April 27, 2017

Posts on medicare

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Tuesday, November 26, 2013 - 10:57 AM

A recent report by the President’s Council of Economic Advisors (CEA) reviewing the recent slowdown in health care costs examined its potential causes, its sustainability and the economic impact going forward.

While the report is intended to put the administration's efforts on health care reform in the best light, that shouldn’t diminish the importance of the slowdown and the lessons we can learn from it. When looking at future fiscal policy decisions, some crucial takeaways are:

  • Changes in government policy can, at the very least, contribute to lowering health care cost growth.
  • Unlike five or six years ago, health care experts are now fairly confident they have identified some strategies to build upon and there is an emerging political consensus for encouraging their implementation.
  • The slowdown presents a unique opportunity to expand reform efforts, and is not a moment for complacency or resting on laurels.

The CEA report highlights the cost slowdown by examining how per-capita spending from 2010 to 2012 saw the lowest growth rate for a three-year...

Monday, May 20, 2013 - 10:07 AM

This is post three of a three-part series on the developing consensus for the next steps on health care reform. Part One is here. Part Two is here.

Ultimately, for any health care reform plan to be credible and passable through Congress, it must have a meaningful and enforced target for long-term cost growth. In this final post of my three-part series (Part 1, Part 2), I look at the recent health care plans from the Bipartisan Policy Center, Simpson and Bowles, the Engleberg Center at Brookings, and the...

Tuesday, May 7, 2013 - 7:57 AM

This is post one of a three-part series on the developing consensus for the next steps on health care reform. Part 2 is here. Part 3 is here.

Recently, I discussed how the new health care reform plan from the Bipartisan Policy Center’s (BPC) Health Care Cost Initiative mirrors the core values of nearly every major deficit reduction plan -- a reduction in spending on the federal budget’s health care programs and an increase in revenues from limiting tax expenditures. I argued that if the absence of political will to pursue a “grand bargain” among a majority of members of Congress continues, perhaps the BPC plan could become an alternative “smaller bargain” that would go a long way towards attacking the nation’s long-term fiscal challenge.

In a series of three blog posts, I will look more closely at how the BPC report, along with a few other high-...

Wednesday, April 24, 2013 - 1:52 PM

Last Thursday, the Bipartisan Policy Center’s (BPC) Health Care Cost Containment Initiative released a comprehensive plan to increase efficiency and reduce costs while reorienting the nation’s health care system to become more patient-centered. That combination would ideally lead not only to a more sustainable fiscal future but to better health care as well.

The plan targets the largest health care levers that federal policymakers have: Medicare and the tax code -- specifically the exclusion of employer-provided health care from taxation. The plan, as scored by health policy experts, would reduce budget deficits over the next 10 years and then continue to lower the trajectory of the federal debt.

Medicare would be transformed into a system that rewards value and coordination instead of the quantity of services, and the tax code would no longer encourage overspending on health care. Furthermore, these changes at the federal level are meant to encourage and incent a more rational private health care system.

These lofty goals were heralded by BPC’s health care leaders: former Senators Tom Daschle, Bill Frist and Pete Domenici, along with Dr. Alice Rivlin. Their agreement after a year of...

Wednesday, February 27, 2013 - 4:15 PM

Among budget wonks who discuss the long-term fiscal challenge, there is something of a consensus -- the projected upward trajectory of our debt is caused primarily by the projected growth in federal health care programs.

For some, this consensus has developed into short-hand: The nation’s fiscal challenge is really “just a health care problem.” This leads to the conclusion that the nation’s unsustainable fiscal future can only be redirected by reforming the entire health care sector of the economy. Or perhaps by simply converting Medicare into a “premium support” program.

The latest CBO report, which takes into account three consecutive years of dramatically slower health care cost increases, should serve as a warning (and a reminder) that it is misleading to say the problem with the federal budget “is just a health care problem.”

If one only looks at the two CBO updates over the last six months, projected 10-year Medicare spending has been revised downward by $306 billion. Projected Medicaid spending has been revised downward by $273 billion (not counting revised estimates of lower Medicaid enrollment due to the Supreme Court’s ruling on Medicaid expansion in the Affordable...

Tuesday, February 26, 2013 - 10:22 AM

In his State of the Union Address President Obama declared: “Our government shouldn’t make promises we cannot keep, but we must keep the promises we’ve already made.”

It was good applause line, but it glossed over a key point: The promises we’ve already made are the ones we cannot keep.

It is widely accepted that current fiscal policy is unsustainable. By definition, that means something has to change. Yet, if we decide that all promises must be kept, we can’t change anything without “breaking a promise.”

