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Medicare is the cornerstone on which all other government health care programs rest.  Unfortunately, the deteriorating financial conditions of this program are threatening beneficiary access to its benefits.  In their most recent report, the Medicare Trustees projected that the account that funds Medicare’s hospital benefit will be exhausted in 2028.  Reports like this illustrate that we can no longer let politicians in Washington deny the danger to Medicare – it is all too real, and the health of our nation’s seniors is far too important.  We have to save Medicare to avoid disruptions in benefits for current seniors and to strengthen the program for future generations.

Medicare Reimbursements for Physicians

As you may know, Medicare reimburses health care providers for various procedures they perform.  These reimbursements are made according to a fee schedule, which is updated annually by a formula called the Sustainable Growth Rate (SGR).  If spending exceeds the established targets, payment rates to providers are cut; if spending is below the target, payment rates are increased.  The intent of the formula is to place a restraint on overall increases in Medicare spending for physicians' services.  However since 2003, Congress has chosen to override current law in order to prevent reimbursements from being cut as a result of the formula.  These temporary patches have resulted in spending nearly $170 billion to avoid the unsustainable cuts imposed by the SGR. 

Rather than passing temporary fixes, I have long preferred to address the more important matter of wholesale reform to the Medicare reimbursement system.  Physicians should not have to wait on Congress to act every year in order to prevent pay cuts that are arbitrarily determined by an outdated formula.  Fundamental reforms to Medicare and our broken health care system are urgently needed.  That is why I was pleased to support H.R. 2, the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015. 

H.R. 2 would provide stability for seniors, foster a more patient-centered system, and provide structural reforms that would strengthen Medicare.

 In part, this legislation would start to move us to a patient-centered system.  It would cancel the cuts and instead give doctors a modest increase for the next five years.  Every year after, doctor payments would grow to depend more and more on results.  Our plan would set up one streamlined program that would reward doctors who met performance goals and improved seniors' health.  Over time, Medicare would reward quality over quantity, and seniors would get better care because of it. 

Our plan would also achieve savings by making two other structural reforms.  First, we would ask higher income seniors to contribute more to their care—something we have called for in the House Republican budget for years.  Starting in 2018, seniors who make more than $133,000 a year would pay a higher premium for their doctor and prescription-drug coverage.  Secondly, our plan would discourage unnecessary doctor visits and give seniors the incentive to seek out the most effective care.  Many seniors have "Medigap" insurance—a private plan that helps pay for costs that Medicare does not cover, such as co-payments and deductibles.  These plans insulate people from costs and, experts believe, encourage the overuse of health care.  Beginning in 2020, this agreement would prohibit Medigap plans for covering the first $147 of out-of-pocket spending, so cost is once again a consideration in health care decisions.

Further, this legislation continues the extenders included in the Protecting Access to Medicare (PAMA) Act of 2014 and provides funding for Community Health Centers through 2017.  These provisions ensure that individuals will have easier and more affordable access to their healthcare.  Additionally, it reauthorizes the Child Healthcare Insurance Program (CHIP), a program that provides health care coverage to more than 8 million children and pregnant women, for two years.

On March 26, 2015, the House passed H.R. 2 in bipartisan fashion and with my support by a vote of 392 to 37.  The bill was subsequently passed in the Senate and signed into law by President Obama on April 16, 2015.  I was happy to join my colleagues in this important step toward patient-centered health care.  After years of manufactured crises, this bill will give doctors the certainty they need and seniors the security they deserve.  And although we have a lot more work to do to save Medicare, this plan is a firm step to strengthen the program.

House Proposals to Reform Medicare

With approximately 10,000 “Baby Boomers” turning 65 every day, Medicare’s structural imbalance threatens beneficiaries’ access to quality, affordable care.  Currently, Medicare reimburses health care providers for services, creating a perverse incentive to order more tests and perform more services than may be necessary as a way to maximize one’s share of the program.  By basing payment on volume, not quality, costs rise and efficiency is reduced.  Ultimately, this flaw in the structure of the program is driving up health care costs, which are, in turn, threatening to bankrupt the system – and ultimately the nation.

Unless Congress fixes what’s broken in Medicare, without breaking what’s working, the program will end up causing exactly what it was created to avoid – millions of American seniors without adequate health security and a younger working generation saddled with enormous debts to pay for spending levels that cannot be sustained.

It is morally unconscionable for elected leaders to cling to an unsustainable status quo with respect to America’s health and retirement security programs.  Current seniors and future generations deserve better than empty promises and a diminished country.  Current retirees deserve the benefits around which they organized their lives.  Future generations deserve health and retirement security they can count on.  By making gradual structural improvements, Congress can preserve America’s social contract with retired workers.

Recognizing the problems facing Medicare, last year’s House Budget Proposal:

  • Strengthens health and retirement security by taking power away from government bureaucrats and empowering patients with control over their care.

  • Repeals the new health care law’s unaccountable board of bureaucrats empowered to cut Medicare in ways that would jeopardize seniors’ access to care.

  • Saves Medicare for current and future generations, with no disruptions for those in and near retirement.

  • For younger workers, when they become eligible, Medicare will provide a premium-support payment and a list of guaranteed coverage options – including a traditional fee-for-service option – from which recipients can choose a plan that best suits their needs.

  • Premium support, competitive bidding, and more assistance for those with lower incomes or greater health care needs will ensure guaranteed affordability for all seniors.

Letting government break its promises to current seniors and to future generations is unacceptable.  The reforms outlined in the budget passed by the House protect and preserve Medicare for those in and near retirement, while saving and strengthening this critical program so that future generations can count on it to be there when they retire.

This approach to strengthening the Medicare program — which is based on a long history of bipartisan reform plans — would ensure security and affordability for seniors now and into the future.  In September 2013, the Congressional Budget Office analyzed illustrative options of a premium support system.  They found that a program in which the premium-support payment was based on the average bid of participating plans would result in savings for affected beneficiaries as well as the federal government.

Moreover, it would set up a carefully monitored exchange for Medicare plans. Health plans that chose to participate in the Medicare Exchange would agree to offer insurance to all Medicare beneficiaries, to avoid cherry-picking, and to ensure that Medicare’s sickest and highest-cost beneficiaries receive coverage.

While there would be no disruptions in the current Medicare fee-for-service program for those currently enrolled or becoming eligible before 2024, all seniors would have the choice to opt in to the new Medicare program once it began in 2024.  This budget envisions giving seniors the freedom to choose a plan best suited for them, guaranteeing health security throughout their retirement years.

These reforms also ensure affordability by fixing the currently broken subsidy system and letting market competition work as a real check on widespread waste and skyrocketing health-care costs.  Putting patients in charge of how their health care dollars are spent will force providers to compete against each other on price and quality.  That’s how markets work: The customer is the ultimate guarantor of value.

Reform aimed to empower individuals — with a strengthened safety net for the poor and the sick — will not only ensure the fiscal sustainability of this program, the federal budget, and the U.S. economy.  It will also guarantee that Medicare can fulfill the promise of health security for America’s seniors.

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