Politico

Across America, it’s Medicare “open enrollment” — the period when seniors can choose a plan that best suits their needs. While polls show that Medicare remains very popular, unless Congress makes some needed improvements, seniors will face reduced Medicare choices in the days ahead.

The program faces increasingly grave challenges in costs and benefits. With the right improvements, however, we can uphold our promise to save this program for millions of elderly and disabled who depend on it; and we can give them better benefits than they have today.

Unlike most commercial insurance, traditional Medicare still does not offer seniors maximum out-of-pocket protection. Too many seniors are exposed to unpredictably high costs when they get sick or feel forced to purchase costly supplemental plans.

Nor does basic Medicare spend dollars smartly to coordinate patient care. Despite the efforts of centralized Medicare technicians to cut costs, data from MedPAC and other experts reveal Medicare’s often inexplicable variation in spending across the country.

On the cost front, the day of reckoning is hurtling toward us. Program insolvency could hit as soon as 2016, according to the Medicare actuary. The longer-range picture is even more dire. As the fiscal commission and budget experts warned, Medicare is the fastest-growing part of the budget. Federal health care represents the nation’s single largest fiscal challenge over the long run.

But these serious challenges offer Congress an opportunity to improve the entire program. The way to save Medicare is to build on what is working. This means Congress should create competition in health care to create more affordable options for seniors by using private plans offering Medicare benefits.

Favoring competition using private plans is based less on ideology than on pragmatism. The traditional fee-for-service system is not affordable or efficient. Private plans, however, have been offered in Medicare since the 1980s and represent some of what works best.

Roughly nine in 10 seniors today receive prescription drug coverage through a private Medicare plan, and premiums for Medicare’s drug benefit are expected to be even lower in 2012 than this year. Seniors benefit from a range of choices, and the competition between private plans has reduced costs for taxpayers — roughly 40 percent under budget compared with original estimates. While Congress must make the financing of the drug benefit sustainable for the long term, the success here is indisputable.

Another success is Medicare Advantage — private plans offering the Medicare benefit. Seniors with a plan benefit from innovative care coordination approaches and a maximum out-of-pocket limit, so their health spending over a year is predictable. Consumer satisfaction is high, and now more than 25 percent of seniors have a MA plan.

Unfortunately, President Barack Obama’s health care overhaul reduced MA payments — spending the money instead on new bureaucracies and government programs. As a result, according to the Medicare actuary, by 2017, roughly half of seniors who like their MA plan probably would lose it.

But the impact could be more grim. A study by health analysts Michael Ramlet and Robert Book of the American Action Forum points out that, because benefit losses vary by state, some seniors could be hit particularly hard and “one of the most damaging effects of the new law is the adverse effects for people with chronic conditions.” The largest estimated loss would likely be in Louisiana — where seniors would get nearly $5,100 less in benefits in 2017 than received before the health care law passed.

Obama said “health care reform should be guided by a simple principle: Fix what’s broken and build on what works.” We agree. But unfortunately, his health care law failed to meet this goal. Instead, what is broken has worsened, and what’s working is in danger of crumbling.

The president’s health care law includes new taxes on health insurance, pharmaceutical drugs and medical devices — increasing the costs of medical care.

It also took about $530 billion from Medicare to spend on new programs not for seniors. The law created an independent payment board of unelected Medicare czars, who can reduce reimbursements to health care providers who care for seniors.

All these changes are wrongheaded and will hurt seniors’ access to care.

We believe the greatest threat to seniors today is not Medicare reform but inaction. More important, we believe that Congress can achieve Medicare reform that improves care for seniors, while reducing costs for taxpayers — and put Medicare on a sustainable path.

Politico, November 30, 2011