Wholesale cuts in the Medicare program have no political support and will backfire because that will merely shift health care costs elsewhere if implemented, several senators and health care policy experts agreed Wednesday at a Senate hearing on the issue.
Instead, the most effective way of reducing federal health care costs is moving across-the-board away from the current fee-for-service reimbursement system.
That comment, by David Blumenthal, M.D., president of the Commonwealth Fund, appeared to represent a consensus of opinion of those who testified at the hearing.
Fee-for-service reimbursement policies, he said, “encourages volume rather than value.”
Instead, what should be done is “put in place policies to reduce unnecessary utilization, increase care coordination and improve outcomes.”
Blumenthal said that would align “incentives for providers, consumers and payers to reward choices that lead to better patient outcomes and use resources wisely.”
Blumenthal also testified that cutting Medicare spending was not a cure-all to the country’s health care cost problems.
“Solutions to the larger health spending problem are not likely to be effective if pursued only in one part of the health care system rather than system-wide,” Blumenthal said.
For example, “drastically cutting reimbursement rates in public programs could shift costs onto private payers and do little to solve the underlying problem,” Blumenthal said.
Indeed, consistent with that analysis, even the much-criticized Medicare Advantage system, which is currently facing serious cuts, was supported.
Kenneth E. Thorpe, Ph.D, and chairman of the of Health Policy and Management Department at Emory University, said research conducted through the experiences of the Medicare Advantage program as well as other research shows that care coordination and prevention play a key role in reducing spending and improving quality of health care.
The testimony took place at a hearing of the Special Committee on Aging on Strengthening Medicare for Today and the Future.
Juliette Cubanski, Ph.D., associate director, the Program on Medicare Policy, at the Henry J. Kaiser Family Foundation, testified at the hearing that “While Medicare faces long – term financial challenges, it is also important to remember that Medicare is a vital source of financial and health security for 50 million people today, and the vast majority of seniors say that Medicare is working well for them.
“Therefore, moving forward it will be important to assess the implications of proposed changes to the Medicare program for current and future beneficiaries,” she said.
At the same time, Cubanski cautioned that one of the issues Medicare beneficiaries face is significant out-of-pocket costs for both premiums and non-premium expenses to meet their medical and long-term care needs.
Another is that spending on hospital costs, Part B of Medicare, and Part D, prescription drug costs, are soaring. Blumenthal said that premiums and cost sharing as a share of annual average Social Security benefit payments has increased from 6 percent in 1970 to 26 percent in 2010.