Can Medicare Be Saved? Antos Makes Case for Hope

Conservative Think Tank Witness Sees Room for Compromise

October 12, 2011 By Allison Bell

Policymakers on both sides of the Medicare finance reform debate have more in common than they may realize, according to Joseph Antos.

Antos, a health care and retirement policy specialist at the American Enterprise Institute, Washington, talked about the possibility of Democrats and Republicans coming together today at a Medicare reform hearing organized by the Senate Special Committee on Aging.

Some observers have argued that the climate in Washington is so toxic right now that Congress cannot hope to accomplish anything of significance until the 2012 general elections, if then.

Antos, who was assistant director for health and human resources at the Congressional Budget Office from 1995 to 2001, testified that, despite all the controversy, there are also important areas of agreement.

Congress still needs to grapple with the more controversial arguments about structural reforms, but “immediate action can be taken on those areas of agreement, which would allow policymakers more time to focus on more fundamental disagreements,” Antos said in written testimony posted on the committee website.

Most of the arguments about Medicare reform reflect different views about whether reform should focus more on government-driven reform efforts or consumer-driven efforts, Antos said.

“As stark as those discussions often are, there are common elements that run through the arguments on both sides,” Antos said. The basic question is not all or nothing. The argument is over where we draw the line between government and market incentives.”

Someone will impose regulations, whether that someone is the government or a private insurer, and consumer and employer responses to any new rules will be unpredictable, no matter how the rules are written, Antos said.

“Consensus will develop around a Medicare reform that sets a reasonable balance between regulation and incetives,” Antos said.

Eventually, in the face of rising fiscal pressure, policymakers could probably come to agreement on making Medicare more progressive and doing more to focus limited resources on those who need help the most, Antos said.

Policymakers on both sides also could probably reach agreement on the need for a more honest approach to Medicare budgeting, Antos said.

The current system, for example, calls for Medicare physician payment rates to fall about 29% Jan. 1, 2012, unless Congress once again takes action to override a “sustainable growth rate” reform law enacted in 2003.

“There is widespread that a nearly 30% cut in physician fees is unreasonable and universal expectation that Congress will do something about it, as it has for the past 8 years,” Antos said.

A permanent fix that allows for no inflation in Medicare physician reimbursement rates would cost $298 billion through 2021, and a fix that allowed for rates to rise with the Medicare Economic Index would cost $358 billion, Antos said.

Antos said a third idea that might attract support would be the idea of a need for shared sacrifice.

Doctors and hospitals likely would fight specific cuts, but at least many could agree on the need for cutting program costs, Antos said.

One problem is that lower payments for care eventually could reduce access to services and slow introduction of new treatments, Antos said.

But Congress also could obtain some savings by taking relatively simple steps such as improving care management programs for high-cost patients, increasing cost-sharing requirements, raising Medicare premiums, and, possibly, increasing the Medicare eligibility age, Antos said.

MEDIGAP

Congress could increase the power of Medicare cost-sharing features by prohibiting Medicare supplement (Medigap) insurance plans from covering the Medicare deductible, or by imposing a tax on Medigap premiums that could be used to compensate for the additional Medicare spending induced by the supplemental coverage, Antos said.

“Simplifying cost-sharing requirements and limiting the scope of Medigap coverage would increase cost awareness and reduce some use of services,” Antos said. “Such a policy would rationalize Medicare’s benefit structure and reduce federal spending modestly.”