Editorial: Don't replace Medicare – just fix its excesses

Published: Friday, Mar. 8, 2013 - 12:00 am | Page 12A

As budget talks ramp up, Americans should not allow the highly successful Medicare health insurance program for retirees to get caught in the buzz saw of Beltway politics. In the last half century, Medicare has done wonders in reducing old-age dependency and, thus, inordinate burdens on younger generations. It is worth preserving.

Today, 48.5 million retirees get health coverage through Medicare; by 2035, with the retirement of the baby boom generation, that rises to 85.3 million. The president and Congress have to figure out how to deal with the enrollment bulge and the cost that brings.

At one end of the spectrum, House Republicans, led by Rep. Paul Ryan, R-Wis., would "end Medicare as we know it" by creating a voucher system for retirees born after 1956 (or perhaps 1954) to buy private insurance.

This would reduce costs by capping the amount of care paid for by vouchers, thus shifting costs to future seniors. While some seniors are wealthy, half of the nation's retiree households have annual incomes of less than $25,000.

At the same time, the Ryan plan fails to rein in costs for the existing Medicare program – essentially freezing Medicare in place for retirees born before 1956.

At the other end of the spectrum, some Democrats take a "been there, done that" attitude, standing pat with Medicare savings from the Affordable Care Act of 2010, also known as Obamacare. Those savings just are not enough to address the scale of the problem. They should be seen as a beginning, not as the whole solution.

Americans who want to see Medicare preserved for the future should reject the Ryan/House Republicans voucher plan and push President Barack Obama and congressional Democrats to take further steps to rein in Medicare costs.

The nonpartisan Congressional Budget Office credits Obamacare with wringing out $716 billion in Medicare savings over 10 years from insurance companies and hospitals – not retirees – by eliminating subsidies for private insurance plans participating in Medicare since 1985 and cutting payments to hospitals that would see fewer uninsured patients. Obamacare improves Medicare's financial outlook, but much more needs to be done.

President Obama promised in his State of the Union address to deliver more – and Americans should hold him and the Congress to it.

He promised to reduce taxpayer subsidies to prescription drug companies, to ask more from the wealthiest seniors and, most significant, to change the so-called "fee-for-service" model where Medicare pays providers for the quantity of services they perform such as the number of tests ordered or days spent in the hospital, a huge cost driver.

Congress and Obama should start by getting rid of the 2003 law that forbids Medicare from negotiating prices with drug companies. Some experts estimate that alone would save $230 billion over 10 years. Then ask the wealthiest retirees to pay more in Medicare premiums.

Weaning providers – doctors, hospitals, health plans, drugmakers and device firms – from out-of-control fee-for-service reimbursements and encouraging them to adopt alternative pay models promises the biggest savings. The Mayo Clinic in Minnesota, the Geisinger Health System in Pennsylvania, Intermountain Healthcare in Utah and Kaiser Permanente are well known for alternative pay models.

The timing is right to take this on. The National Commission on Physician Payment Reform on Monday called for eliminating the fee-for-service model within seven years (see http://physicianpaymentcommission.org/report/ ).

Former Senate Majority Leader Bill Frist, R-Tenn., who chairs the commission, said, "We can't control runaway medical spending without changing how doctors get paid. This is a bipartisan issue. We all want to get the most from our health care dollars, and that requires rethinking the way we pay for health care."

We don't need to replace Medicare or put significant new burdens on retirees. But we do need to fix how we pay for health care.

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