NASI Fact Sheets Look to the Future of Medicare
Some policymakers propose radically reforming Medicare in order to lower the federal deficit. Many of these proposals are the subject of ongoing debate, given that the most discussed proposals achieve savings merely by increasing costs for older adults and people with disabilities. The National Academy of Social Insurance (NASI) recently released two fact sheets that offer useful information to inform ongoing conversations about Medicare’s future.
“Medicare and Private Health Insurance,” shows that while growing costs in the health care sector overall pose a serious challenge, Medicare’s expenditures have grown more slowly in recent years compared to spending by private health plans. The brief attributes this trend to two factors: lower reimbursements for Medicare providers due to the government’s regulatory authority and the program’s market power, and Medicare’s lower administrative costs compared to private plans. The Centers for Medicare & Medicaid Services recently reported that Medicare spending is projected to grow by 3.1 percent per person per year compared to 5 percent in private plans.
“Is Medicare Solvent and Sustainable?” analyzes the Medicare Part A Hospital Insurance (HI) Trust Fund and its ability to continue paying health costs for beneficiaries in full. As a result of the Affordable Care Act (ACA), the HI fund will remain solvent through 2024, eight years later than originally projected. After 2024, Medicare will not “go broke.” In fact, annual revenue to the HI fund will be sufficient to continue covering 87 percent of benefits.
These realities raise concerns about proposals that would increasingly rely on private plans to provide Medicare coverage, including premium support models such as the Romney-Ryan plan. This plan would replace Medicare’s guaranteed set of benefits with a voucher that people would use to purchase health insurance. The amount of the voucher would be unlikely to keep pace with health care inflation, so Medicare beneficiaries—half of whom have annual incomes below $22,000 and already spend 15 percent of their incomes on health care—would pay more for less health security. Under a premium support model, Medicare’s ability to meet the needs of today’s and future beneficiaries would be diminished.
Be sure to check out the NASI website for additional briefs and information on Medicare.
Read the NASI brief, “Health Care Spending Trends: Medicare and Private Health Insurance.”
Read the NASI brief, “Is Medicare Solvent and Sustainable?”
CBPP Report Outlines Risk of Moving Dual-Eligibles into Managed Care Plans
A new report from the Center on Budget and Policy Priorities (CBPP) outlines the risk of moving the nine million people who are eligible for both Medicare and Medicaid—the “dually-eligible”—into private, managed care plans. CBPP cautions that mandating dually-eligible beneficiaries into managed care plans before understanding the implications would pose significant risks to people enrolled in both programs.
In its report, CBPP warns against limiting or capping federal Medicare and Medicaid spending for those who are dually-eligible in an effort to achieve government savings. Placing a cap on federal funding would likely result in fewer acute or long-term care services for low-income older adults and people with disabilities. CBPP also advises against moving dual-eligibles into managed care because private plans have very little experience in successfully coordinating care for this population. Only twenty private health plans across the county have experience receiving payments to provide Medicare and Medicaid services, and only half of states are participating in a demonstration to test various approaches to better coordinate care for the dually-eligible population.
Policymakers should continue to test new approaches to integrating services before mandating enrollment into managed care for dually-eligible beneficiaries. In addition, capping the federal funds available for these beneficiaries at an amount below what would otherwise be provided on their behalf would reduce access to much-needed care.
Read the report.