[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE PRESIDENT'S AND OTHER BIPARTISAN
PROPOSALS TO REFORM MEDICARE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
MAY 21, 2013
__________
Serial No. 113-HL04
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
DAVE CAMP, Michigan, Chairman
SAM JOHNSON, Texas SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas CHARLES B. RANGEL, New York
PAUL RYAN, Wisconsin JIM MCDERMOTT, Washington
DEVIN NUNES, California JOHN LEWIS, Georgia
PATRICK J. TIBERI, Ohio RICHARD E. NEAL, Massachusetts
DAVID G. REICHERT, Washington XAVIER BECERRA, California
CHARLES W. BOUSTANY, JR., Louisiana LLOYD DOGGETT, Texas
PETER J. ROSKAM, Illinois MIKE THOMPSON, California
JIM GERLACH, Pennsylvania JOHN B. LARSON, Connecticut
TOM PRICE, Georgia EARL BLUMENAUER, Oregon
VERN BUCHANAN, Florida RON KIND, Wisconsin
ADRIAN SMITH, Nebraska BILL PASCRELL, JR., New Jersey
AARON SCHOCK, Illinois JOSEPH CROWLEY, New York
LYNN JENKINS, Kansas ALLYSON SCHWARTZ, Pennsylvania
ERIK PAULSEN, Minnesota DANNY DAVIS, Illinois
KENNY MARCHANT, Texas LINDA SANCHEZ, California
DIANE BLACK, Tennessee
TOM REED, New York
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
TIM GRIFFIN, Arkansas
JIM RENACCI, Ohio
Jennifer M. Safavian, Staff Director and General Counsel
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HEALTH
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas JIM MCDERMOTT, Washington
PAUL RYAN, Wisconsin MIKE THOMPSON, California
DEVIN NUNES, California RON KIND, Wisconsin
PETER J. ROSKAM, Illinois EARL BLUMENAUER, Oregon
JIM GERLACH, Pennsylvania BILL PASCRELL, JR., New Jersey
TOM PRICE, Georgia
VERN BUCHANAN, Florida
ADRIAN SMITH, Nebraska
C O N T E N T S
__________
Page
Advisory of May 21, 2013 announcing the hearing.................. 2
WITNESSES
Joseph R. Antos, Ph.D., Wilson H.Taylor Scholar in Health Care
and Retirement Policy, American Enterprise Institute........... 6
Joe Baker, President, Medicare Rights Center..................... 24
Alice M. Rivlin, Ph.D., Co-Leader, Bipartisan Policy Center
Health Care Cost Containment Initiative, Senior Fellow,
Economic Studies, Brookings Institution........................ 15
SUBMISSIONS FOR THE RECORD
AARP, statement.................................................. 59
AFSCME, statement................................................ 63
Alliance for Retired Americans, statement........................ 66
American Association of Bioanalysts, statement................... 69
Center for Medicare Advocacy, statement.......................... 71
National Association for Home Care & Hospice, statement.......... 82
National Association of Chain Drug Stores, statement............. 93
National Committee to Preserve Social Security and Medicare,
statement...................................................... 98
Pam Casper, statement............................................ 100
Partnership for Quality Home Healthcare, statement............... 102
Partnership for the Future of Medicare, statement................ 109
Robert N. Young, statement....................................... 112
Shannon Dwyer, statement......................................... 116
St. Joseph Health, statement..................................... 117
Texas Association for Home Care and Hospice, statement........... 119
Torchmark Corporation, statement................................. 121
United Auto Workers, statement................................... 124
United Steelworkers, statement................................... 127
Virginia Association for Home Care and Hospice, statement........ 131
Visiting Nurse Associations of America, statement................ 133
THE PRESIDENT'S AND OTHER BIPARTISAN
PROPOSALS TO REFORM MEDICARE
----------
TUESDAY, MAY 21, 2013
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Health,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 1100, Longworth House Office Building, Hon. Kevin Brady
[Chairman of the Subcommittee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HEALTH
CONTACT: (202) 225-3943
FOR IMMEDIATE RELEASE
Tuesday, May 14, 2013
No. HL-04
Chairman Brady Announces Hearing on
the President's and Other Bipartisan
Proposals to Reform Medicare
House Committee on Ways and Means, Subcommittee on Health Chairman
Kevin Brady (R-TX) today announced that the Subcommittee on Health will
hold its first in a series of hearings to explore the bipartisan
proposals, including those contained in President Obama's Fiscal Year
2014 Budget to reform Medicare. This hearing will focus on review of
proposals to change cost-sharing for services received under the
Medicare program. The hearing will take place on Tuesday, May 21, 2013,
in 1100 Longworth House Office Building, beginning at 10:00 a.m.
In view of the limited time available to hear from witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Committee and for
inclusion in the printed record of the hearing. A list of witnesses
will follow.
BACKGROUND:
Created in 1965, the Medicare benefit was originally modeled on the
Blue Cross Blue Shield plans that were prevalent throughout the Nation
at that time. However, since its creation, Medicare's cost-sharing has
been largely unchanged and has not kept up with changes in the growth
of the Medicare population or how health care is delivered. The current
Medicare spending trajectory is unsustainable and has led the Medicare
trustees to estimate that the Part A trust fund will be bankrupt in
2023 and insolvent in 2024. The Medicare Health Insurance (HI) trust
fund has not met the trustee's formal test of short-range financial
adequacy since 2003. The Supplemental Medical Insurance (SMI) trust
fund is considered adequately financed, however, this is a result of
the SMI trust fund being reliant on general revenue transfers. By 2037,
the Medicare trustees estimate general revenue transfers will account
for 56 percent of Medicare outlays.
To address these and other concerns, the Obama Administration has
identified several key policies to modify cost-sharing within the
Medicare program. In the President's FY14 budget, the Administration
focused on three key cost-sharing policies: (1) increasing income-
related premiums for Medicare Parts B and D; (2) increasing the annual
Medicare Part B deductible; and (3) establishing a home health copay.
