Increased Payments for Medicare+Choice Unlikely to ‘Rescue’ Program
A "major infusion of dollars" into Medicare+Choice is unlikely to "rescue" the program from its financial difficulties, according to Wall Street and health policy analysts attending a conference sponsored by the Center for Studying Health System Change. Analysts predict that reimbursement increases demanded by physicians will cause profit margins for participating plans to continue to decline, even if federal reimbursements are increased to match fee-for-service Medicare payments, as House Republicans are proposing. At the same time, Medicare+Choice plans have "driven away" their patient base "because the cost is no longer worth the constraints" on choice of hospitals and doctors, Joe France of Credit Suisse First Boston said. Medicare HMOs are implementing disease-management programs to control costs, but such action is not expected to "save much money," although the quality of care is likely to improve. "The idea that [disease management] is the silver bullet [for rising health care costs] is largely wishful thinking," Urban Institute President Robert Reischauer said (Rovner, CongressDaily, 6/11). France added that more health plans will likely end their participation in Medicare+Choice.
On the employer-sponsored insurance front, analysts said that although companies are not expected to undergo "radical overhauls" of their benefits, they will continue to increase deductibles and copayments to "make workers more aware of the costs of care." Insurers are also creating entirely new products, such as tiered hospital and physician plans and employee health spending accounts, but analysts said such efforts do not "appear to be catching on." Merrill Lynch Vice President Roberta Walter Goodman said, "We will see much more tweaking of existing benefit plan structures than we will moving to things that are new and different and dramatic." The rise in cost sharing, however, could create consumer resistance similar to that which developed against the restrictions of managed care. Reischauer said, "As the movement toward increasing the burden on those utilizing the health care system increases through higher deductibles, coinsurance, copays, whatever, that will in fact become a political issue, and there will be a backlash" (HSC release, 6/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.