recommendations to increase beneficiary premiums as well as cut benefits.
3. Force Medicare/Medicaid Dual eligibles into Managed Care.
For decreasing Medicare expenditures to providers, listed below are some of the options that have been discussed.
1 Decrease Medicare Fraud by additional CMS funding. This will reduce the deficit by $1 billion dollars annually.
2. Require drug companies to give price concessions to Medicare based upon the Medicaid formulas. This will save $11 billion annually.
3. Allow access to biologic generic drugs by year 7 rather than year 12.
4. Prohibit Pay for Delay Agreements in regards to generic drugs.
5. Replace or modify the current Sustainable Growth Rate Formula now used to determine physician pay.
6. Reduce payments to hospitals for medical education. This will save $6 billion annually.
7. Eliminate payments to Hospitals for bad debts. This will save $3 billion annually.
8. Cut reimbursement for home healthcare. Savings will be $3 billion annually.
9. Reform Medical Malpractice. This will save $2 billion per year.
10. Freeze payments to providers for one year or for up to 5 years.
11. Cut payments to providers on a one time basis or over a 3 year period.
12. Focus attention and effort on high cost chronically ill patient populations such as heart patients and diabetic patients.
13. Migrate to capitaltion for provider payments using the Accountable Care Organization scheme.