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Direckshun 02-13-2013 12:14 PM

How would you cut Medicare?
Three ideas from the President, at least acceptable to the President:

1. Attacking the crazy cost structure of Part D by bringing Medicaid drug rebates to it.
2. Means-testing the Medicare program for higher-income seniors.
3. Moving toward pay-for-performance reimbursement methods.

Some of these are already in motion, but the above keeps benefits in tact while lowering costs.

What ideas might you prefer?

Three ways Obama wants to cut Medicare
Posted by Sarah Kliff
on February 13, 2013 at 9:52 am

In his State of the Union address, President Obama pointed to three ways he plans to reduce Medicare spending.

“We’ll reduce taxpayer subsidies to prescription drug companies and ask more from the wealthiest seniors,” he said. “We’ll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital – they should be based on the quality of care that our seniors receive.”

What does that mean? It essentially boils down to three policy proposals: Bringing Medicaid drug rebates to Medicare Part D, means-testing the Medicare program for higher-income seniors and moving toward pay-for-performance reimbursement methods. Let’s break those down.

Right now, Medicaid gets a really good deal on prescription drugs: Manufacturers have to sell their prescriptions to the entitlement program at the very best price they offer private insurance plans or 23.1 percent lower than the average price. This has lead to big discounts for the program: The Office of the Inspector General at Health and Human Services estimates that this provision has reduced Medicaid spending on drugs by 45 percent.

Medicare added its prescription coverage option in 2006, Medicare Part D. Their drug procurement processes work differently: Each private Part D plan negotiates with a drug manufacturer to obtain their own, lower rates. There’s no set discount, however, like there is in Medicaid. The HHS Office of the Inspector General estimates that the Medicare Part D program gets a 19 percent discount on drugs, compared to the 45 percent discount that Medicaid negotiates. This is most important in how it applies to the dual eligibles, the low-income seniors who qualify for both Medicaid and Medicare. In the early 2000s, these 6 million or so patients got their drugs through the Medicaid program. That all changed when Medicare added Part D and its drug purchasing moved over into that new program. The dual eligibles tend to be some of the heaviest users of prescription drugs, with upward of $6,100 in medication costs annually. Now, their drugs are coming in at a higher price to the federal government. So what the White House is proposing here is essentially moving Medicare into a system where they purchase drugs at a specified, lower price. They estimate this would save $156 billion over 10 years.

Next up, means-testing for higher income seniors. Under current law, Medicare beneficiaries cover about 25 percent of the monthly premiums for Part B (which covers doctors) and 25.5 percent for Part D (which covers prescription drugs). The federal government foots the rest of the bill. As part of the Affordable Care Act, higher-income seniors are required to pay a bigger share of their health-care costs. This starts with seniors who earn more than $85,000 and gradually scales upward for higher-earning seniors, as you can see in this chart from the Kaiser Family Foundation.

Only about 5 percent of seniors end up in this higher-income category; 95 percent do not earn enough to see these higher premiums. What the Obama administration has proposed is essentially jacking up these income related premiums by 15 percent, so they would pay a bigger chunk of their own health-care premium. This would, according to the CBO, generate $30 billion in savings over the course of a decade.

Last up: Paying for quality. This policy is a bit less specific; there’s no one way to pay hospitals for delivering higher quality care. You could hand out bonus payments to hospitals that meet certain quality metrics — or withhold dollars from those that don’t. You can put a firm cap on how much you’ll pay a health-care provider, incentivizing them to stay within a set budget. The Affordable Care Act already has a few policies like this. The law penalizes hospitals, for example, who have patients come back for a preventable readmission: A repeat hospital trip that was caused by the first visit to the doctor. As of last October, hospitals can now lose 1 percent of their Medicare reimbursement rates for these repeat visits.

The health-care law created Accountable Care Organizations, teams of doctors and hospitals who band together and accept a lump sum payment to take care of a given Medicare patient. Those who can deliver high quality health care for less will get to split the savings with the federal government.

There are ways to crank programs like these up: You could tether even more of hospitals’ income to readmission rates, or put a greater part of a hospital budget’s at risk in the ACO model. Those could be a few of the ideas that Obama is talking about when he mentions paying doctors for the quality of care they provide, rather than the quantity.

DementedLogic 02-13-2013 02:18 PM

I would phase it out completely.

FD 02-13-2013 05:12 PM

Its a very difficult question, and probably the most important question we face over the next 30 years. I think the answer is a combination of your #3 and so-called "death panels". Means testing is a fine idea but its not going to save much money unless you really hit the middle class.

BigRedChief 02-13-2013 05:38 PM


Originally Posted by DementedLogic (Post 9400181)
I would phase it out completely.

Not going to happen in our lifetimes. So your really bad ideas will just remain bad ideas withering on your dying vine of demented logic.

Direckshun 02-13-2013 10:21 PM


Originally Posted by BigRedChief (Post 9400733)
So your really bad ideas will just remain bad ideas withering on your dying vine of demented logic.

