The Future of Medicare

Co-authored by Tara O'Neill

Seemingly forever, a debate has raged about Medicare reform -- not just about how to do it but about whether Medicare needs reforming at all. That debate should end. The latest Congressional Budget Office report indicates that despite the current (and likely temporary) slowdown in the growth of Medicare spending, the long-term trajectory is unsustainable. Even the Department of Health and Human Services is acknowledging the problem, recently announcing efforts to tackle payment reform in order to address Medicare's budget cost. But recognizing the problem is only the first step; you also have to make the right reforms. Fortunately, the Medicare program already has a built-in template for effective reform: Medicare Advantage (MA).

MA allows seniors to purchase health insurance from a private insurer rather than utilizing the traditional fee-for-service Medicare program. Nearly one third of the eligible population chooses these plans, largely for the benefits provided above and beyond traditional Medicare. These include more coordinated care, coverage of preventive services, supplemental benefits, and financial protection through out-of-pocket spending limits. Since its inception 30 years ago, MA has led the way in improving care delivery for seniors.

Yet, despite its popularity and success, MA is at risk. Millions of seniors--particularly the nearly 6 million low-income seniors who rely on MA plans for affordable health care coverage--are surely hoping that the recurring nightmare they have experienced for the past several years will not repeat itself again this year. Since 2010 the MA program has been hit with a series of cuts that will total more than $200 billion over 10 years. These cuts have left beneficiaries with higher out-of-pocket costs, reductions in benefits, and fewer choices of doctors and insurance plans. In the past year alone, such cuts have resulted in premium increases of 20 percent, and out-of-pocket spending-limit increases of 5 percent. To make matters worse, the average number of plans available to MA beneficiaries has fallen by 45 percent since 2010 -- from 33 to 18 in 2015, because the cuts have driven insurers out of the market. Access to "zero-premium plans" has declined from 84 percent of MA plans in 2014 to only 78 percent in 2015. Seniors and supporters of MA are bracing for even more cuts when the Centers for Medicare and Medicaid Services' issues its February 2015 letter formally requesting that insurers submit proposals for 2016 MA plans.

As the baby-boom generation retires, Medicare spending will increasingly threaten the nation's budgetary and economic future. Medicare spending was more than $600 billion in 2014, and 11,000 people are becoming newly eligible for Medicare daily. It is clear that changes are needed. However, cutting MA is not the answer. MA plans provide higher-quality care to our nation's seniors at a cost of nearly $2,000 less to the beneficiary on average. With enrollment expected to reach 22 million by 2020 and a 90-percent satisfaction rate among current enrollees, MA can be a bridge to a better Medicare program. We should be strengthening MA, not crippling it.

It is not surprising that satisfaction among MA plan participants is higher than traditional Medicare. Seniors receiving care through MA are more likely to receive primary and preventive care services. MA plans outperformed traditional Medicare fee-for-service (FFS) plans in nine out of 11 clinical quality measures, including screening and exams for diabetics, cardiovascular disease, breast cancer, heart failure and antidepressant medication management. The most vulnerable seniors--those enrolled in MA Special Needs Plans--also see great reductions in the amount of time spent in a hospital or other inpatient facility: 11-percent fewer inpatient admissions, 20-percent fewer days in inpatient care, 39-percent fewer readmissions, and 24-percent fewer visits to the emergency departments.

The nearly 16 million seniors who currently rely on MA deserve better. The growing ranks of future seniors deserve better. The future of Medicare deserves better. We must stop sacrificing quality coverage for seniors in the name of paper savings for Medicare. MA shows what Medicare can be; here's hoping this time around the administration stops undercutting it.