MEDICARE: Has The Time Come For Premium Support?
The antiquated Medicare program -- basically unchanged since the 1960s and a heavy financial burden for seniors -- needs to be reformed and a premium support plan implemented to provide expanded benefits to Medicare beneficiaries, according to two prominent health care experts. Writing in a special Medicare issue of Health Affairs, Medicare Payment Advisory Commission Chair and former HCFA Administrator Gail Wilensky and Joseph Newhouse of Harvard University, co-chair of MedPAC, charge that Medicare "needs to change to better reflect how health care is organized and delivered in the 1990s." Wilensky said, "Unless that happens, our seniors may find themselves without the guaranteed health care coverage on which they have come to rely." The authors note that Medigap policies -- utilized by up to 90% of seniors -- "are already a considerable burden for those who rely mostly on Social Security." They argue that the current system is hugely inefficient, and recommend providing a defined government contribution toward an expanded benefits package that would include prescription drug coverage.
Pie In The Sky?
Premium support, despite the assertions of some members of the National Bipartisan Commission on the Future of Medicare, is extremely unlikely to completely offset the rising costs of the program as the baby boomers age. At a Health Affairs briefing yesterday, Wilensky, former Congressional Budget Office Director Robert Reischauer and Medicare trustee Marilyn Moon of the Urban Institute all agreed that supplementary revenue would almost inevitably be needed to keep Medicare solvent. Moon said the "commission is looking for unrealistic savings," and added that Congress' stated goal of holding Medicare's share of the GDP constant is similarly far-fetched. Reischauer, while agreeing that new taxes are largely "unavoidable," said it would be "a significant mistake to start" reforms by enacting new taxes. He advocated reforming Medicare through other means and then "filling in the gaps" of whatever revenue shortfalls existed. "Continuation of the current system would be a disaster," he said. Echoing those sentiments, Wilensky recommended waiting until the "second or third round of changes," but admitted that "at some point, we will need more revenues." An accompanying article in Health Affairs, by Stanford University's Victor Fuchs, argues that any Medicare reform must be accompanied by a companion effort to increase seniors' post-retirement income, perhaps through mandatory savings programs.
What Would It Look Like?
In sketching out their version of premium support, Wilensky and Newhouse describe a means-tested, partially capitated program that includes "a more comprehensive benefits package that partially covers outpatient drugs and in the long run covers some portion of long term care as well." The authors note that while means-testing Medicare may prove politically unpopular, they argue it is "neither feasible nor desirable" to have the costs shouldered by the nonelderly or "by the lower-income elderly themselves." Wilensky and Newhouse point out potential problems that must be dealt with for premium support to succeed: reimbursement rates must be set fairly and efficiently across different regions, and an accurate risk-assessment system must be implemented. They conclude, "[T]he magnitude of the likely fiscal problems after 2010 means that modest tinkering of Medicare as we have known it is unlikely to succeed." And when will reforms occur? At yesterday's briefing, Wilensky predicted that substantive and far-reaching Medicare reform would not occur until 2005 or even 2009, following the '04 and '08 presidential elections (Adam Pasick, American Health Line, 1/13).