The dilemma for policymakers in Washington is that for years they have made unfunded promises and there is no politically convenient way to reverse this.

The first thing to do is just face up to it.

That’s why a bipartisan group of former members of Congress included this warning among their findings from their Strengthening of America forum series last fall: “We cannot put our debt on a sustainable path without reductions in the projected cost of entitlement programs, cuts in discretionary spending and higher revenues.”

Strictly speaking, any of those things could be characterized as breaking a promise.

It could be argued, for example, that...

Wednesday, June 13, 2012 - 3:36 PM

The Medicare actuaries have just updated their projections for National Health Expenditures (NHE) and the overall picture they illustrate is a welcome one, but likely reflects temporary factors and cannot serve as an excuse for politicans to rest on their laurels.

On the plus side, health care cost inflation has slowed pretty dramatically over the last three years (2009-2011) and is also projected to be slower than normal for 2012 and 2013 -- with those costs staying nearly constant as a percent of GDP throughout the entire time period (around 17.9 percent). Furthermore, while spending is projected to jump in 2014, as the major health insurance provisions of the Affordable Care Act (ACA) extend coverage to approximately 22 million people, over the period 2011-2021 spending is projected to grow at an annual average of 0.9 percent above GDP growth. This is good news because most budget experts consider health care cost growth of 1 percent over GDP the "gold standard" for a tough, but theoretically obtainable, spending target. (Historically, health care costs have risen 2 percentage points faster than GDP.)

The actuaries suggest most of the recent slowdown in health care spending can be attributed to the recession and...

Monday, April 16, 2012 - 3:01 PM

It’s getting to be that time again when the Social Security and Medicare Trustees release their annual report on the programs’ 75-year outlook. This report is the source of valuable information, but it often causes confusion because of the different conclusions that can be drawn depending upon whether one looks at trust fund balances, which are positive, or at cash flows, which are negative.
 
Is the glass half-full or half-empty?
 
The Concord Coalition has always stressed the importance of cash flows over trust fund balances. As the Congressional Budget Office (CBO) has observed, government trust funds “have important legal meaning but little economic or budgetary meaning.”1
 
This is because trust fund “assets” are nothing more than promises from the government to pay itself a lot of money in the future regardless of whether any resources have been saved for that purpose. Trust fund balances are thus easily manipulated to increase their claims on general revenues.
 
Two recent examples demonstrate why trust fund balances should be taken with a grain of salt. One involves a grant of spending authority (new bonds) to the Social Security trust funds unsupported by any new income. The other involves cutting spending from Medicare and raising Medicare payroll taxes to...

Monday, March 12, 2012 - 12:14 PM

Last week two committees in the House of Representatives voted to repeal the Independent Payment Advisory Board (IPAB). This is an alarming attempt to undo a key cost-saving enforcement mechanism without putting anything else in its place.

You may recall that the IPAB was created by the Affordable Care Act (ACA – aka “health care reform”) to reduce the growth in Medicare spending through the use of a spending-target system and a fast-track legislative process. 

The Concord Coalition has long supported the IPAB because it provides a crucial backstop to ensure federal health care savings from the ACA. (See here and here).

The ACA imposed cuts to Medicare, raised some taxes and fees, and created a penalty for people who don’t buy insurance. The legislation also created pilot projects and experiments to determine how to help curb the growth of health care costs. The IPAB was designed to ensure that the Medicare cuts -- or others that would achieve the same level of savings -- will go into effect. The IPAB will also make it less likely that parochial political interests will be able to...

Tuesday, December 20, 2011 - 3:13 PM

The demise of the deficit reduction super committee left many people wondering whether the polarized atmosphere in Washington has made it impossible for Republicans and Democrats to reach agreement on the thorniest issues that must be resolved to achieve a fiscal sustainability plan.  

So it was heartening last week to see a bipartisan pair of prominent lawmakers – Sen. Ron Wyden (D-Ore.) and Rep. Paul Ryan (R-Wis.) -- release a joint Medicare reform proposal.

At its core is the concept of “premium support” (Wyden and Ryan call it “coverage support”) in which the federal government would pay a set amount to subsidize Medicare premiums. Beneficiaries could elect to remain in the traditional Medicare program or purchase their health insurance on an “exchange” of approved plans, which would be required to offer “at least as comprehensive a benefit as traditional fee-for-service Medicare.” The plans would also be required to issue policies to all seniors who apply (i.e., guaranteed issue).

The level of support would be determined through a competitive bidding process similar to the one currently used to set premiums for the Medicare prescription drug benefit (Part D). There would be a cap on out-of-pocket expenses (catastrophic coverage), and the coverage support “would be adjusted to provide additional...