The President's FY14 budget estimates that these three policies will
save $54 billion over 10 years. In addition to the President's budget,
several other bipartisan policy organizations, such as the Bipartisan
Policy Center, The Moment of Truth project, and the Medicare Payment
Advisory Commission, have collectively made recommendations to alter
Medicare's cost-sharing policies as a means of extending the longevity
of the program.
In announcing the hearing, Chairman Brady stated, ``The current
Medicare spending trajectory is unsustainable. There is bipartisan
recognition that modifying seniors' cost-sharing is appropriate and can
be done in a way that maintains access to critical healthcare services.
Medicare is fast going broke and the time to act to save this program
is now.''
FOCUS OF THE HEARING:
The hearing will review policies that modify beneficiary cost-
sharing within the Medicare program.
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---------
Chairman BRADY. Subcommittee will come to order. I want to
welcome everyone to today's hearing on the President's budget
and other bipartisan proposals to reform Medicare. This is the
fourth hearing for our Subcommittee this Congress, and the
second Ways and Means Committee hearing in a series focused on
proposals to reform Medicare and Social Security. During our
first hearing of Congress we focused on redesigning the
Medicare benefit package to make it more rational, more
responsive to seniors and Medicare patients. Today's discussion
is an extension of that hearing discussing the details around
these three specific policies:
One, increasing income-related premiums for Medicare Parts
B and D; two, increasing annual Medicare Part B deductibles,
and three, establishing a home health copay. We focused on
these three policies because they are included in the
President's 2014 budget and supported by several bipartisan
organizations. All too often recently, discussions surrounding
finding Medicare savings have come under the context of a
``grand bargain'' or a ``super committee.'' As the committee of
jurisdiction over these critical topics, we have an obligation
to discuss them publicly and determine how best to craft policy
in these areas. That is why we are holding this hearing today.
The President's budget estimates that these three policies
will save $54 billion over 10 years. These are real savings for
a program that is facing bankruptcy in 10 short years. Asking
seniors to pay more when they have the means to do so is not a
new concept. In 2003, Republicans led the charge with income-
related premiums for Medicare Part B in the Medicare
Modernization Act, which ensured that seniors have access to
accessible, affordable, high-quality medicines through free
market competition for their business.
In 2010, Democrats included income-related premiums in the
Medicaid program, Health Exchanges, and increases for Medicare
Part D in the Affordable Care Act, known as ObamaCare.
Throughout Federal programs, there has been recognition that
some seniors can contribute more and some seniors need
additional assistance. The growth of the retiree population has
been and will continue to be a tremendous source of stress on
Medicare's finances.
When Medicare was enacted in 1965, the average life
expectancy was 70.2 years. It was anticipated that Medicare
would cover an average person's health expenditures for the
last 5.2 years of their life. In 2010, the average American
lived to the age of 78.4, which means Medicare covered the last
13.5 years of life, a 158 percent increase. Yet, we have not
made changes to the Medicare benefit structure to address this
increase.
Now, I know that some may want to reject these policies out
of hand and may suggest that the overall Medicare spending for
seniors has decreased. They may contend that this means there
is less of a need to find Medicare savings. But I, too, am glad
to see Medicare spending is down, but the program is headed
toward bankruptcy in 10 short years. Burying our heads in the
sand and waiting for the looming crisis to overwhelm us will
only force future Congresses to take more drastic measures.
Even the Medicare trustees recognize the growing challenges
of Medicare's financial future as the baby boomers enter
Medicare. Even if per-senior spending decreases, that will not
help the sustainability of the trust fund when the number of
new seniors coming into the program begins to dramatically
increase.
And simply cutting providers is not the answer. In fact,
the Medicare trustees warn because of cuts already in law, 15
percent of our Part A providers will be unprofitable by the end
of this decade. Roughly 40 percent would be unprofitable by
2050. The actuaries warn that these cuts will force providers
to withdraw from providing services to our Medicare seniors and
patients.
Finally, instead of simply focusing on how much money a
policy might save Medicare or how many more beneficiaries will
pay more, I challenge this Committee and our witnesses today to
think differently. The question we should be asking ourselves
is, how can we act now, this year, to extend Medicare solvency?
If not permanently, how about for an additional 10 years beyond
2023? Why not extend its life an additional 20 years? We owe it
to current and future seniors to examine and pursue these
critical goals. It will require hard decisions, yes. But making
them now will ensure a vibrant Medicare for generations to
come.
Before I recognize Ranking Member McDermott for the
purposes of an opening statement, I ask unanimous consent that
all Members' written statements be included in the record.
Without objection, so ordered.
I now recognize Ranking Member McDermott for his opening
statement.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
There was a time in the Congress when the procedure was
that the President proposed and the Congress disposed. And so I
would just put a caveat on anything that has been proposed by
the White House that that is not holy writ brought down from
the mountain by Moses. That is to be looked at by the Congress
and we will make a decision.
The Majority keeps holding hearings on supposedly
bipartisan reform ideas, but over and over it is the same song:
Cut the benefits, shift the costs to the poor and the elderly.
These reforms were offered by the President in a spirit of a
grand, balanced bargain. That package has shared sacrifice and
included some spending cuts and revenue increases, but when it
is cherry picked, when you catch the low-hanging fruit, they
are nothing more than partisan cuts. How many times and how
many ways can we rehash the same old idea? We have been trying
to get blood from a stone.
Fifty percent of the Medicare beneficiaries in this country
have annual incomes at or below $22,500. Our seniors, our
parents, our grandparents, 50 percent of them are living barely
above the poverty line. They should not be our go-to source for
savings.
We are long overdue on fixing the physician payment system
and I sincerely hope we can work in a bipartisan way to do it.
In particular, we need to address inequities in payment for
primary care physicians, and we need to do it in a way that
encourages the most efficient delivery of health care so we can
be pushing more of the right kind of care, not just more care
overall.
Now let me be clear, and I am speaking as a physician here:
It is the physicians who are driving the healthcare utilization
in the system, not the beneficiaries. The notion that
beneficiaries have to have more skin in the game to encourage
smart healthcare shopping is ridiculous. When your doctor tells
you you need an extra test, or to come back in 2 weeks, how
many of you poll other doctors to see if they agree? Of course
not. There is a major information asymmetry between doctors and
patients and a necessity to trust the physician's judgment. Few
beneficiaries can distinguish between necessary and unnecessary
care, and in the face of more cost-sharing, they may forego
both.
