Medicare Matters: Time for Patient-Centered Reforms

Published March 6, 2017

The fight over the Affordable Care Act is taking center stage in Washington at the moment, and the results of the battle could be dramatic. Millions of people may lose newly-gained coverage, the market for individual insurance could be disrupted, and employers, providers and health plans may soon have to start undoing the changes they’ve spent the last several years implementing.

But if Congressional Republicans and HHS Secretary Tom Price have their way, even more radical and profound changes could be in store for the 56 million senior citizens and disabled people who rely on the half trillion dollar Medicare program. House Speaker Paul Ryan advocates a so-called “premium support” approach, which provides vouchers for Medicare beneficiaries to spend on premiums for the private insurance plan of their choice. Ironically, the proposal would set up marketplaces that look a lot like the Obamacare exchanges Republicans vow to do away with, except in this case enrollment would be mandatory.

Price supports the Ryan plan, and he goes further by advocating for physicians to be allowed to charge patients above and beyond Medicare reimbursement rates (this is called “balance billing”) and by discouraging the shift away from fee-for-service to value based payments.

Tellingly, President Trump — who champions radical change in every sphere from industrial policy to immigration to the environment to foreign affairs—is an advocate for the status quo when it comes to Medicare.  He understands that Medicare beneficiaries are pretty satisfied with what they’ve got, and that there’s little political upside and a lot of downside in shaking things up.

But Medicare consumes 14% of the federal budget and is projected to continue to grow substantially over the next few decades. Medicare also has a major influence on the commercial market. A do-nothing approach to Medicare is defeatist. We can do far better by enacting sensible reforms that make significant improvements without risking major disruptions and backlash.

Some things to consider:

  • Any Medicare reforms should be patient/family centric. It’s the right thing to do for quality, cost and patient experience. And done well, it will be popular with the voters, too.
  • One way to be patient and family centric is to leverage the most appropriate and cost-effective sites of care. Unfortunately, hospitals and other facilities still dominate healthcare delivery systems, even with new payment structures such as Accountable Care Organizations that were birthed by the Affordable Care Act. The home is where patients prefer to be when possible, and it’s also often the most cost-effective and safest place for services like physical therapy and the intravenous administration of medications for serious illnesses.
  • Many Medicare beneficiaries have low incomes that also qualify them for Medicaid. These “dual eligible” patients consume significant resources and have to contend with two different sets of coverage. For example, Medicare doesn’t pay for long-term nursing home care but Medicaid does. We should simply incorporate Medicaid-style benefits into Medicare for lower income people instead of trying to coordinate across the programs.
  • Finally, Medicare Advantage (MA) plans have become popular with beneficiaries, but have limited flexibility to vary their coverage to suit the needs of different segments. The federal government should give MA plans the opportunity to experiment with new strategies to improve cost and quality. For example, they should be encouraged to implement population health strategies, to seek novel ways to address stubborn social determinants of health, and to offer benefit designs that enable beneficiaries to receive home-based care and telemedicine where appropriate and desired.