A Plan for Medicare
By Setti Warren
The headlines of the past couple weeks have been filled with politicians debating Republican Congressman Paul Ryan’s plan to privatize Medicare. The Congressional Budget Office (CBO) estimated, in early April, that this approach would actually increase an average senior’s medical costs by $6,400 in a decade.
I believe we must fight against privatizing Medicare, while offering serious proposals to keep the program solvent and confronting the long-term cost drivers in our healthcare system as a whole.
That begins with defending and improving the health reforms signed into law by President Obama last year, which increase the solvency of Medicare, and give 87,000 Massachusetts Medicare beneficiaries access to more than $20 million in tax credits to help them afford prescription drugs. Repealing the law would increase the deficit by $230 billion while preserving a $136 billion taxpayer subsidy to boost private insurance company profits through overpayments to Medicare Advantage. Republicans want to turn the clock back on taxpayer savings, seniors, small businesses, and working families. I would vigorously fight repeal efforts, but health reform is only a start.
Of course we need to forcefully combat waste and fraud wherever we find it. The CBO estimates that every $1 invested in cracking down on fraud in Medicare and Medicaid returns $1.75 for taxpayers, which would save $50 billion. This just sounds like efficient government to me, but it’s only a piece of what we must do to control Medicare costs. My plan is focused on reducing the price of prescription drugs and reforming the way we pay for care.
American consumers pay the highest prices in the world for FDA-backed prescription drugs. Allowing Medicare to use its bargaining power to negotiate the prices of prescription drugs would have a game-changing impact for seniors on fixed incomes. Medicare already serves as a model for savings in some areas with administrative costs accounting for only 2% of its total spending, compared to as much as 17% for private insurers. Negotiating drug prices could save taxpayers an estimated $200 billion.
Also, lifting the federal ban on the importation of FDA-approved drugs would reduce the cost of medications by up to half. Putting downward pressure on prices would help consumers, including Medicare and Medicaid recipients, afford their medications. Municipalities across the country, including Newton, Massachusetts, already do this, and its saves millions. Bills in the Senate, with strong safeguards against counterfeiting and other risks, have received bipartisan support. This pragmatic approach would save the government $20 billion and consumers another $100 billion in the form of lower prices.
There is bipartisan consensus that Medicare’s reimbursement system, like so much of the rest of our health care payment system, is fundamentally flawed. The health reform law achieved $200 billion in savings by starting to move the broken “fee-for-service” system to one based more on patient outcomes—without any discernable impact on quality of care. We need to follow-through on reform, eliminate the “fee-for-service” model entirely, and replace it with a payment plan that rewards prevention, primary care and chronic disease management rather than the number of procedures and tests ordered. Adopting a model based on patient outcomes would incentivize physicians to achieve savings by coordinating their services, especially for seniors with chronic conditions, reducing total Medicare spending by up to 30%.
In addition, we must ensure that these payments are equitable and encourage providers to remain in the Medicare system.
Physicians currently face a potential 29% cut in reimbursements, and this problem requires a long-term solution. Seniors, taxpayers, and doctors deserve a system that makes sense, is cost-effective, and rewards quality care.
I balanced two budgets as mayor by slowing the growth of spending to achieve $8 million in savings, as my city grappled with a recession and the spiraling cost of health care. I believe in smart, efficient, and effective government to bring about these results. Now is not the time for demagoguery on Medicare, nor is it time for muddling through and playing politics on one of the most important issues before our nation. It’s time for serious, thoughtful leadership to find the right solution that doesn’t saddle seniors and consumers with higher costs.
Setti Warren, the mayor of Newton, is a Democratic candidate running for U.S. Senate.
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