MEDICARE REFORM: Greenspan Offers Prescription
Federal Reserve Chair Alan Greenspan suggested Monday "that the private sector can offer valuable lessons about health care policy," appearing as the first witness before the 17-member National Bipartisan Commission on the Future of Medicare (Norton, CongressDaily, 4/21). The Wall Street Journal reports Greenspan told the commission that "[f]ostering greater cost-consciousness among patients and improving health care efficiency are worth studying." An option would be to require Medicare recipients "to pay part of their health care expenses," which according to Greenspan would be "one of the most useful tools" (Sharpe, 4/21). Greenspan said, "Perhaps the hardest issue with which you will have to grapple is the very real possibility that projected demands by Medicare recipients exceed a realistic estimate of our budgetary capabilities" (Love, AP/Boston Globe, 4/21).
Head Them Off At The Cap
Greenspan "advised against trying to set an arbitrary cap on health care costs based on a percentage of gross domestic product and instead urged 'more sophisticated' measurements" (CongressDaily, 4/21). He also suggested "determin[ing] what the federal budget can support and then try to decide on ways to reduce Medicare costs" (Journal, 4/21). "The nation should be prepared to revisit the issue of Medicare reform, perhaps many times, as unanticipated technological changes alter medical practice and private insurance markets evolve," he added.
The New York Times reports that Greenspan noted that "Medicare 'has not kept pace with changes in the private health care system,'" and said HMOs had "extraordinary success" in reducing medical inflation (Pear, 4/21). While "managed health care is a choice for Medicare beneficiaries, more than 80% of retirees still" participate in fee-for-service plans. The AP/Boston Globe reports that Greenspan said "Americans spend a tremendous amount of money compared to other industrialized countries on 'super high-tech medicine' designed to prolong life. When it comes to medical care, we seem to hold life as an unequivocal value with pressures to fend off death by any means, regardless of the costs in real resources."
The AP/Globe reports "[s]everal Medicare commissioners questioned whether using the private sector as a model is best for Medicare, considering recent consumer backlash against loss of control over some life-and-death decisions" (4/21). In addition, some members of the commission "wondered if 'working backwards' from government restraints would require limitations that could erode Medicare's guarantees and deny care at the end of life, when costs are often highest but results most marginal." Greenspan replied that "Medicare's future must be determined by a complex mixture of tangible factors, including economic effect of tax and spending choices, and intangibles such as the value and quality of life and the unpredictable but huge cost impact of medical technology" (CongressDaily, 4/21).
Commonwealth Fund Address
Today, in an appearance before the commission, Karen Davis, president of The Commonwealth Fund, "addressed the challenge to Medicare" as baby boomers approach retirement. Davis identified the following principles to guide a panel discussion on "Medicare and the Baby Boomers" and how to finance care: Future needs for Medicare outlays are difficult to predict and five year incremental changes with careful monitoring of their impact are needed. Medicare beneficiaries already shoulder a rapidly growing share of costs. Employer based retiree coverage is decreasing. Low income beneficiaries are most at risk. Expenditures are skewed by a small number of recipients who need the most care. The implications of the move to managed care are unknown, and Medicare payment rates should be comparable to the private sector. Davis said, "Medicare has played a crucial role in improving the lives of the elderly, and this must continue to be its goal. The health and economic security of Americans in the twenty-first century is at stake" (release, 4/21).