Medicare What's Buzzing

HHS proposals would drive up Medicare costs

Written by Diane Archer

A recent StatPlus story reports that the Trump administration is considering proposals that could drive up Medicare costs significantly for 58 million older adults and people with disabilities. The U.S. Department of Health and Human Services is looking at ways to move more people into Medicare Advantage plans. It is planning a series of pilot programs, and it has asked doctors and hospitals to weigh in on what they would like to see.

Republican policymakers have long wanted to put a cap on federal Medicare spending. One easy way to do so is to limit per person Medicare payments. But, traditional Medicare does not permit such caps since it must pay for all medically reasonable and necessary services. Medicare Advantage plans, however, allow an easy mechanism for fixed payments.

To keep people from flocking back into traditional Medicare and to encourage enrollment in Medicare Advantage, HHS wants to increase out-of-pocking costs in traditional Medicare. And, it can do so by making it easier for doctors to enter into private contracts with patients through which patients are liable for the full cost of their care or by lifting the cap on doctors’ charges–the balance billing limits.

HHS plans to rely on the Centers for Medicare and Medicaid Innovation to develop these pilot programs. CMMI pilots do not require legislative approval. And CMMI has about $1 billion annually to spend on pilots that lower Medicare spending if they also improve quality. The ideas being put forward, however, are in line with many of Congressman Paul Ryan’s proposals for gutting Medicarewith no evidence that they improve quality.

HHS is also looking to promote the conservative notion of “premium support.” Through premium support, the government would be able cap per person spending on traditional Medicare, by only giving people a fixed amount to help pay their premiums. Higher out-of-pocket spending on premiums, coinsurance and deductibles would mean more costs for people with Medicare. Premium support could be designed to make private Medicare Advantage plans seem a much better deal than traditional Medicare, particularly for people in good health.

The problem is that premium support would hurt everyone with Medicare. Anyone joining a Medicare Advantage plan to save money could need costly care at any time, driving up their out-of-pocket costs tremendously. And, again, how would premium support promote quality?

To be clear, MedPAC, the Medicare Payment Advisory Commission, has found year after year that Medicare Advantage plans are less cost-effective than traditional Medicare.  But, they do provide a route for Congress to easily slash spending on Medicare.

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1 Comment

  • So, Trump and the Republicans want to move more people into Medicare Advantage! What a surprise! FYI—moving more gullible old and disabled people into privatized Medicare insurance will put big bucks in the pockets of their friends and contributors in the greedy, for-profit insurance industry; however, will hurt Medicare recipients! Don’t be conned!

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