Posted by Mark Ryan, MD July 19, 2011 at 10:06 AM
The 46th anniversary of Medicare and Medicaid is July 30th. Despite the benefits these programs have provided, both find themselves under significant strains due to increasing costs of care, inadequate funding, and political agendas. Major changes have been proposed to each program–changes that would significantly impact the nature of the Medicare and Medicaid programs, and potentially reverse these programs’ benefits.
Tonight, at 9 pm Eastern, NPA will participate in our first live Twitter chat. This will be the first of two chats, and will be focused on the Medicare program. The second, next Tuesday July 26, will be focused on Medicaid.
Medicare provides health insurance for elderly and disabled Americans, and its passage had significant impacts on the American healthcare system. After Medicare’s passage, rates of hospitalizations (and hospital expenditures) increased, and elderly American’s share of medical costs reduced. This increased utilization likely indicates that more Americans were receiving needed care, but the increased costs of care and increased utilization has helped lead to Medicare’s currently unsustainable funding situation. Over the next 25 years, Medicare’s costs are expected to account for 5.5% of our national GDP (currently Medicare accounts for 3.6% of GDP), and as the baby boomers retire there will be a smaller pool of workers paying into the Medicare program. Increased costs and decreased revenues is a bad combination.
Earlier this year, Wisconsin Rep. Paul Ryan introduced a budget plan that included major reforms to the Medicare program. At a fundamental level, Rep. Ryan’s plan would change the very nature of Medicare: rather than receive health insurance directly through the government-run Medicare program, seniors would receive money from the federal government in the form of “premium supports” that would allow them to purchase commercial health insurance. (One irony is that this proposed benefit is very similar to the health insurance exchanges and premium supports included in the Patient Protection and Affordable Care Act that Republicans intensely dislike.)
Rep. Ryan’s plan, if passed, would shift a significant burden of medical costs back onto seniors. Not surprisingly, his plan has been very unpopular among seniors. But it appears that the idea of sharing costs more generally is gaining traction in the face of the funding challenges noted above. The idea of cost shifting, and having beneficiaries pay more for their benefits, is often put forward as a way for patients to have “skin in the game” and to use resources more responsibly. On the surface, this idea might make sense. Further reading, though, reveals that many seniors lack significant retirement savings (and would be hard-pressed to pay significant out-of-pocket costs) and studies have indicated that increasing the share of medical costs patients pay reduces the use of preventive care services and might not lower costs.
Another piece of Rep. Ryan’s plan to improve Medicare’s solvency would be to increase the age of eligibility from 65 years to 67 years. This would be expected to save a significant amount of money, but could worsen the cost shifting onto elderly Americans in the form of increased premiums and the need for “young elderly” (aged 65-67 years old) to continue purchasing private insurance.
Tonight, during the Twitter chat, we will focus on the following questions:
- Is Rep. Ryan’s Medicare proposal viable? Would switching to a premium support model make a difference?
- Is it fair to shift costs onto seniors? In general, is increased cost sharing a good thing?
- Should Medicare’s age of eligibility be increased? Or…as proposed by Robert Riech, should it be decreased?
- Given Medicare’s currently unsustainable funding, what could/should/must be done to ensure the program’s continued solvency?
I hope you will join us in this important conversation. You can follow the chat at www.TweetChat.com/room/MDChat (even without a Twitter account), or if you have a Twitter account you can log in and join the conversation.