A Better Way to Cut Medicare Spending
Over the next 10 years, the Affordable Care Act (ObamaCare) is scheduled to cut Medicare spending by $716 billion, primarily by reducing payments to doctors and hospitals. Further, those cuts in spending will continue indefinitely into the future. By 2060, one-fifth of Medicare will be gone. The Medicare actuaries and others have warned that these cuts will reduce access to care for seniors.
Fortunately, there is a better way ― proposed by Liqun Liu, Andrew J. Rettenmaier, Thomas R. Saving and Zijun Wang in a study for the National Center for Policy Analysis: The reform consists of two changes to current law: (1) raising the Medicare eligibility age to the same age as Social Security (and thereafter indexing it to increases in longevity) and (2) requiring higher income seniors to pay a greater share of their medical costs (or so-called means testing). This reform ensures that low income workers receive full benefits (defined as the average benefits retirees would receive if the ACA’s cost-cutting provisions are not realized) upon attaining the new eligibility age. Once seniors reach the new eligibility age:
- Individuals in the lowest 30 percent of the lifetime income distribution would receive 100 percent of full benefits (net of premiums).
- Medium income workers (at the 50th percentile of lifetime income) would receive 87 percent of full benefits — significantly higher than the benefits they would receive under the Affordable Care Act.
- However, individuals in the higher lifetime income groups would be required to pay a greater share of their health care costs and as a result receive a reduction in net benefits under current law.
I like means testing, but considering the fact that high income earners are not capped on what they pay into Medicare while working I find it difficult to tax them again when they are on Medicare. Additionally higher income folks pay a higher Medicare premium along with a higher Part D premium so this type of action seems geared to taxing the rich instead of solving the problems which are inherent to the program (lack of skin in the game).
Perhaps a partial fix would be to allow balance billing. That way the increases in SGR would be at least partially held down. It might also place a bit more control over prices. Additionally Medicare could also manage a lot of the fraud taking place with regard to DME and ancillary medical costs.
Who would propose the partial fix though?
Our legislators think their primary purpose for being is to get reelected. Don’t you think their primary purpose is to propose useful legislation?
Interesting. Something like this will be needed, because even if the Republicans succeed in repealing ObamaCare, their budget has the same Medicare cuts that the Obama budget has.
I think it would be easier just to have an alternative
“(1) raising the Medicare eligibility age to the same age as Social Security (and thereafter indexing it to increases in longevity) and (2) requiring higher income seniors to pay a greater share of their medical costs (or so-called means testing”
A much better option.
What’s the feasibility of this passing though?
Probably slim to none, but some options are better than no options
Unless the options are atrocious
Will these cuts even actually go through?
My thoughts exactly, it just doesn’t seem possible. Like fighting a fire with water balloons
“Over the next 10 years, the Affordable Care Act (ObamaCare) is scheduled to cut Medicare spending by $716 billion”
We are afraid to cut this much from old people, but 4 billion spending on SNAP is too much??
To people who won’t work for themselves
I haven’t read the study, but here are my knee-jerk reactions:
Raising the Medicare age would remove the youngest group of seniors from Medicare, which is likely the healthiest group. They are effectively contributing much more – compared to benefits received – than other seniors. If the goal here is to cut Medicare spending, then removing the healthiest group of seniors makes little sense.
As for means testing, it’s already being done in the calculation of premiums for Medicare Part B and Part D. If that strategy is not a success, why would a cut-in-benefits masquerading as means-testing be any different?
That is actually very possible
Wouldn’t they still be paying in regardless?
Note to Carter (and many others on this blog over time):
The sad thing is that the “716 billion in Medicare cuts” were almost all classic Washington phoney baloney.
The rate of growth in Medicare fees was what was cut. Congress counts this as saving money.
If Medicare now pays $1500 for a form of cataract surgery, the Obama “cuts” did not lower the fee to $1200.
No, these so-called ‘cuts’ just stipulated that the fee would not grow to $1600 next year. Maybe it would only grow to $1,520.
Big deal.