I would like to submit for the record a recent letter from
the National Association of Insurance Commissioners in which
they state that they were unable to find evidence that cost-
sharing encouraged appropriate use of healthcare services. In
fact, they found that cost-sharing would result in delayed
treatments that could increase costs and result in negative
health outcomes.
As it is, Medicare households pay nearly 15 percent of
their income on health care as compared to non-Medicare
households, which pay 5 percent. As one of our witnesses, Joe
Antos, points out in his testimony, higher income Medicare
beneficiaries already pay more into the system, both through
higher premiums and because they have paid more payroll taxes
over the course of their working lives.
As for the notion of home healthcare deductible, these
beneficiaries are some of the frailest individuals in Medicare.
Why do Republicans insist on using this Committee to go after
them rather than building on the ACA's tools to fight fraud in
this section?
It is fundamentally untrue that we have to cut Medicare in
order to save it. If we are looking for offsets, we could focus
on pharmaceutical companies' windfall from the Republicans'
Part D drug benefit. Creating a drug rebate to capture that
windfall would save $141 billion, the entire cost of the SGR
fix. We could look to the providers with higher Medicare
margins. MedPAC tells us that those margins mean payment rates
are too high. Or we could look to the savings from winding down
the wars in Afghanistan and Iraq. There are plenty of other
savings to be found that don't involve jeopardizing the health
and security of some of our most vulnerable Americans.
I look forward to this hearing and the witnesses'
testimony. I think that we are faced with a question that we
are going to have to face at some point. That is, how do you
control costs in the healthcare system? I yield back.
Chairman BRADY. Thank you.
And without objection, the document will be included in the
record.
Today we will hear from three witnesses, Joseph Antos, the
William H. Taylor Scholar in Health Care and Retirement Policy
at the American Enterprise Institute; Alice M. Rivlin, the
Senior Fellow of Economic Studies at the Brookings Institution;
and Joe Baker, President of the Medicare Rights Center.
I want to thank you all on behalf of Mr. McDermott and
myself, thank you all for being here today. I look forward to
your testimony. You will all be recognized for 5 minutes for
the purposes of providing your oral remarks.
Mr. Antos, we will begin with you.
STATEMENT OF JOSEPH R. ANTOS, PH.D., WILSON H. TAYLOR SCHOLAR
IN HEALTH CARE AND RETIREMENT POLICY, AMERICAN ENTERPRISE
INSTITUTE
Mr. ANTOS. Thank you, Mr. Chairman.
Medicare is on a fiscally unsustainable path. Seventy-six
million members of the baby boom generation will turn 65 and
enroll in Medicare over the next 2 decades. According to AARP,
that is about 8,000 baby boomers every day. The resulting costs
will place a heavy strain on the Federal budget, crowding out
other spending priorities and burdening younger generations,
and for that matter burdening older generations who will have
to pay the rising costs of the Medicare program.
Comprehensive reforms are needed to ensure that Medicare
will be able to continue to meet the needs of its beneficiaries
over the long term. Bipartisan commissions, including the
Bowles-Simpson commission, the Bipartisan Policy Center, the
Medicare Payment Advisory Commission, and the Engelberg
Center's Bending the Curve project concur on several principles
that should form the basis of Medicare reform. One of those
principles is addressed today, and that is the need to reform
cost-sharing responsibilities to promote cost awareness and
improve equity in the program.
Today's hearing focuses on three proposals advanced by the
President: raising the Part B deductible, adding a copayment
for some home health episodes, and increasing premiums for
higher income beneficiaries. These proposals, as the Chairman
said, these proposals yield $54 billion in budget savings over
the next decade. That is less than 1 percent of the $7.9
trillion that Medicare will spend over the same period.
These are modest changes, certainly financially, but they
could lead to bipartisan discussions of broader reforms to
protect Medicare for future generations. Medicare reform should
create a benefit that is easy to understand and that protects
seniors from catastrophic costs. That is a principle that I
think is almost universally agreed, but the Medicare program is
the way it is today for historical reasons.
The bipartisan commissions support proposals to simplify
traditional Medicare's confusing benefit structure. If patients
know what a health service will cost them, they will be more
informed about their alternatives and will be better able to
decide, with their physicians, about the best course of action.
Replacing the multiple deductibles and complicated copayment
structure in traditional Medicare with a simpler design typical
of private insurance is one step in this reform. Limiting what
Medigap plans cover so that beneficiaries pay some of the
upfront costs themselves is another part of this reform.
The President's budget proposals are much narrower. The
Part B deductible would be increased 75 years over 3 years. The
new copayment would be levied on certain home health episodes
that were not preceded by an inpatient stay. Both proposals
would apply only to new Medicare enrollees as of 2017. Those
proposals have been criticized as imposing a burden on
beneficiaries. But in fact 90 percent of beneficiaries have
supplementary coverage through Medigap, retiree plans, or
Medicaid. Consequently, most beneficiaries have nearly complete
coverage against out-of-pocket costs.
That fosters inefficiency in Medicare and adds to the costs
of the program, which are borne by beneficiaries and taxpayers.
I might add that for those who buy Medigap policies, they are
simply paying it through another mechanism. They are still
paying the cost.
So a more equitable phase-in than the President proposes
would provide further protection for beneficiaries who do not
already have supplementary coverage. The cost-sharing provision
should be applied to all beneficiaries, not only to new
enrollees, but exceptions could be made based on a
beneficiary's ability to pay or health status, rather than the
year of their enrollment.
The third proposal increases income-related premiums under
Part B and Part D. This extends the principle that those with
greater means should provide more support for the program, a
principle embraced by Republicans and Democrats alike. This
principle was embodied in Medicare at its beginning in 1965.
High earners pay more in payroll taxes, as Mr. McDermott
pointed out, and income taxes throughout their work lives. That
started in 1966, and we still have this principle today.
How much they should pay is an ethical judgment, but if the
budget resources are not available to maintain an adequate
level of Medicare benefits for every senior, then we should
care first for those who cannot afford to cover the costs
themselves.
