Heritage Foundation Report: 'The Next Step In Medicare Reform'

WASHINGTON, Sept. 18 -- The Heritage Foundation issued the following report entitled "The Next Step In Medicare Reform."

The report was written by Brian Miller, hospitalist and public health physician, and Gail Wilensky, Ph.D, senior fellow at ProjectHope and former CMS administrator.

Here are excerpts:

SUMMARY

Dated insurance design underlies the traditional Medicare fee-for-service (FFS) program, driving uncontrolled health spending. Innovation in traditional Medicare has failed to control expenditure growth, jeopardizing the program's long-term future. Medicare Advantage, an alternative that uses defined contribution payments to private companies that administer health care benefits, provides greater financial protections and benefits for consumers while providing the potential for budgetary control in a way that does not exist in traditional Medicare. Utilizing lessons from retirement plan products, Congress should couple auto-enrollment with default assignment of new Medicare beneficiaries into the growing Medicare Advantage market as a promising first step for potentially being able to stabilize the future of Medicare and for providing more integrated care for America's current and future seniors. Consumer protections should be maintained with an annual enrollment period wherein beneficiaries can switch plans or elect back into FFS.

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KEY TAKEAWAYS

1. With an outdated insurance design, Medicare is sorely in need of an upgrade. Congress should look to innovations happening within Medicare Advantage.

2. Medicare Advantage, which works with private insurers to administer benefits, gives seniors more financial protections and benefits at the same costs to taxpayers.

3. Making Medicare Advantage the default for new enrollees would give seniors options while helping ensure Medicare remains viable for future generations.

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Conclusion

The transition to value in the health care system necessitates comprehensive changes in the way care is financed and delivered. Enacting statutory change to allow auto-assignment of beneficiaries into MA plans marks the next step on the path to value. Doing so would provide policymakers with better levers for spending control while facilitating value-based development and innovation in supplemental benefit design, helping taxpayers and beneficiaries alike. Finally, by fixing financing first, policymakers can facilitate the transition of the largest health plan market--the Medicare program--to a defined contribution by way of a risk-adjusted, capitated financing model.

MA is a market-tested, federally protected, and innovative marketplace with the potential to provide better health care. It is up to Congress to deploy it to its full potential.

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Brian J. Miller, MD, MBA, MPH, is a hospitalist and public health physician. Gail Wilensky, PhD, is a Senior Fellow at ProjectHope and former CMS administrator. The authors are grateful for and would like to acknowledge Jennifer M. Slota for her research and editorial assistance.

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REPORT: https://www.heritage.org/health-care-reform/report/the-next-step-medicare-reform