Hearing addresses protecting Medicare from a ‘tsunami of aging baby boomers’

Lawmakers and experts discussed potential reforms to preserve and sustain the Medicare program amidst significant growth in the number of eligible beneficiaries at a House Ways and Means Health Subcommittee on March 16, 2016. Proposals included plans for greater reliance on the Medicare Advantage (MA) program and to raise the age of Medicare eligibility.

Opening statements

Subcommittee Chairman Pat Tiberi (R-Ohio) explained that Medicare has barreled forward for 50 years on the same struggling path. He noted that the hearing was designed to ensure that, as lawmakers look for a new path, the patient remains at the center of those Medicare reforms. He started by encouraging policymakers to repeal what he called onerous Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) policies and he suggested that steps be taken to expand on value-based care ideas like MA. Other recommendations made by Tiberi included a plan to combine the Part A and Part B deductibles.

In his opening statement, Senator McDermott (D-Wash) noted that the hearing was the first on the subject since November of 2015. He countered many of Tiberi’s positions and warned that the Republican party’s core proposal to “end Medicare as we know it” would be devastating for seniors. McDermott explained that seniors want a clearly defined benefit, not a voucher program with undefined outcomes and a Medicare program with a stronger benefits and a limit on out of pocket costs. The senator also warned that prescription drug costs are out of control, costing Medicare $120 billion in 2015. To remedy the problem, he recommended that Medicare be able to negotiate drug prices like the Veterans Administration.

Value

Katherine Baicker, a professor of health economics in the Department of Health Policy and Management at the Harvard School of Public Health focused her testimony on the importance of value to the Medicare program. She noted that high value means the right care to the right patient at the right time. She explained that high value insurance makes sure that such care is provided in a way that the program can afford. She testified that MA reforms are doing a better job, than other aspects of the program, at moving away from the waste of fee-for-service care and towards high value care. When considering the move away from wasteful spending, she clarified that the goal should not just be to spend less on Medicare but to spend less on care that is only minimally helpful. To reach those goals, she pointed to a lack of coordination as a primary cause of law quality and inefficient care. Baicker also noted that Medicare is designed not just to provide care but to serve as an economic protection so that seniors are not bankrupted when high cost care episodes arise. She said that Medicare has only done a “moderate job” of meeting that secondary program goal.

Simplification

Robert Moffit, a senior fellow at The Heritage Foundation’s Center for Health Policy Studies, testified that Medicare is the greatest challenge of all federal entitlements and a necessary focus of any workable economic recovery policy. He asked that Congress reconsider structural changes to the Medicare program, specifically: (1) combining Medicare Part A and Part B, (2) limiting Medicare subsidies to wealthy enrollees, and (3) raising the age of eligibility to 68. He explained that none of the proposals are novel and all have, at different times, “generated genuine bipartisan support.” He explained that a simplification of the Medicare program should include an addition of catastrophic coverage because it is the single greatest need of Medicare beneficiaries.

Aging population

Stuart Guterman, the senior scholar in residence at AcademyHealth, warned that when considering reforms it is important to “not throw the Medicare beneficiary out with the bathwater.” He said that policymakers should expect to spend more on Medicare as the “tsunami of aging baby boomers starts to hit.” He also echoed the earlier witnesses calls for more comprehensive and catastrophic care coverage.