Washington, D.C. — Medicare is a bright spot in the American health care system, providing universal health coverage for older adults and others while controlling costs better than commercial insurance. However, Medicare faces significant challenges that must be addressed to make the program work better for older adults and to protect it for future generations. Two new Center for American Progress reports detail how comprehensive reforms can strengthen Medicare for older Americans. The reports also provide recommendations for how to curb overpayments to Medicare Advantage (MA) plans that are projected to cost the Medicare program between $83 billion to $127 billion this year.
In “Ending Overpayment in Medicare Advantage,” a new CAP analysis estimates that without reform, Medicare is at risk of overpaying MA plans between $1.3 trillion and $2 trillion over the next decade. CAP outlines several policy recommendations to reduce MA overpayments, including eliminating contributions from coding intensity and selection bias, making MA quality bonuses and county adjustments budget neutral, and paying MA plans based on the lower of a revised traditional Medicare benchmark or the local competitive MA bid.
In an accompanying report, “Medicare 2.0,” CAP emphasizes that MA payment fixes should be used to finance broad and robust improvements in the Medicare program overall, including expanded benefits and reduced out-of-pocket costs in the traditional Medicare program.
The guiding principles to strengthen Medicare outlined in CAP’s new report include:
- Guarantee simple and comprehensive coverage. Medicare 2.0 should transform and simplify traditional Medicare into a single, streamlined plan that covers comprehensive benefits including hospital and physician services, prescription drugs, vision, dental, hearing, and long-term services and supports.
- Significantly reduce out-of-pocket costs for patients. Under Medicare 2.0, traditional Medicare and MA should have a single, unified cost-sharing structure that significantly reduces out-of-pocket expenses and provides greater protection for lower-income people.
- Modernize prescription drug policy. Prescription drugs are an essential component of modern medicine, and Medicare 2.0 should aim to ensure broad access to medications at lower costs while promoting genuine pharmaceutical innovation.
- Place primary care at the center of the health care system. Primary care is the bedrock of a well-functioning health care system, but Medicare vastly underinvests in primary care. Medicare 2.0 should pursue several reforms to place primary care at the center of the health care system.
- Reinvent Medicare as a program that finances population health and advances health equity, not just an insurer that reimburses services. The goals of the Medicare program should be expanded to include improving the quality and experience of care for patients and clinicians, promoting high-value care while controlling costs, improving health equity, and ultimately improving the nation’s health.
“Medicare 2.0 provides a blueprint for improving Medicare for all beneficiaries by making coverage simple and comprehensive, reducing out-of-pocket costs, modernizing prescription drug policy, centering primary care, and focusing on population health and health equity,” said Andrea Ducas, vice president of Health Policy at CAP and co-author of the report. “MA payment fixes can provide financing for these holistic Medicare reforms, which CAP believes can build the political will for action. Taken together, these reforms would create a stronger Medicare program that better serves today’s beneficiaries and protects Medicare for generations to come.”
Read the report: “Medicare 2.0: Comprehensive Reform To Strengthen America’s Health Insurance Program for Older Adults” by Micah Johnson, Donald Berwick, Richard Gilfillan, and Andrea Ducas
Read the report: “Ending Overpayment in Medicare Advantage” by Micah Johnson, Donald Berwick, Richard Gilfillan, and Andrea Ducas
For more information on this topic or to speak with an expert, please contact Sarah Nadeau at [email protected].