MedPAC members concerned about Medicare finances

WASHINGTON — “Shock and awe.” “Almost like reading a dystopian sci-fi novel.”

These are some of the comments made Thursday by members of the Medicare Payments Advisory Commission (MedPAC) in response to a presentation by Rachel Burton, senior MedPAC analyst, MPP, on the current financial situation of the Medicare program. The commission was discussing a draft chapter of its upcoming March 2023 report to Congress that outlines Medicare’s overall financial situation.

Burton began by noting that COVID-19 has had a “disproportionate impact” on Medicare beneficiaries, with 75% of COVID deaths in the United States occurring in patients over the age of 65. Additionally, patients with end-stage renal disease (ESRD), who are also covered by Medicare at any age, were six times more likely to be hospitalized with COVID-19 than older beneficiaries, she said. declared.

Burton offered some good news, noting that the Medicare program is in slightly better financial shape compared to a year ago. “After initially contracting at the start of the pandemic, the U.S. economy subsequently grew strongly, generating higher-than-expected Medicare payroll tax revenues,” she said. “This helped delay the planned insolvency of the Medicare hospital insurance trust fund by a few years until 2028, according to CMS actuaries.”

On a darker note, Burton said “CMS actuaries found that Medicare beneficiaries who died of COVID-19 in 2020 tended to be high-cost beneficiaries with multiple medical conditions. As a result, the remaining beneficiaries are estimated to be 2% cheaper on average.”

However, health care continues to generally rise as a percentage of gross domestic product (GDP), reaching an all-time high of 19.7% in 2020 – Medicare contributing 4 percentage points, according to Burton. And Medicare spending is expected to double over the next 10 years. Within the Medicare program itself, Medicare Advantage spending per beneficiary from 2013 grew faster — at 3% per year — than traditional health insurance, which grew 2.3% on average. Spending on Medicare Part D drugs over the same period grew an average of 1.9% per year, she said.

These increases are occurring even as the number of workers contributing to Medicare through their taxes continues to decline; in 1970, there were more than 4.5 tax-paying workers for one Medicare beneficiary enrolled in Medicare Part A, which pays for hospital care and is primarily funded by payroll taxes. But by 2021, that number had dropped to 2.9. To help the Medicare Hospital Trust Fund remain solvent for another 25 years, the government could increase the percentage of wages workers pay from 2.9% today to 3.66%, or cut Medicare Part A spending by 16.9%, or $69 billion a year, Burton says.

Once Burton was finished, the commissioners began discussing the draft chapter. “I may refer to this as a chapter of shock and awe” in the next report, said Stacie Dusetzina, PhD, of Vanderbilt University School of Medicine in Nashville, Tennessee. “I think you’ve done a great job of describing the situation we’re going to find ourselves in and I’ve been amazed by this doubling of spending in 10 years.” She noted that the draft chapter also indicated that private plans paid providers better rates than Medicare, so there were concerns that providers would stop taking Medicare patients.

This suggests that Medicare “might need to pay more to accommodate this, but I also wondered if we would get out of this game and instead think about other penalties that should be paid for being an organization that denies access to Medicare beneficiaries,” Dusetzina says. For example, “maybe you get special privileges like 340B rebates or other things that we as a country pay for that maybe you shouldn’t get if you discriminate against Medicare beneficiaries “.

“It was almost like reading a dystopian science fiction novel,” said Lawrence Casalino, MD, PhD, of Weill Cornell Medical School in New York. “You need a family that’s separated from their child, reunited, and medicare saved.” He noted that the draft chapter also addresses the fact that the consolidation of health care providers continues, “and I think as long as we talk about consolidation, [we should include] a short paragraph…simply mentioning that to the extent that this consolidation lessens market competition, theoretically – and there is empirical evidence – it also reduces quality for Medicare beneficiaries. »

But Lynn Barr, MPH, of Caravan Health in Kansas City, Missouri, disagreed, saying consolidation in rural areas can actually have positive effects. “The rhetoric that hospitals buy doctors’ practices so they can raise prices – I’m sure it happens in urban areas. I don’t work there, so I don’t really know,” she said. declared. “But everywhere I work, I see doctors lined up outside the CEO’s office asking to be hired, because of the pressure we put on doctors.”

Commission Chairman Michael Chernew, PhD, closed the session by reminding Commissioners that “our challenge is not to solve all the fiscal problems within the [Medicare] program or to decide whether we should solve them through payment approaches or income-increasing approaches”, but rather it is about ensuring that beneficiaries have access to high-quality care.

  • Joyce Frieden oversees MedPage Today’s coverage in Washington, including stories about Congress, the White House, the Supreme Court, professional health associations and federal agencies. She has 35 years of experience in health policy. Follow

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