Increasing premiums reduces the fiscal pressure faced by
Medicare, but it does not address the fundamental defects that
drive up program costs. Higher premiums do not change the
financial incentives of fee-for-service Medicare. They do not
change the way beneficiaries use services, or the way services
are delivered. More fundamental reforms that address Medicare's
cost drivers are needed.
Any significant Medicare reform will take time to develop
and implement. It is better to start that process now rather
than delay until the fiscal crisis is upon us. Abrupt actions
forced by crisis harm seniors and risk the long-term stability
of the program. Proposals advanced by the President, as well as
proposals from the independent commissions, potentially provide
a basis for bipartisan agreement and the start of a process
that can preserve and improve Medicare for future generations.
Thank you.
[The prepared statement of Mr. Antos follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
--------
Chairman BRADY. Thank you, Mr. Antos.
Ms. Rivlin.
STATEMENT OF ALICE M. RIVLIN, PH.D., CO-LEADER, BIPARTISAN
POLICY CENTER HEALTH CARE COST CONTAINMENT INITIATIVE, SENIOR
FELLOW, ECONOMIC STUDIES, BROOKINGS INSTITUTION
Ms. RIVLIN. Thank you, Chairman Brady and Ranking Member
McDermott.
Let me start with a basic question: Why reform Medicare?
The main reason for reforming Medicare is not that the program
is the principal driver of future Federal spending increases,
although it is. The main reason is not that Medicare
beneficiaries could be receiving much better coordinated and
more effective care, although they could. The most important
reason is that Medicare is big enough to move the whole
American health delivery system away from fee-for-service
reimbursement, which rewards the volume of services, and toward
new delivery structures which reward quality and value.
Medicare can lead a revolution in healthcare delivery that will
give all Americans better health care at sustainable cost.
This Committee knows very well that health care in the
United States is expensive and getting more so. Moreover,
quality is uneven, and much care is duplicative, wasteful, and
uncoordinated. For decades, however, reformers have focused
less on cost containment and quality improvement than on
closing the gaps by widening healthcare insurance coverage. But
now that the near universal coverage has been ensured by the
Affordable Care Act, attention should shift to improving
quality and value of healthcare delivery for all and containing
cost growth.
I recently had the privilege of co-leading with former
Senators Daschle, Domenici and Frist the Bipartisan Policy
Center's report on the future--on cost containment in health
care. We reached a consensus on a comprehensive package of
reforms that span the entire healthcare system with a
particular focus on Medicare and Federal health-related tax
policy. We believe that if enacted together, and that is
important, these reforms will improve healthcare quality for
patients and families and lower overall spending throughout the
healthcare system.
Budget savings were not our primary objective, but we
believe that these reforms would achieve approximately $300
billion in net savings over the next 10 years and about a
trillion in the following 10 years. These saving estimates are
net of the cost of fixing the dysfunctional sustainable growth
rate physician payment formula.
Now, as has been noted, our bipartisan foursome were not
mavericks working in isolation. The Simpson-Bowles commission,
the Bending the Curve project at Brookings, and indeed the
President's budget have endorsed many of the same proposals. It
seems that a bipartisan consensus is emerging on using Medicare
and tax reform to lead the transition of the health system away
from fee-for-service and toward quality and value-based care.
Briefly, our recommendations included preserving the
guaranteed health coverage promised in traditional Medicare;
modernizing the benefit package for Medicare to create a cap on
beneficiary cost-sharing, a catastrophic cap which we don't now
have; combining the Part A and B deductibles; and exempting
physician visits from the deductible and preventive care from
all cost-sharing. We would limit Medicare supplemental
coverage, and we would protect low-income beneficiaries by
helping them with cost-sharing up to 150 percent of the poverty
line. We would raise Part B premiums for higher-income
beneficiaries in a slightly different way than the President
does.
Most importantly, we would create Medicare networks, an
improved version of the affordable care organization
demonstrations in the Affordable Care Act. Medicare networks
would be provider-led and enrollment-based, and would better
provide coordinated care. Beneficiaries and providers would
have incentives to join them, and reimbursement would be
increasingly reflective of measures of quality and value.
We would replace the SGR with a better structure, and we
would increase competition among health plans in Medicare
Advantage by implementing a new competitive bidding structure
that would result in lower payments and helping beneficiaries
navigate plan choice on a user-friendly website.
We would also limit the tax-favored treatment of expensive
health insurance products by capping the exclusion of employer-
paid benefits. And we would have a cumulative limit on the
increase in Medicare spending for each of the three categories
that we propose.
This would not be an easy set of reforms to enact or
implement, Mr. Chairman, but we believe it would improve the
care delivery under Medicare and save money at the same time.
[The prepared statement of Ms. Rivlin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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Chairman BRADY. Thank you, Ms. Rivlin.
Mr. Baker.
STATEMENT OF JOE BAKER,
PRESIDENT, MEDICARE RIGHTS CENTER
Mr. BAKER. Thank you, Chairman Brady, Ranking Member
McDermott, and distinguished Members of the Subcommittee on
Health, for the opportunity to testify this morning about
proposals to modify Medicare cost-sharing. Medicare Rights
Center is a national nonprofit organization dedicated to making
sure that people with Medicare get access to affordable health
care. We counsel about 15,000 people a year and their families
and through our education initiatives help about 700,000
others.
Proposals to increase the Medicare Part B deductible,
introduce a home health copayment, and further income-relate
Medicare premiums share a common pernicious theme: Each plan
achieves savings by shifting cost to the very people Medicare
was designed to protect.
Cost shifting to Medicare beneficiaries doesn't solve the
underlying problem with our healthcare system: the long-term
challenge of systemic healthcare inflation and costs, which
threatens both the public and the private spheres. We believe
that Congress should focus its attention on reforms that
diminish wasteful Medicare spending and encourage the
transformation of our healthcare system from one that rewards
high-volume care to one that rewards high-value care.
To this extent, we support the proposals that would shift
no costs, like advancing some of the delivery system reforms in
the Affordable Care Act, restoring Medicare drug rebates,
equalizing reimbursements to Medicare Advantage plans, and
other proposals.
