Last December, the Trump Administration redesigned and set a new direction for the Shared Savings Program, which is Medicare’s main program for Accountable Care Organizations (ACOs) under “Pathways to Success.” Data on ACO performance in the program the first six performance years showed that, over time, those ACOs taking accountability for cost increases, or “risk,” performed better than those that did not. In fact, ACOs that did not take accountability for cost increases and only shared in savings nominally increased Medicare spending relative to their cost targets. The agency also found that ACOs led by physicians (which tend to be “low revenue” ACOs since they provide mostly outpatient services) performed better than ACOs led by hospital systems (which tend to be “high revenue” ACOs since they provide inpatient and outpatient services).
Hospitals would have to disclose the discounted prices they negotiate with insurance companies under a Trump administration rule that could upend the $1 trillion hospital industry by revealing rates long guarded as trade secrets. Hospitals that fail to share the discounted prices in an online form could be fined up to $300 a day, according to the proposal. The price-disclosure requirements would cover all the more than 6,000 hospitals that accept Medicare, as well as some others, and is likely to face fierce industry opposition.
On Thursday, the Senate passed a bill to increase the federal budget and lift the debt ceiling for the next two years. The Trump administration provided a list of $574 billion in savings options from the president’s 2020 budget to offset some or all of the proposed deal’s domestic and defense spending increases over the next two years. And whenever big numbers in government spending are debated, Medicare is always on the table. Early reports said that a big chunk of the spending offsets were expected to come from “Medicare savings,” including by imposing an inflation cap on Medicare Part D “reinsurance” spending. The issues is complex but the politics aren’t: The deal could have led to charges that Medicare cuts were being used to pay for more government spending.
Sen. Chuck Grassley (R-IA) recently introduced the bipartisan Prescription Drug Pricing Reduction Act of 2019. The bill provides incentives to slow the spending curve in the Medicaid drug program. Grassley says, “When states decide which drugs will be covered and included on their preferred drug lists, taxpayers and Medicaid patients ought to have assurances the system is fair. Transparency is the best guardrail to ensure safety and effectiveness to deliver the best value for taxpayers and the best outcomes for Medicaid patients.”
Politicians are depicting a system in meltdown, but the numbers tell a different story, not as dire and more nuanced. Government surveys show that about 90% of the population has coverage. Independent experts estimate that more than one-half of the roughly 30 million uninsured people in the country are eligible for health insurance through existing programs. The bigger issue than lack of coverage seems to be that many people with insurance are struggling to pay their deductibles and copays.
Health insurance is expensive because spending on hospital and physician services is high. Insurers are unpopular because they bear the main responsibility for controlling this spending—but in doing so, they save consumers money and focus resources toward better care. A comparison of plan options under Medicare can quantify the value added by private insurance management. Private plans reduce costs by about 10%, allowing them to provide more than $1,000 in extra health services to each Medicare enrollee every year.
What Bernie Sanders is proposing is not Medicare for all. It is far more generous—and more expensive. It would be funded much differently. And its relationship with private insurance would be nothing like today’s Medicare. Sanders would, in fact, replace the current Medicare program and it would effectively eliminate private health insurance. You can call it many things—from ambitious to unrealistic. But please don’t call it Medicare.
The health reform plan Sen. Harris unveiled this week tries to appear more moderate but it is just a bit slower path to “Medicare for All.” She would get there over 10 years—after she would be out of office, should she be elected and reelected. Grace-Marie Turner of the Galen Institute breaks down the consequences: “Sen. Harris’ plan is a clear pathway to a single-payer, government-run health system that would eliminate choices, more than double personal and corporate incomes taxes, and drive hospitals and physicians into bankruptcy.” Like other candidates, she seems to believe that private insurance could survive alongside a ‘public option’ or ‘Medicare buy in.’ Both have unlimited calls on taxpayer resources, the ability to dictate prices, and no costs of capital. Private insurance would quickly wither.
Sen. Kamala Harris raised her hand in the June Democratic presidential debate when the moderators asked who would eliminate private health insurance. Then she backtracked. Harris says she’ll provide a “commonsense path” for folding everything from Medicaid to employer insurance into the federal system. Her website says employers could offer either private Medicare Advantage plans or dump workers into Medicare for All. She wants her plan to appear less disruptive than the Sanders bill, yet the obvious conclusion is that it would still blow up traditional employer-sponsored insurance and eventually put everyone on a single federal health program.
Last week, Reps. Ami Bera, MD (D-CA) and Jason Smith (R-MO) introduced an HSA correction and expansion bill, HR 3796, that eliminates some of the discriminatory practices against working seniors and allows more Americans to own HSAs and enjoy the benefits of HSA ownership longer than they can under current law. Retirees who already own an HSA would be able to continue to contribute to their accounts, and those who have never had an opportunity to open an HSA could do so. This means that 58 million retirees would feel less pressure from the financial vise and leave them with more funds to receive the high-value care that they need.