Is There a Need for Urgency in Fixing Medicare?

In the February 27, 2013 edition of the New York Times the economics analyst Eduardo Porter writes that “Medicare Needs Fixing but not Right Now”. He shows that cost increases have slowed down recently and that there are huge disparities between Medicare reimbursement rates as well as hospital utilization rates by Medicare enrollees in different parts of the country.  Therefore we should first focus on operating Medicare more efficiently before making big changes in its finances.

But a recent study by Michael Chernew, Richard Frank and Stephen Parente, “Slowing Medicare Spending Growth: Reaching for Common Ground”, points out that historically Medicare costs have been growing much faster than GDP.  And now, with demographic pressure from retiring baby boomers, the only way to stabilize Medicare costs as a percentage of GDP, will be to hold per-beneficiary cost increases below the overall rate of GDP increase.

Chernew, Frank and Parente also point out that there are many similarities between the Republican voucher plan for cost control and the Democratic proposal to move away from the fee for service model to either a fixed payment per episode model or global payment per beneficiary model.  A voucher plan shifts responsibility for cost control to beneficiaries and their insurers while the global payment model shifts this responsibility to providers.

Conclusion: yes, it is an urgent matter to slow the growth in Medicare costs and also, yes, there is lots of common ground between the two parties in getting this done.  So let’s insist that our national leaders take Medicare reform seriously and accept no excuses for further delay!

2 thoughts on “Is There a Need for Urgency in Fixing Medicare?

  1. Jack
    This is a real hot potato. Since the feds can’t even reduce the deficit, how can anyone possibly expect meaningful action on Medicare and the like?

  2. The sequester is just a small awkward step towards deficit reduction. Much more is needed, especially with respect to entitlements, and Medicare is the biggest single problem. Either we slow the growth of Medicare expenses or else our country goes bankrupt. It’s that simple and so Congress will eventually act, hopefully sooner than later. It’s important to keep up the drumbeat of criticism until this happens. Our fiscal crisis is severe but we’ve come through equally or even more severe crises in the past. So we can certainly pull out of this one as well.

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