Today, as Ranking Member McDermott said, half of all people
with Medicare, 25 million older adults and people with
disabilities, are living on annual incomes of $22,500 or less
and spending about 15 percent of their household income on
healthcare costs as opposed to 5 percent for those under age 65
who are not on Medicare. These people with Medicare cannot
afford to pay more for health care. Indeed, the most common
call to our help line comes from a Medicare beneficiary having
difficulty affording a treatment or a medicine. Further,
forcing so-called wealthy beneficiaries to pay more for
Medicare translates into a premium hike on middle-class
retirees and people with disabilities while also fracturing one
of our Nation's most successful social insurance programs.
Added cost-sharing leaves many beneficiaries with no choice
but to self-ration care. Faced with higher upfront costs,
beneficiaries living on fixed incomes are likely to forego
doctor's visits, a decision made on affordability, not on
healthcare needs. Almost 40 years of data consistently
demonstrates that while higher out-of-pocket costs certainly
deter healthcare utilization, it deters utilization of needed
care as well as unneeded care indiscriminately. The equation is
simple: Higher out-of-pocket costs will require many Medicare
beneficiaries to go without, either going without heating or
rent payments, or going without needed medical care. And in the
long run, reduction in the use of medically necessary care can
increase healthcare spending through the increased likelihood
of emergency room visits, ambulance rides, and hospital stays.
Increasing the Medicare Part B deductible, either alone or
by combining the Part A and Part B deductible, is one of
several proposals that adhere to the faulty logic that added
cost-sharing is an appropriate tool to limit healthcare service
use. Most alarming about this proposal is that these added
costs would impose greater hardship on beneficiaries with low
fixed income. And with regard to the point about supplemental
insurance covering this, many who would also increase the
deductible would also decrease the level of coverage in Medigap
or other Medicare supplemental plans.
Similarly, introducing a home health copayment would be
most damaging to the most vulnerable--the poorest, the oldest
and the sickest. The typical home health user is an older,
lower-income woman with one or more common or chronic
conditions. Beneficiaries who need ongoing care to remain in
their homes and not be institutionalized in nursing homes or
other types of care are most at risk of skipping needed care if
forced to pay this copayment.
Many policymakers suggest that wealthier beneficiaries can
contribute more in Medicare costs, specifically through higher
premiums. Yet higher-income beneficiaries already pay higher
premiums, as we have heard. Achieving savings of any scope
under these proposals requires reaching down the income
spectrum. Recent analysis shows that individuals making $47,000
per year would pay more under current proposals. And that is a
slippery slope. It could get lower and lower as this is looked
at.
So we implore you to reject proposals that fail to build a
better healthcare system, instead only achieve ephemeral
savings by shifting costs to people with Medicare. Thank you
for this opportunity to testify.
[The prepared statement of Mr. Baker follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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Chairman BRADY. Thank you, Mr. Baker.
First to Mr. Antos, Ms. Rivlin. Medicare is so important.
It is in deep trouble. Lawmakers like to bury their heads in
the sand on these tough issues. How important is it that we act
this year to either save Medicare for the long-term or to take
meaningful steps to extending its life, for example, another 20
years or more? Mr. Antos. Ms. Rivlin.
Mr. ANTOS. Well----
Chairman BRADY. Act now.
Mr. ANTOS. Acting now is a critical matter. Congress has
had plenty of opportunity to take appropriate actions over
many, many years. But in fact we still face the fiscal problems
and the risk to the Medicare program.
Chairman BRADY. I have a couple more questions for you, so
your point is act now?
Mr. ANTOS. Act now, but act responsibly.
Chairman BRADY. Got it.
Ms. Rivlin.
Ms. RIVLIN. I would say act now, but for the principal
reason that you can use Medicare to reform the whole system.
Chairman BRADY. Yeah. Yeah. Do you see, as you look at
these issues and the President's policies in his budget,
income-related premiums for Medicare Parts B and D, the Part D
deductible establishing a home health copay? The President has
suggested this begin 4 years from now, 2017. Ms. Rivlin, do you
see any reason we should wait that long?
Ms. RIVLIN. I don't think you need to wait until 2017. You
need a little time to get them in place and----
Chairman BRADY. Yeah. Set them up.
Ms. RIVLIN. Set them up. So it can't be 2014. I think we
suggested 2016 as a reasonable year. But again, I wouldn't do
these in isolation. Do them as a package.
Chairman BRADY. Got it, makes sense.
Mr. Antos, you emphasized broad reforms of combining
Medicare Parts A and B. This important topic, the Subcommittee
has been looking at and will continue to explore. Would you
consider the policies we are discussing today to be smaller
reforms on the pathway to perhaps bigger ones?
Mr. ANTOS. Well, they could be on the pathway to a
discussion about combining A and B and more sensible reforms of
Medicare. But these specific proposals I don't think take us in
that direction. They are simply budget cuts.
Chairman BRADY. Got it.
Ms. Rivlin, you--and Mr. Antos, you both recommended
establishing a home health copay so that patients determine the
value of those services that are being provided to them. Some
critics have warned it would deter many vulnerable Medicare
beneficiaries from accessing needed care, maybe increase
returning to hospitals. Can you respond to those criticisms?
Mr. ANTOS. Well, certainly, the President's proposal
follows the Medicare Payment Advisory Commission's precaution
and restricts this to episodes that have at least five visits
and are not preceded by an inpatient stay.
Chairman BRADY. So you are not coming from the hospital.
Mr. ANTOS. You are not coming from the hospital.
Nonetheless, this is a serious matter. And the problem with a
lot of Medicare policy is that it is very heavy-handed. We need
to have a more subtle policy or we need to have a better
management of patient care.
Chairman BRADY. Should we adjust it to the income of the
Medicare senior?
Mr. ANTOS. We certainly should recognize the extra burden
that this is going to cause on the minority of patients who
don't have the money.
Chairman BRADY. Ms. Rivlin, your thoughts?
Ms. RIVLIN. Home health care is liable to abuse, and I
think that some cost-sharing is appropriate. In our plan, we
actually help the lower-income beneficiaries cope with total
cost-sharing, including any new cost-sharing, so it wouldn't be
subject to that criticism.
