Why do we need to improve Medicare?

The New England Journal of Medicine
January 14, 2015
Medicare at 50 — Origins and Evolution
David Blumenthal, M.D., M.P.P., Karen Davis, Ph.D., and Stuart Guterman,
M.A.

Many Americans have never known a world without Medicare. For 50 years,
it has been a reliable guarantor of the health and welfare of older and
disabled Americans by paying their medical bills, ensuring their access
to needed health care services, and protecting them from potentially
crushing health expenses. However, as popular as Medicare has become,
Congress created the program only after a long and deeply ideological
struggle that still reverberates in continuing debates about its future.

Future Challenges

Medicare is a much larger, more comprehensive, and more complex program
than it was in 1965. In its response to cost and quality concerns, it
has also become much more assertive in trying to improve the performance
of the national health care system. For much of its history, Medicare
just paid bills. Now, it has joined private-sector insurers in the
effort to manage care as well.

Despite these changes, however, Medicare continues to face major
challenges, which will be discussed in more detail in part two of this
series. Perhaps the most important of these challenges is its cost.
Growth in Medicare spending per beneficiary has slowed sharply in recent
years, and although that slowdown is projected to continue over the next
few years, the growth in total program spending is projected to outpace
that in the overall economy as the retiring baby-boom generation
increases the number of beneficiaries. This will put more pressure not
only on Medicare finances but also on the federal budget, with Medicare
spending projected to rise as a share of federal revenues from 17% in
2014 to 27% in 2050 and to approach 40% by the end of the century.

The current structure of Medicare is anachronistic and unnecessarily
complex. Most employers offer their employees a comprehensive benefit
package that includes hospital care, physician services, and
prescription drugs. Medicare, in contrast, offers its beneficiaries
fragmented coverage, with separate parts for each of these services. As
a result of its substantial deductibles and the lack of a ceiling on
out-of-pocket costs, most beneficiaries purchase supplemental private
insurance to cover gaps in Medicare. Low-income beneficiaries, unable to
afford care provided through substantial cost sharing in Medicare, can
enroll in Medicaid to obtain help in paying Medicare premiums and
out-of-pocket costs, but each state has its own income and asset rules.
As a result, the complexity of the current insurance system for the
elderly becomes truly startling. This complexity frustrates efforts to
coordinate care for the sickest and frailest patients and to create an
understandable and consistent set of incentives for providers.

Despite the importance of Medicare in improving its beneficiaries'
access to care, the program does have substantial limitations in
coverage. These limitations result in large out-of-pocket payments for
the most vulnerable beneficiaries. Although Medicare covers some
rehabilitation services and limited home care, it does not pay for
extended long-term services and supports, a gap that surprises many
elderly persons and their families when they need such care. Medicaid
does cover these benefits but only for the poorest elderly. The role of
Medicare in addressing growing societal needs for long-term services
remains uncertain.

These and other issues suggest that preserving and strengthening
Medicare over the next 50 years will continue to require active, wise,
and humane policy development. Such a task would be a challenge for the
federal government under any circumstances but particularly if the
current intense partisan divisions persist.

http://www.nejm.org/doi/full/10.1056/NEJMhpr1411701

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Comment by Don McCanne

Although Medicare is the most popular health insurance program in the
nation, it still has some serious deficiencies. As an example, 27
percent of Medicare beneficiaries spend more than 20 percent of their
income for out-of-pocket health care expenses.

There are two pressing reasons why efforts should be made to strengthen
Medicare. The most obvious is that current Medicare beneficiaries should
have at least the level of financial security and health security that
citizens of other nations receive through their health care financing
systems.

The other reason is that Medicare is thought by many to be a natural
model for a national health program that covers everyone. It is
important that the model be improved so that we can do away with
wasteful and inefficient supplementary programs such as Medigap
coverage, retiree health benefits, Medicare Advantage plans, and Part D
drug plans, and, while we are at it, eliminate the financial barriers of
cost sharing that impair access to care. Once we have an improved
Medicare we can combine it with the other important features of a single
payer national health program, finally realizing our dream of an
expanded and improved Medicare for all.

For those who wish to be reminded of the key features of single payer
that should be combined with an improved Medicare, a brief list is at
this link:

http://www.pnhp.org/resources/key-features-of-single-payer