Transcript Overview of Policy Options to Sustain Medicare for the Future

Overview of Policy Options to
Sustain Medicare for the Future
Juliette Cubanski, Ph.D.
Associate Director, Program on Medicare Policy
Kaiser Family Foundation
NCCS Cancer Policy Roundtable
Washington, D.C.
March 8, 2013
Exhibit 1
Why Medicare Proposals Are Under Discussion
 Medicare is now 15% of the
federal budget, growing to
18% by 2020
 Medicare was 3.6% of the
economy in 2010, growing to
3.9% by 2020 and 5.2% by
2030
 Over the long term, total
Medicare spending is
projected to grow faster than
the economy, due to
retirement of baby boomers
and rising health care costs
(affecting all payers)
Defense
Discretionary
Social Security
22%
19%
Medicare
15%
Nondefense
Discretionary
17%
Other
6%
Net Interest
13%
8%
Medicaid
Projected Total Federal Spending,
FY2012: $3.6 Trillion
SOURCE: Congressional Budget Office, An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022; August 2012.
Exhibit 2
Historical and Projected Average Annual
Growth Rate in Medicare Spending Per Capita
and Other Measures
Projected (2012-2021)
Actual (2000-2011)
6.9%
6.9%
5.0%
4.0%
3.9%
2.9%
Medicare
spending
per capita
Private
health
insurance
spending
per capita
GDP
per capita
2.5%
CPI
2.1%
Medicare
spending
per capita*
Private
health
insurance
spending
per capita
GDP
per capita
NOTE: *Assumes no reduction in physician fees under Medicare between 2012 and 2021.
SOURCE: Kaiser Family Foundation analysis of data from Medicare Boards of Trustees, Bureau of Economic Analysis,
Congressional Budget Office, Centers for Medicare & Medicaid Services, U.S. Census Bureau.
CPI
Exhibit 3
Medicare Enrollment Growth and Medicare
Spending as a Share of Gross Domestic Product,
2000-2040
Medicare Enrollment
(in millions)
81
88
Medicare Spending as a
Share of GDP
(under CBO’s alternative fiscal scenario)
7.1%
64
5.7%
48
40
3.6%
4.2%
2.2%
2000
2010
2020
2030
2040
2000
2010
2020
SOURCE: Medicare Boards of Trustees 2012 Annual Report; Congressional Budget Office Long-Term Budget Outlook.
2030
2040
Exhibit 4
Projected Change in Medicare Enrollment,
2000-2050
Medicare Enrollment
(in millions)
100
90
80
70
60
50
40
30
20
10
0
Average Annual
Growth in Enrollment
90.7
87.6
81.0
64.0
47.7
39.7
3.0%
2.4%
1.9%
0.8%
2000
2010
2020
SOURCE: Medicare Boards of Trustees 2012 Annual Report.
2030
0.3%
2040
2050
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Exhibit 5
Medicare Part A Trust Fund Balance,
2011-2024
Trust Fund Balance at beginning of year, as a percentage of annual expenditures:
120%
100%
80%
60%
40%
20%
0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
SOURCE: Medicare Boards of Trustees 2012 Annual Report.
Exhibit 6
Challenges Facing Medicare
• A mismatch between projected revenues and spending that is projected to
result in insufficient funds to support services that are paid for by the Hospital
Insurance trust fund beginning in 2024
• An outdated benefit design, with relatively high deductibles and cost-sharing
requirements, no limit on out-of-pocket spending, and benefit gaps, that
encourages beneficiaries to seek supplemental insurance and contributes to
relatively high out-of-pocket spending
• Several provider payment systems that reward volume, rather than value or
patient outcomes, without adequate incentives to encourage providers to
coordinate and manage patient care, particularly for high-need, high-cost
beneficiaries
• A flawed physician payment formula that aims to constrain the growth in
expenditures associated with physician services, but has led to frequent
Congressional intervention to avoid sudden and severe reductions in doctors’
fees
• An ongoing struggle to constrain the growth in health care spending, while
providing fair payments to providers and plans and high-quality, affordable
medical care for beneficiaries
Exhibit 7
Possible Pathways for Medicare Reform
• Leave the current program structure largely intact but
modify features of it; e.g., adjust existing payment
rules for providers and plans, raise beneficiary cost
sharing
• Leverage Medicare’s role in the health system to create
stronger incentives to promote “value” over volume;
e.g., accelerate delivery system reforms through CMMI
• Change the fundamental structure of Medicare from
defined benefit program to one that provides
entitlement to a government payment for the purchase
of insurance coverage
Exhibit 8
Kaiser Family Foundation Compilation of
Medicare Savings Options
• 150 Medicare savings options
divided into five main groups
• Process involved expert
interviews, literature/research
review, review of various
Medicare and deficit-reduction
proposals
• Cost estimates (where available)
from official and publicly
available government sources,
including CBO, HHS Office of
Inspector General, MedPAC,
and OMB
• Do not make policy
recommendations or suggest
a specific savings target
Exhibit 9
Categories of Medicare Savings Options
• Medicare eligibility, beneficiary costs/premiums, and
program financing/revenues
• Medicare payments to plans and providers, including
Medicare Advantage, prescription drugs, provider
payments, and malpractice
• Delivery system reform, care for high-need
beneficiaries, and patient engagement
• Medicare program structure, including benefit redesign
and premium support
• Medicare program administration, including spending
caps, coverage policy, governance, and program
integrity
Exhibit 10
Majority of the public expresses opposition to most
deficit-reducing changes to Medicare
I’m going to read you some changes to the Medicare program that have been discussed as ways to reduce the federal
budget deficit. Please tell me whether you would generally favor or oppose each one.
Strongly favor
Somewhat favor
Somewhat oppose
Requiring drug companies to give the federal government
a better deal on medications for low-income people on Medicare
Strongly oppose
68%
Requiring only high income seniors to pay higher Medicare
premiums
32%
Gradually raising the age of eligibility for Medicare from 65 to
67 for future retirees
27%
26%
Reducing payments to hospitals and other health care
providers for treating people covered by Medicare
22%
23%
Increasing the payroll taxes workers and employers pay to
help fund Medicare
16%
Requiring all seniors to pay higher Medicare premiums
10%
3%
23%
27%
6% 7%
17%
17%
12%
39%
21%
30%
22%
24%
21%
33%
61%
50%
NOTE: Don’t know/Refused answers not shown.
SOURCE: Kaiser Family Foundation/Robert Wood Johnson Foundation/Harvard School of Public Health, The Public’s Health Care
Agenda for the 113th Congress (conducted January 3-9, 2013)
Exhibit 11
Key Questions in the Debate about
Medicare’s Future
• How much can Medicare absorb in additional savings, and over what
period of time, without negatively affecting patient care?
• How should efforts to sustain Medicare be distributed among
providers, plans, beneficiaries, and taxpayers?
• What are the most promising strategies for reducing inefficiencies
and promoting high-quality care: accelerated delivery system reforms;
greater competition among plans and providers; value-based
purchasing strategies; stronger financial incentives to encourage care
management?
• Should Medicare’s basic entitlement be changed from a program that
guarantees a defined set of benefits to one that provides a defined
contribution for the purchase of insurance?
• Should reform efforts focus specifically on Medicare or be broadened
to address the growth in health care spending across all payers?