Chairman BRADY. Yeah. And your belief is we are looking at
value over volume. Is Washington the best one to determine what
that value of service is, or are patients actually using them,
you know, who have some role in some cost-sharing, small or
large, according to ability to pay? Is that where we see value
more likely to be determined?
Ms. RIVLIN. Well, when we talk about value and quality, we
envision a set of measures that will eventually govern the
reimbursement as we get more experience with them. I don't
think you entirely rely on patients, as Dr. McDermott has
suggested, to sort out what is quality. The point of cost-
sharing is to give patients some reason to stop and think,
unless they are very low income, about whether they need to go.
Chairman BRADY. That makes sense.
Mr. Baker, I just want to understand: You absolutely reject
the President's proposals to begin some of these reforms in
Medicare?
Mr. BAKER. Yes, we think that the cost-sharing as set is a
blunt instrument and one that would visit some harm on
beneficiaries.
Chairman BRADY. Okay. Thank you.
Mr. McDermott.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
I didn't take economics and so I am always pleased with the
chance to learn from economists how they think. You take the
average person is 78 years old, and he or she is living on
$22,000 and spending about $3,000 on average, 15 percent, on
their medical expenses, okay. So they are already spending a
big chunk out of it.
Now, we are going to impose a tax on them. We are going to
tax them--we are going to call it a premium increase, but it is
a tax. It is a tax on the seniors that we are putting on here.
And I want to understand from the economist's point of view how
imposing that tax on a 78-year-old senior who is living on
$22,000 and spending $3,000 already on health care, how is that
going to change the delivery of the healthcare system to
deliver quality instead of quantity?
I mean, I am trying to think of Mr. Johnson sitting there
and saying, well, the doctor said I should come back and have
my blood pressure checked, and it is going to cost me X number
of dollars and so forth, and so I am not going to go. Or I am
going to go because the doctor told me to. How does this change
the cost of overall Medicare by putting a tax on seniors of
another 50 bucks a month?
Ms. RIVLIN. That proposal is not what I--tax on seniors of
50 bucks a month is not what I am advocating.
Mr. MCDERMOTT. You are not talking about the melding of the
Part A and Part B?
Ms. RIVLIN. We are.
Mr. MCDERMOTT. You are. So that means that the money that
they pay will be more per month, right?
Ms. RIVLIN. Let me finish. We do not propose a net increase
in beneficiary cost-sharing. The package that we would have,
and it is a package, would reduce the cost-sharing for low-
income beneficiaries, increase it at the top. It would also
make some very important changes in the benefit package that
would say no deductible for going to the doctor ever, and no
cost-sharing at all for preventive care, and a cap on out-of-
pocket spending. All of that is helpful to your average and
below beneficiary.
Mr. MCDERMOTT. So then you are going to put it all on the
richer people, that is the idea. Since it is not going to cost
the poor people more, it has to cost the richer people more, is
that it? So you are putting the tax on the people above----
Ms. RIVLIN. Well, we are increasing the Part B premium,
yes, for higher-income people. There is already an income
relation, and we would lower the thresholds for that, but not
to levels where people are in need.
Mr. MCDERMOTT. When does it tip over into being a welfare
system? If you are poor you get it for free; if you are rich,
you have to pay for it. I mean, that is what we have now in the
healthcare system in this country. If you are poor, you go to
Medicaid, right? Or you just walk into the emergency room and
get taken care of. The rest of us pay for it, and we are paying
1,000 bucks a year for the cost of the uncompensated care,
presently. What you are doing is just shifting it to the top,
is that what you are saying?
Ms. RIVLIN. That is part of what I am saying, but remember,
we don't pay for Part B. Right now the premiums cover only 25
percent of the cost of Part B. We would like the premiums to
cover a somewhat higher share, and we would do that by raising
the premiums for people like me. I am a beneficiary of Medicare
who can afford to pay it.
Mr. MCDERMOTT. Mr. Baker, your view of this whole process?
Mr. BAKER. Well, I think whenever you are talking about
shifting the benefit, especially in the context of deficit
reduction or for paying for other things, you are looking for
savings. And in that context, even if you are protecting lower-
income people----
Mr. MCDERMOTT. You are looking for savings or you are
looking for more revenue?
Mr. BAKER. Well, you are looking for revenue for the
Federal budget, of course.
Mr. MCDERMOTT. So it is basically a tax.
Mr. BAKER. It is a tax.
Mr. MCDERMOTT. You are taxing somebody to get more revenue
into the system.
Mr. BAKER. It gets more revenue into the system, and I
think that the problem is, it doesn't solve the underlying
problem, as I said, which is the healthcare costs themselves
and inflation in that market, and it is kind of a slippery
slope. So once you start charging, say, people at $60,000 or
$85,000 a year or more, and you can argue whether that is a
wealthy individual when you look at our Tax Code, not
necessarily as wealthy, of course, as someone at 450 or a
million dollars where tax rates start to go up. But even for
folks that are in that middle-income range, they do not qualify
for low-income protection. They are strapped.
So, you know, you are looking at folks that are the most
vulnerable, that have the least control over their utilization
of health care, because as you had mentioned, once they get to
the doctor and they are in the healthcare system, they are
moving through that system. They are following doctor's orders.
And I think that is where the incentives need to be placed on
controlling care, through accountable care organizations, some
other mechanisms I think we all see as appropriate.
Mr. MCDERMOTT. Thank you.
Chairman BRADY. Thank you.
Mr. Roskam is recognized for 5 minutes.
Mr. ROSKAM. Thank you, Mr. Chairman.
You know, it is interesting to take a step back and look at
the trend and the history of this discussion. So the trend
would suggest that income-related premiums and the discussion
around them are here to stay. If you look at 2003, the decision
by House GOP at that point to move forward on Part D and Part
B; the decision by the Democrat majority in 2010 to move
forward with similar themes as it relates to Medicaid and
health exchanges in Part D; the decision of the Obama
Administration, even if it is de minimis, they are
acknowledging in their budget that it is here to stay.
