The House recently approved a federal budget proposal that would fundamentally alter Medicare and Medicaid – programs that together provide care to 1 in 3 Americans. The Senate will vote on the proposal within days.
We want to make sure every doctor and medical student knows what could happen:
- Eliminate traditional Medicare and replace it with a voucher for seniors and disabled Americans to buy their own insurance. Each person would receive a fixed-amount voucher to choose a private insurance plan. The value of the voucher would increase with time, but would not rise at the same rate as insurance premium increases.
- Cut Medicaid funding for states by turning it into a fixed-amount federal block grant program. With the block grant program, states that are already struggling to cover Medicaid patients would have to make do with decreased federal help. The Kaiser Family Foundation estimates that within 10 years, 44 million people who would have been on Medicaid in would not have coverage - that includes children, pregnant women, seniors in long-term care, and the disabled.
See below for details on what’s being proposed. Do you think America can do better? I know we can.
Doctors for America leaders are meeting with Senate leadership on Tuesday. We will make sure your voice is heard.
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Proposed Medicare and Medicaid Changes in the Federal Budget
Medicare is the largest public health care program in the United States. For over 40 years, Medicare has provided health care to America’s seniors, and has helped lift them out of the poverty they too often suffered due to unpayable medical bills before it was passed in 1965. Most everyone recognizes that Medicare has flaws - and is on a dangerous financial course that needs to be changed.
The Affordable Care Act (ACA) makes several adjustments to Medicare: payment and delivery system reforms to improve quality and contain cost and decreased subsidies to private insurance companies that administer Medicare – overall extending the solvency of Medicare by 9 years. The budget proposal offered by Congressman Paul Ryan would add many more provider cuts as well as a radical shift to a premium-support voucher system. Medicare would change from a “defined benefit” system, where the government pays providers the cost of covered services, to a “defined contribution” system, where seniors receive a voucher to help them purchase coverage in the private marketplace. The Ryan plan would:
- Risk health care security of seniors. Under a voucher system, seniors would pay for all costs beyond the value of the voucher. The value of vouchers would be pegged to a non-health economic indicator, such as GDP. Because health costs grow at a faster rate, seniors would likely be responsible for an increasing share of costs over time. According to the Congressional Budget Office, seniors could spend over two-thirds of their income on health under the Ryan budget plan by 2030. This would force many seniors to drop their insurance coverage.
- Increase administrative waste. Medicare currently runs with very low administrative costs. Premium support through vouchers would increase the administrative burdens and complexity of enrollment.
- Do little or nothing to control costs. Delivery system reform innovations, such as the Accountable Care Organizations and Patient Centered Medical Homes, will work to encourage quality of care (reduced waste, greater coordination, and improved efficiency), rather than the high quantity of care that is making health care costs skyrocket and doing little to improve patient health. The Ryan proposal does nothing to try and change how health care is delivered or what we pay for, it just changes who pays for it.
Medicaid is an essential safety net for many low-income Americans and vulnerable populations - including the blind, seniors in long-term care, children, and pregnant women. States currently have widely different eligibility levels for Medicaid, and many are very stringent. In 2014, the ACA will expand Medicaid coverage to all individuals up to 133% of the federal poverty level. Between 2014 and 2019, the federal government will pay an estimated 95% of the cost of expanding Medicaid. Medicaid is jointly financed by the states and the federal government. Currently because of the tough economy, many states have historic revenue shortfalls and Medicaid enrollment increases; many states are considering cutting the number of people and services that are covered. Federally, concerns over the budget deficit have led to major cost-cutting proposals, such as shifting Medicaid to a block grant program that would:
- Further weaken the Medicaid safety net. Federal regulations current ensure that individuals can receive Medicaid so long as they meet minimum standards. Under a block grant program, states would be free to weaken regulations. Many states would likely chose to cut costs by reducing enrollment. An estimated 44 million would lose access to Medicaid, which would threaten their health, lead to a rise in uncompensated care costs, and increase the strain on taxpayers and local providers.
- Do little or nothing to control costs. Shifting to a block grant program would not reduce the underlying drivers of health care cost growth and would limit the ability for Medicaid to drive system improvements especially during tough economic times when we most need innovation.
Together, Medicare and Medicaid play a key role in ensuring our nation’s health, making it possible for physicians to provide care to the elderly, vulnerable and low-income Americans in our communities. The Affordable Care Act (ACA) will expand the role of both of these programs, using them as means for testing innovative new payment and care delivery models. It will also expand the number of people who gain access to health care through Medicaid.
Unfortunately, proposed changes to these programs at the federal level, most notably the shift to Medicare vouchers and Medicaid block grants, would endanger safety net programs for children, the elderly and the disabled and patients these programs serve. The proposed changes in the Ryan budget would:
- Decrease access to health care. Seniors, disabled, children, and low-income Americans would lose the safety net that currently protects the health and security of millions.
- Decrease quality and ineffectively control costs. Vouchers and block grants will not reduce the underlying drivers of health care cost growth. Lasting cost control will come from a transformation of the ways we deliver and pay for health care. It will not come from simply shifting the responsibility for paying to America's seniors and most vulnerable. Many new delivery system reform projects, such as the Accountable Care Organizations and Patient Centered Medical Homes, will work to encourage quality of care (reduced waste, greater coordination, and improved efficiency), rather than the high quantity of care that is driving up health care costs and doing little to improve patient health.
- Put patients at increased financial risk. Vouchers for insurance premium support and block grants will control federal health spending over time, but they will do so by shifting financial risk and administrative burdens onto state and local providers, families, communities and vulnerable beneficiaries.
Kaiser Family Foundation. Implications of a Federal Block Grant Program for Medicaid. April 2011. http://act.drsforamerica.org/go/231?akid=695.6574.9YUWKN&t=4
Congressional Budget Office. Preliminary analysis of Rivlin–Ryan health reform proposal. November 17, 2010. http://act.drsforamerica.org/go/232?akid=695.6574.9YUWKN&t=6
Henry Aaron. How Not to Reform Medicare. April 2011. NEJM. http://act.drsforamerica.org/go/233?akid=695.6574.9YUWKN&t=8