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Congressman
Paul Ryan
Medicare is the cornerstone on which all other government health programs rest. Unfortunately, the deteriorating financial conditions of this program are threatening beneficiary access to its benefits. In fact, the nonpartisan Medicare Trustees Report reported that in 2007 the trust fund that finances virtually all Medicare initiatives will be insolvent by the year 2019. This means the total cost of Medicare expenditures will be less than the entire value of the Medicare trust fund. At the same time, other government health programs are growing at unsustainable rates and threatening to overrun many state budgets. If left unreformed, these health care costs will impose a crushing financial burden on our economy and fail in their promise to provide core benefits to those in the most need. One of the most important issues for Congress to focus on is managing the skyrocketing costs of health care and setting the Medicare program back on the path of long-term fiscal sustainability.
I believe that an essential part of improving quality while reducing overall costs involves remodeling the Medicare program to fit the needs of the beneficiary. I have been working in Congress to keep the government out of the doctor’s office and allow seniors and their doctors the freedom to decide what is best. While these steps are a good first start, more needs to be done to reign in out of control spending while ensuring seniors have access to the services they need.
H.R. 6110, A Roadmap for America’s Future.
For more than a decade, legislation has been offered in
Congress attempting to address Medicare’s financial
shortcomings. Some proposals suggest comprehensive reform
while others address only specific issues. While these
initiatives have met with mixed results, none have addressed
the underlying problem responsible for our current situation.
The third-party-payer, first-dollar-coverage health care model
that drives Medicare spending no longer meets the needs of
patients, doctors, hospitals, and governments. Earlier this
year, I introduced comprehensive health care reform
legislation that redesigns Medicare, protects beneficiaries’
access to health care services, and restores the fundamental
relationship between doctors and patients.
My proposal preserves the
current Medicare system for those individuals who are 55 years
or older. While the program’s fiscal crisis demands change,
I do not believe it is appropriate or necessary to force these
reforms on seniors who are retired or nearing retirement. For
those who are under age 55, my proposal restructures the way
in which beneficiaries interact with Medicare to provide them
with more direct control over health care decisions while
fulfilling the program’s of health care security.
Beginning in the year 2019, Medicare will provide seniors who
turn 65 that year with a voucher of at least $9,500 to
purchase a health care plan of their choosing. For those
seniors who are sicker, the amount of the voucher will be
increased to account for the increased medical costs they will
incur. Additionally, low-income seniors will also receive
additional assistance to cover their out out-of-pocket costs.
Seniors will receive a booklet of Medicare approved plans
along with their voucher to assist them in deciding which
coverage option to choose. This will be similar to the
Medicare & You pamphlet that beneficiaries already receive
each year under the current program. Seniors would not be
limited to the plans listed in this manual, but would have the
freedom to choose any plan they find that fits their needs.
Beneficiaries would receive a new voucher every year with its
value increasing to keep pace with changing medical
costs.
Medicare provides millions of seniors every year with access
to essential health care services. But unless Congress takes
action to help reign in out of control spending and reform the
program’s outdated policies, Medicare will not be there to
provide future generations the same health care security it
offers today. I look forward to working with my colleagues in
Congress to address these serious issues and restore the
promise of Medicare.
Medicare Reimbursements for Physicians.
Under current Medicare law, doctors providing health care services to Part B enrollees are compensated through a “fee-for-service” system, in which physician payments are distributed on a per-service basis, as determined by a fee schedule and an annual conversion factor (a formula dollar amount). The fee schedule assigns “relative values” to each type of provided service. Relative value reflects physicians’ work time and skill, average medical practice expenses, and geographical adjustments.
Medicare law requires that the conversion factor be updated each year. The formula used to determine the annual update takes into consideration the following factors:
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Medicare economic index (MEI)–cost of providing medical care;
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Sustainable Growth Rate (SGR)–target for aggregate growth in Medicare physician payments; and
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Performance Adjustment–an adjustment ranging from -13% to 3%, to bring the MEI change in line with what is allowed under SGR, in order to restrain overall spending.
Every November, the Centers for Medicare and Medicaid Services (CMS) announces the statutory annual update to the conversion factor for the subsequent year. The new conversion factor is calculated by increasing or decreasing the previous year’s factor by the annual update. Since 2003, Congress has chosen to override current law in order to prevent reimbursements from being cut as a result of the formula. In 2008, physicians were expected to receive a 10.1 percent decrease in Medicare reimbursements. On December 19, 2007 Congress acted to prevent this significant cut in physician reimbursements that severely threatened beneficiary access to doctors. Unfortunately, this legislation only provides funding to stave off this cut though June 30, 2008.
Unfortunately, the House recently considered legislation to postpone these cuts for an additional 18 months, however, this proposal also cut $13.6 billion from Medicare Advantage over five years - nearly $50 billion over 10 years. As a result of this legislation, while physician payments would have returned to normal, nearly 2.3 million seniors would have lost access to their Medicare Advantage plans. Despite my opposition, this legislation recently passed the House but was eventually defeated in the Senate. This proposal is similar to one that failed to pass the Senate earlier this year. A bi-partisan compromise has been developing in the Senate for several weeks that does not require eliminated benefits for seniors in order to restore physician payments. I, along with many of my colleagues, have called on the Senate to produce this compromise so that Congress can act swiftly and prevent any disruptions in care. I am hopeful that the Senate will act soon and a bill will presented to the President in the near future.
Other Key Health Care Initiatives
Health Savings
Accounts.
The high cost of health insurance is one of the leading problems facing individuals and small business owners. One important step towards giving employers and individuals more opportunities to manage their health care needs was the creation of Health Savings Accounts (HSAs). HSAs allow small business owners and individuals to purchase health coverage to fit their individual needs by allowing participants to set pre-tax dollars aside at their own discretion in order to save and pay for their health care costs. A HSA participant carries a high deductible insurance plan that is used primarily for serious illnesses, while routine medical costs, even Medicare costs, are paid for out of the individual's HSA. Individuals, employers, or even family members can contribute money to an HSA, and these accounts are portable from job to job. HSA-eligible plans can be carried over each year and are comprehensive, including benefits like prescription drug coverage, hospitalization, and doctor benefits. I recently authored several changes to the existing HSA regulations that will make these insurance vehicles more accessible to employers and more flexible for individuals. The number of HSA polices are expected to grow to 14 million by 2010.
Quality and Transparency
Reforms.
I believe the next step in reducing health-care costs is providing concise, accurate, and accessible information about the quality and costs associated with health care. In 2002, I requested a GAO study to investigate why Southeastern Wisconsin pays more for health care than other comparable markets. The report revealed that areas with the least competition among hospitals and health care providers had, on average, higher prices. We must provide information to consumers to help them make informed choices when it comes to their health-care needs.
Additional Information.
For more information on Medicare, please refer to the following
web sites:
Medicare
Information: www.medicare.gov
or 1-800-MEDICARE
Medicare Part D Plans in Wisconsin
Medicare
Enrollment Data
A
Roadmap For America's Future: http://www.house.gov/ryan/roadmap
www.americanroadmap.org
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