So, Mr. Baker, I think that you are making yesterday's
argument. Yesterday's arguments, they are nostalgic, but I
think that the entire question, these numbers are so big, they
have really eclipsed. Mr. McDermott raised this question about
the economics of this, and that is sort of the wonder of it
all, isn't it? That if you give patients choices, and not
cutting out the legs from underneath the vulnerable that he is
defending today, as well he should, but you look at the success
of Part D, for example, a lot of the themes that we have heard
in terms of criticisms of income-related premiums, we have
heard those echoes in the past, and that was the claim that
Part B was going to sort of lead to a very difficult situation,
when as we all know, the data suggests just the opposite.
Incredibly high satisfaction rate among seniors, you know,
savings that have come in well under, you know, by 45 percent
under the expectations. So that is part of the power of giving
people choices and the ability to move forward.
Mr. McDermott mentioned a minute ago the idea of a senior
being told, well, chase this down, you know what I mean, and
come back and double-check with your physician. Part of the
other story, though, to complete the picture is, many times if
you are told by a physician to get an MRI, or whatever it
happens to be, right now the system doesn't create an
environment where you have much interest in trying to figure
out who is doing the most efficient MRI. Where is the best,
cheapest, and easiest, as opposed to the one that you just end
up in?
Dr. Rivlin, can I ask you a question? With that sort of
predicate, you made an interesting statement, and you said that
the driving opportunity right now take the debt--and it is a
pretty provocative thing. You said the debt is a big question;
set it aside. A more effective healthcare system is
interesting; sort of set it aside. But you are telling this
Committee and this Congress that you have such a big
opportunity right now that you can have a transformational
moment as it relates to Medicare. What did you mean by that?
Ms. RIVLIN. The rising costs are not just in Medicare. They
are in the whole system. And one of the culprits is the fee-
for-service reimbursement system, which does, not surprisingly,
reward more services, more volume, rather than coordinating
care and rewarding value and quality.
We think that the accountable care organizations, we all
think that accountable care organizations should be
strengthened, provider-led networks that will take care of the
whole patient, coordinates the care, and we think do it on a
better, a higher quality basis, and at a lower cost.
Now, time will tell whether that is right, but there is a
strong feeling among health policy analysts that it is time to
use Medicare to move the whole system off of fee-for-service.
Mr. ROSKAM. Thank you. I yield back.
Chairman BRADY. Thank you.
Mr. Pascrell is recognized for 5 minutes.
Mr. PASCRELL. Thank you, Mr. Chairman.
Ms. Rivlin, I think you have hit the nail on the head when
you talk about Medicare and the whole system. Because I think
one of the major problems we had in putting the ObamaCare
together, in writing out the law, and it is voluminous pages,
we have all heard, was that we often lose track that the person
who is over 65 years of age many times has the same kinds of
problems that a couple of 45 years of age have. And we have
missed the point on this thing. When you shift costs, when you
are shifting costs, as you laid out, you are not changing the
cost, you are not lowering the cost. It is like the person who
doesn't look at his hospital bill because it is covered,
because I have insurance.
This moves the cost higher as well. I mean, many medical
people don't want us to be knowledgeable of what is in the
bill. And let's face it and let's say it like it is. I
understand my colleagues on the other side continue to say that
these proposed additional costs to beneficiaries are bipartisan
proposals, I will have you know. But we must remember that the
President offered the proposal in the context of a broad, large
deficit-reduction package that requires both spending cuts and
increased revenues.
We also need to remember that reform to the Medicare
program is already underway. Why we will not admit to that,
some on my side, and some on the other side, is beyond me. When
we put the Affordable Care Act together, the purpose of that
was to look at, one of the specifics was Medicare and to reduce
the cost.
And already, already, what we have done is the following:
We have had entitlement change. We won't admit it. If you have
Medicare, you qualify for an annual wellness visit, mammograms,
other screenings for cancer and diabetes, important preventive
care. Medicare Advantage plans that give better quality care
receive additional bonus payments. Plans must use some of the
bonus money to offer you added health benefits. Medicare
Advantage plans cannot change--or charge people more than the
original Medicare pays for certain services. These services
include chemotherapy administration, renal dialysis, and
skilled nursing care. The law cracks down on waste, on fraud
and abuse, a major part of that ObamaCare. Nobody refers to
this. We have selective memory about what we want to think
about or talk about in this legislation. And we guard against
medical identity theft, et cetera, et cetera. It improves long-
term care services.
Why not target when you say that we have to move away from
fee-for-service, not just for seniors, for everybody? For
everybody? Can we say it enough times, Ms. Rivlin, for
everybody? Because the costs are too high. And if we don't
change those costs and find a way to do it without cost
controls, then we are not going to have any system at all, not
just we will reduce the propensity of Medicare and the strength
of Medicare.
Overall health spending has been constrained. Per capita
Medicare spending was 0.4 percent of GDP in 2012, last year.
And CBO projects Medicare cost growth will remain low
throughout the decade. There is a reason for this. Are there
less people going into Medicare? Heck no. And overall health
inflation has been at historic lows for 3 years in a row.
There is a report that came out this morning, I don't know
if you saw it. Senior poverty is much worse than you think due
in part to such burdens. The new Kaiser Family Foundation
report finds that the SPM poverty rate for seniors is actually
higher than the official rate, 15 percent versus 9 percent. And
here we are talking about shifting costs, even if it is to the
higher income. We better be darn careful about this, because if
we don't understand the situation that seniors are in, we are
in big trouble.
Mr. Baker, if I can get a quick question in. I think we are
trying to go in a new direction here. I agree we should always
be open to new ideas. I think my colleagues need to take a look
at the work happening today that is moving Medicare; more
important the quality than the quantity. Can you discuss the
ways in which affordable health care has helped the solvency of
the Medicare program directly? Can you answer the question?
Chairman BRADY. If I may, because time has expired, Mr.
Baker, could you perhaps answer in another question or provide
Mr. Pascrell an answer in writing. Thank you.
Mr. PASCRELL. Thank you for your consideration.
Chairman BRADY. Thank you, Mr. Pascrell.
Mr. Gerlach is recognized for 5 minutes.
Mr. GERLACH. Thank you, Mr. Chairman. Thank you for having
this hearing today.