When did Werner Herzog start posting under BRC's handle?

Pawnmower 02-14-2013 01:36 AM

One way not listed is to add some reasonable co-pays. I know plenty of people who go to the doctor way too much...old lonely bored ladies mainly......adding a 20ish dollar copay for a doctor visit would cut back a ton of the frivolous abuse of the system Imo. So they would get some money back via co pays & reduce wasteful needless visits thus saving $$$.

Fairplay 02-14-2013 02:17 AM

Raise everyone's taxes.

Velvet_Jones 02-14-2013 07:12 AM


Originally Posted by Pawnmower (Post 9401844)
One way not listed is to add some reasonable co-pays. I know plenty of people who go to the doctor way too much...old lonely bored ladies mainly......adding a 20ish dollar copay for a doctor visit would cut back a ton of the frivolous abuse of the system Imo. So they would get some money back via co pays & reduce wasteful needless visits thus saving $$$.

I know what you are saying sounds reasonable but in reality, having a $20 copay will raise the cost because the consumer has no incentive to not go to the doctor when they have a minor ailment or a perceived ailment.

Copays have increased healthcare consumption with no proof that it provides better long term care and savings by catching a catastrophic illness early. I understand where you can come to this conclusion but consumer behavior actually increases consumption.

Now adding a copay for a limited number of office visits could be a good compromise. Something like 4 to 8 office visits a year at copay only and any visit over 8 is at normal benefits.

Velvet_Jones 02-14-2013 10:36 AM

MediCare will always lose money because we have expanded the eligibility rules to include people who haven't contributed to the system and then wonder why it loses money. It’s been turned from being prepaid health insurance into welfare. This can no longer be considered insurance because both parties are not sharing in the risk. The consumer has little risk at stake and therefore will consume more.

From my experience, four things need to be managed better to reduce cost. All three are managed fairly well by insurance companies. I’m not saying that CMS could actually accomplish these without turning it into a Charlie Foxtrot but a private company could. I do not have the time to go into detail on any of these items but all of these are done poorly or not at all by CMS.

Healthcare Coordination: There really is no management of healthcare for MediCare clients currently in place. Currently, CMS relies on the client’s primary healthcare provider for this. That provider normally would not have the resources or expertise to perform this function plus there is no incentive for that physician to provide this free of charge.

Pharmaceutical Medicine Coordination: CMS has made a cursory attempt at this by flagging medications that can be bought in bulk to save cost. They don’t however warn of medicine conflicts or even attempt to determine if there is a cheaper, more efficient way of getting the desired results with less medicine. Additionally, if the client only uses a single pharmacy, normally the pharmacy will do some of this for the client.

Eligible Expenses: Eligible expenses should be limited to conditions and procedures that are medically necessary, remedy healthcare, or meant to relieve pain. Elective surgery or treatment (not medically necessary) are not covered expenses. Examples are cosmetic treatment, experimental and investigational care, anything that has to do with fertility or sexual performance, hearing aides, TMJ, sclerotherapy, etc…..

Fraud Detection and Investigation: This would probably save the most of any of my suggestions. In the insurance industry, if an insurance company suspects that a fraudulent claim has been submitted, it is turned over to the authorities. The insurance company will inform the provider that fraud is suspected and, if the provider cannot justify the charges, normally the insurance company will tell the provider that it will not accept any further claims submitted by him. This is regardless of any legal remedies that may or may not occur. MediCare allows the courts to decide if fraud was committed. If the provider makes restitution, normally they are allowed to continue to submitted claims to MediCare. That my friends is a poor business decision. The business relationship between provider and insured and insurer is voluntary. If any party wants to stop doing business with any one of the other parties then they are free to do so. Medicare should function the same. There is a reason that fraud doesn’t affect insurance companies as much as it does MediCare. The insurance companies will not tolerate fraud but MediCare will.

Garcia Bronco 02-14-2013 10:46 AM

I'd remove it completely and put in controls to unwind it to where the market drives the cost while protecting the most amount of people possible through the transition. And while there are serious negative consequences, I would nationalize the entire healthcare system to bring the system under fiscal control. And while this idea is void of specifics, understand that there will be pain, but we would be collectively better over the long run.

This would be the utter end of "health insurance" in this country. People will lose jobs because of it, however we can transition these people to the obvious government jobs that will need to be created...if that's what they desire.

To help pay for it I would seriously scale down the DHS (and change the Orwellian name) and move it under the FBI.

CoMoChief 02-14-2013 11:22 AM

Most old people are horribly over medicated.

They take something for this, something for that, something to compinsate the side effects of one drug, another for side effects on another. Most people over the age of 65 take about 10-20 pills a day.

Most MD's dont know jack shit about pharmacology. They just usually do the whole "Oh you got I got this to help this and that etc." Without knowing the side effects etc. If you get an adverse reaction...well then they have something for that too.

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