Obama’s Proposals For Medicare — Do They Go Far Enough? Will They Become Law?

Not long ago, I wrote about the Center for American Progress’ (CAP’s) “Senior Protection Plan” —a report that aims to rein in Medicare “by $385 billion over ten years without harming beneficiaries.” In that post, I suggested that CAP’s proposals might well give us a preview of the “modest adjustments” that President Obama had said he would be willing to make to Medicare.  At the time, I highlighted three of CAP’s recommendations:

– increase premiums for the wealthiest 10% of Medicare beneficiaries (raising $25 billion);

– insist that drug-makers extend Medicaid rebates to low-income Medicare beneficiaries (saving $137.4 billion);

– prohibit “pay for delay” agreements that let “brand-name drug manufacturers pay generic drug manufacturers to keep generics off the market” (saving $5 billion).

Last week, in his State of the Union address, President Obama embraced the first two:  “Already, the Affordable Care Act is helping to slow the growth of health care costs,” he noted. “The reforms I’m proposing go even further. We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors.”  (In time, I suspect that the administration also will call for a ban on those decidedly seamy “pay for delay” deals.)

“On Medicare,” he added, “I’m prepared to enact reforms that will achieve the same amount of health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission.” The commission called for reducing Medicare spending by roughly $350 billion over 10 years–  a sum that is not far from CAP’s $385 billion target.

Are These “Adjustments” Too Modest ?

These may seem like small numbers. But keep in mind that this is on top of the $950 billion that the Affordable Care Act (ACA) saves by squeezing waste out of health care spending, while simultaneously raising new revenues. Of that $950 billion, some $350 billion comes in the form of Medicare savings achieved by:

–  Pruning over-payments to private sector Medicare Advantage insurers– $132 billion  

–  Containing Medicare inflation by shaving annual “updates” in  payments to hospitals and other large facilities by 1% a year for ten years, beginning in 2014– $196 billion

– Cutting disproportionate share hospital payments to hospitals that care for a disproportionate share of poor and uninsured patients over 10 years beginning in 2014 – $22 billion.

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How to Rein in Medicare Spending Without Hurting Seniors

In his Inaugural speech, President Obama renewed his commitment to safety nets:  ”Medicare and Medicaid and Social Security–these things do not sap our initiative, they strengthen us.

Yet last week, he signaled that he is “open to making modest adjustments to programs like Medicare.” Should seniors brace for bad news?

No. There are many ways to cut Medicare spending without drawing blood. It’s a matter of using a scalpel, not an axe, to trim the fat.

Not long ago, the Center for American Progress (CAP) unveiled a Senior Protection Plan that would do just that, revealing how we could reduce Medicare spending by $385 billion without harming beneficiaries.”

The administration pays attention to CAP. Recently Bloomberg News described CAP as “the intellectual wellspring for Democratic policy proposals, including many that are shaping the agenda of the Obama administration.” This suggests that the report’s proposals may offer a preview of “adjustments to Medicare spending” that the president would consider.

How would CAP save $358 billion without rationing benefits or shifting costs to middle-class seniors? The report focuses on squeezing waste out of the system. Waste doesn’t help beneficiaries.

During recent fiscal cliff negotiations, Democrats and Republicans agreed to adopt four of CAP’s proposals, and I suspect that, over time, we will see more of its recommendations become part of the reality of health care reform.

Recently, I interviewed CAP president NeeraTanden and Topher Spiro, CAP’s managing director for health policy. I was impressed by how their practical approach differs from conservative strategies for slicing “entitlements.”
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As We Approach the Fiscal Cliff: What is the GOP’s Primary Goal?

In theory, the GOP’s main concern is the deficit. We must reduce it they say—and we must do it now–or face a financial Armageddon. But somehow or other, “cutting the deficit” always turns out to mean “reducing entitlement programs.”

Let me suggest that cutting those entitlements programs is the GOP’s primary goal.

Why would I say this?

Earlier this week , wh en Republican House speaker John Boehner presented his party’s counter-proposal for solving the budget deadlock, he once again put lifting the eligibility age for Medicare from 65 to 67 near the top of his list. Yet, it you take a hard look at the numbers, it becomes clear that this proposal would not save money–or strengthen the economy. Moreover, entitlement programs did not create the current deficit.

Begin with forcing seniors to wait until they are 67 before they can apply for Medicare. As I explain in the post above, this proposal simply shifts costs to employers, the states, everyone buying insurance in the Exchanges, other Medicare beneficiaries, and 65 and 66-year-olds themselves. It does not lower the nation’s total healthcare bill. Indeed, the GOP’s remedy would wind up costing us twice as much as we now spend providing Medicare benefits for people who are 65 and 66. (See graph in the post above).

I am not  the first person to make this argument. The Kaiser Family Foundation and the Center for Budget Policy and Priorities  offer  eye-opening numbers that prove the point.  One would think that, if the GOP’s main goal were to save the economy, Republicans would be interested in these numbers.

One would be wrong.  They ignore them (and seem to have persuaded the mainstream media to follow suit.) Why would conservatives close their eyes to the financial facts? The GOP has an agenda, and it’s not about the deficit. The party’s main fear is “creeping socialism.”

Conservatives use the deficit as an excuse for slicing benefits that they acknowledge will inflict pain on the people who most depend on Medicare, Medicaid and Social Security—the elderly and the poor.

 

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How Soon Can We Expect National Health Reform?

On this blog, we have debated how soon Americans will be ready for national health reform.  Many observers believe that we’ll only get reform when more people are uninsured—specifically when more middle-class and  upper-middle-class families find themselves “going naked.”

The chart below comes from a new Commonwealth Fund Report which shows that while two-thirds of low-income adults (earning less than 200 percent of the federal poverty threshold) were uninsured or underinsured in 2006, just 17 percent of those earning more than 200 percent of the federal poverty level (FPL) were either underinsured or uninsured at some point during the year.

 

Uninsuredandunderinsured_2

“Underinsured” is defined as someone who finds himself spending 10 percent or more of his income on out-of-pocket medical expenses. (For those earning less than 200 percent of FPL, the number is 5 percent.)

The report observes that employers are continuing to back away from offering health benefits:  “Between 2000 and 2005, the proportion of workers receiving employer-provided health insurance declined from 74.2 percent to 70.5 percent,” and again “middle- and lower-wage workers,” suffered most, with “the largest decreases” hitting this group.

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