Cel­e­brat­ing pro­grams that pro­tect us from health­care risks

Modern Healthcare - - 50 MEDICARE AND MEDICAID THE NEXT HALF-CENTURY - By Judy Feder Judy Feder is a pro­fes­sor of public pol­icy at Ge­orge­town Uni­ver­sity who served as an HHS of­fi­cial dur­ing the Clin­ton ad­min­is­tra­tion.

The 50th an­niver­sary of Medi­care and Med­i­caid en­act­ment calls for a cel­e­bra­tion. Medi­care pro­vides health in­sur­ance pro­tec­tion to vir­tu­ally all older Amer­i­cans and many work­ers who be­come dis­abled. Med­i­caid is the na­tion’s in­valu­able long-term-care safety net, help­ing any­one who can’t af­ford ser­vices and sup­port. Un­der the Af­ford­able Care Act, states can rely on Med­i­caid to make health­care avail­able to all low-in­come Amer­i­cans.

So what’s not to cel­e­brate? To those philo­soph­i­cally op­posed to gov­ern­ment, pro­gram ex­pen­di­tures are fis­cally daunt­ing. But that spend­ing growth now and for the fore­see­able fu­ture is ex­traor­di­nar­ily low, largely driven by growth in their el­i­gi­ble pop­u­la­tions.

Crit­ics pro­pose to re­duce gov­ern­ment’s role and spend­ing by rad­i­cally re­struc­tur­ing both pro­grams. They would re­place Medi­care’s public in­sur­ance with vouch­ers to buy pri­vate plans. They would re­place fed­eral Med­i­caid fund­ing grants that match state spend­ing with fixed-dollar block grants. Both “re­forms” would shift health­care and cost risks from tax­pay­ers to ben­e­fi­cia­ries.

Tra­di­tional Medi­care has enor­mous clout in pric­ing ser­vices. And it avoids the risk se­lec­tion that oc­curs when mul­ti­ple pri­vate in­sur­ers com­pete to en­roll the healthy and avoid the sick. Even in the reg­u­lated Medi­care Ad­van­tage mar­ket, health plans ben­e­fit fi­nan­cially from serv­ing less costly pa­tients, and chron­i­cally ill pa­tients re­port prob­lems with ac­cess to and qual­ity of care. With vouch­ers and less reg­u­la­tion, sicker pa­tients would pay more or re­ceive less care. Over time, all ben­e­fi­cia­ries would bear the risk if voucher amounts failed to keep pace with health­care costs.

Med­i­caid block grants would shift risks first to states, then to ben­e­fi­cia­ries. Pro­po­nents say free­ing states from fed­eral rules would lead to ef­fi­cien­cies and sav­ings. But re­ces­sions hap­pen and health costs rise. With block grants, that risk would shift to the states. Then they would limit el­i­gi­bil­ity and benefits, and ben­e­fi­cia­ries would bear the brunt.

Changes could be made in Medi­care and Med­i­caid to bet­ter pro­tect us—in­clud­ing a Medi­care cap on out-of­pocket spend­ing, Med­i­caid ex­pan­sion in all states, bet­ter long-term-care pro­tec­tion, and bet­ter man­age­ment of costs and over­pay­ments. But that means man­ag­ing the risk, not shift­ing it. That’s what gov­ern­ment is sup­posed to do.

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