Common political wisdom seems to be that after the November election Congress and whoever has been elected President will come up with a “grand bargain” that deals with the big tax and spending issues that our society needs to address: Taxes, Medicare, Medicaid, and Social Security.
If a grand bargain remains out of reach we could end up with another short term postponement that continues current tax and spending policies (and counter-productive uncertainties) for another year or two while lawmakers try to agree on a plan. But both sides express the view that eventually, certainly during the next Presidential term, we will have to tackle our unsustainable current policies.
Here are some thoughts about how Medicare is likely to change as a result of policies already in place and as part of a grand bargain.
Unless there is a November election sweep by the Democrats, the next Congress should be poised to change the Medicare payment and delivery system to one which includes a premium support option.
Under a premium support approach, the government would tell Medicare beneficiaries to find insurance plans on their own in the private market; the government would issue vouchers to help the beneficiaries pay for much of the premiums.
Premium support is a Medicare model championed by Congressman Paul Ryan and supported by Governor Mitt Romney. Representative Ryan originally proposed shifting all new Medicare recipients to the private market in 10 years. But, met with the charge that he was destroying Medicare, Ryan modified his plan this year to allow people the option of staying with their current Medicare plan.
The Simpson Bowles Report, while initially ignored, appears to be gaining traction as a post-election starting point for discussions on changes to tax and spending policies. It recognized that “a voucher or subsidy system holds significant promise of controlling costs, but also carries significant potential risks.” So, my take is that modifying Medicare to offer a premium support option has a good chance to become law next year.
Another significant change we may see with Medicare is an increase in the standard age for eligibility. The idea would be to gradually move the age from 65 to 67. Even the Obama administration has indicated a willingness to accept an increase in the Medicare eligibility age, so this change is likely to survive any election results.
We are also likely to see a continuation of the trend toward increasing the premiums higher income retirees pay for their Medicare Parts B and D coverage.
Other possible Medicare changes would be based on the assumption that consumers who are at financial risk spend less. These include:
· Limiting the coverage obtainable through Medicare supplement insurance policies so that beneficiaries will have to pay more out of pocket;
· Adding co-payment requirements for some services that are now fully coverage. An example would be to impose a co-pay requirement on the first 20 days of Medicare covered care in a skilled nursing facility.
In general, it looks like people are going to be paying more for their Medicare coverage, and they are going to be getting even more of that coverage through private insurance companies.
In addition, no matter who wins the election, we seem to be moving away from paying for health care on a fee for service basis that is seen as encouraging a high volume of services rather than quality care or efficiency. We are moving toward performance based payments that are intended to encourage efficiency, quality, and cost savings.
For example, the Affordable Care Act (the health reform law) seeks to achieve Medicare cost savings through what are called Accountable Care Organizations (or ACOs). If an ACO succeeds at managing its pool of patients effectively from both a cost and quality standpoint, it shares in the savings and boosts its profits.
ACOs are based to a large extent on models of care developed at systems like Geisinger Health System in Pennsylvania. The Simpson Bowles report recommended that CMS (the federal Medicare agency) aggressively pursue the development of ACOs and other “pay for performance” programs.
Participation in an ACO is purely voluntary, and people with Medicare retain their ability to seek treatment from any provider they wish.
Many hospitals, physician practices and insurers across the country have embraced the concept and are creating ACOs, not only for Medicare beneficiaries but for patients with private insurance as well.
So, this is happening now, and the ACO model will be coming soon to health providers near you. However much it saves, from a patient’s perspective (I am a senior myself and on Medicare), I like a model for health care delivery that focuses on quality not volume.It is one of the many aspect of health reform that I am hopeful will survive whatever political result we get in November.