Today's hearing is focused on the reform of Medicare's
benefit structure, so your suggestions are very welcome and
very helpful. Thank you very much. But in addition to the
benefit structure itself, success and cost-effectiveness of the
program is also based on how it is administered every single
day. Currently, the Medicare program has a pay-and-catch system
for improper payments. A few years ago, the GAO put out a
report that concluded that there is about $50 billion a year in
improper payments made in the Medicare program, both
unintentional payments, erroneous, mistaken, or intentional
fraudulent-based payments due to stealing the identification
numbers of physicians and other fraudulent activities.
So based on the fact that that $50 billion a year in
improper payments in the Medicare program over 10 years would
be half a trillion dollars, and based on the fact that that is
about 10 percent of the total expenditure in the program each
year, what do you each believe would be the single-most
important step that Congress could take now to reduce and
ultimately eliminate $50 billion a year in improper payments in
the program in addition to all of the other suggestions you
have given us about benefits restructuring? But specifically
what could be done today to reduce and eliminate $50 billion in
improper payments just because of the way the program is
administered on a daily basis?
Start with Mr. Antos.
Mr. ANTOS. Well, certainly, the idea about Medicare
verifying who the providers are would be the first step. Don't
pay unless the provider is a legitimate provider. Don't pay
unless the provider is providing appropriate services. The idea
of having information about the quality of care should extend
also to traditional Medicare. It doesn't exist there right now.
Mr. GERLACH. Thank you. Is there a specific kind of
technology or system, programming that could be utilized to
make that happen?
Mr. ANTOS. Well, so in terms of measuring quality, there
are literally scores of different measures that measure very
specific results or very specific activities in health care.
They don't necessarily represent quality. They represent things
we can measure. And so I think the first step is to do a better
job of developing the kinds of measures that really reflect not
what goes into the patient, but what comes out. In other words,
patient outcomes.
Mr. GERLACH. Ms. Rivlin.
Ms. RIVLIN. I agree with that, and I think more money for
more vigorous prosecution of fraud would actually help. That is
happening, but probably not enough. And better information for
the patient to enable a patient to say, wait a minute, I never
saw that doctor. It is hard now for a patient to monitor that
kind of thing.
Mr. GERLACH. Mr. Baker.
Mr. BAKER. I would agree with all that has been said. We
get a lot of complaints on our help line saying I didn't see
this particular doctor, and we do refer them to the fraud tip
lines, et cetera, but sometimes it is the pathologist in the
hospital that no one ever sees. That kind of education is
important.
I think one of the things that we do have to guard against
is one of the justifications for home health copayments is, oh,
it will help combat fraud efforts. And I think putting
financial cost-sharing on consumers to have them help identify
fraud is not necessarily the best way to go, but rather, some
of the ideas that we have been talking about here, and really
providing administrative resources to not only our law
enforcement personnel, but also to the Center for Medicare and
Medicaid Services to really oversee this program. We always
brag about Medicare having a low administrative cost, but maybe
it should have a little bit of a higher level of administrative
cost so that it can pursue some of these initiatives against
fraud.
Mr. GERLACH. Do either of you have a debit card on you
today?
Mr. BAKER. Yeah.
Mr. GERLACH. And you pull that card out, is there an
identification number on that?
Mr. BAKER. Yes, there is.
Mr. GERLACH. And if you took it downstairs to the credit
union and you want to get money, you would type in a few
numbers, would you not, that are unique to you and unique to
that identification number, is that correct?
Mr. BAKER. Yes.
Mr. GERLACH. And so why don't we have that system in
Medicare right now? Why don't we have a smart card technology
in our system that identifies that provider and that patient at
the same time before the service is undertaken? Has anybody
considered that as part of your review of the program?
Ms. RIVLIN. Sounds like a good idea.
Mr. GERLACH. Okay.
Mr. BAKER. We certainly could consider that.
Mr. GERLACH. I know when to end my questioning. Thank you,
Mr. Chairman. I yield back.
Chairman BRADY. Stop when you get the answer you want.
Mr. Price is recognized for 5 minutes.
Mr. PRICE. Sounds like a bill is coming, Mr. Chairman.
Thank you. Thank you so much. And I want to thank the panel
members.
This is a remarkably important topic, but it is also just
part of a hugely complex system. And I am struck most often
when we have the topic of health care come up in this
Committee, and appropriately so, we are talking about money,
not about patients. And when you talk just about money and not
about patients, then I think that we miss really the focus of
where we ought to be. We ought to be talking about patients.
And as a physician taking care of patients for over 20
years, I know that the patients of this country, especially the
Medicare patients of this country, are extremely frustrated
with the current system. Access is being diminished to care. I
have said this before, if you are a new Medicare patient, you
turn 65, your physician that has been taking care of you isn't
seeing Medicare patients, which is more and more frequent.
Even in large metropolitan areas, the opportunity or the
ability that you have to find a doctor who is taking new
Medicare patients is minimal. One in three physicians in this
country has limited the number of Medicare patients that they
are seeing. One in eight physicians who would normally see
patients of Medicare age is not seeing any Medicare patients.
And that is only getting worse. And the ACA is making that
worse, not Dr. Price's, Tom Price's opinion. That is the
opinion of the Medicare trustees, that access to care will be
diminished because of the laws that we have already passed.
Mr. Antos, you talked about Medicare oftentimes instituting
policies in a heavy-handed way, and it is that heavy-handedness
that I believe harms patients.
So there is huge pressure within the system, and I want to
touch on a couple specific areas. And I know that the fee-for-
service system has been bashed, and, you know, it isn't worth a
doggone thing, according to some folks. But one of the
antiquated notions of the fee-for-service system is that a
patient can choose a physician that he or she desires to take
care of them and that that care can be delivered.
So I would ask you, Mr. Antos and Ms. Rivlin, do you
believe that whatever system we come up with, should patients
and doctors be able to practice outside of that system? Should
they be free to take--the doctor take care of a patient outside
of that system if voluntarily the patient and the doctor desire
to do so?
Mr. ANTOS. Well, under the Medicare program right now
physicians are allowed to opt out, in essence. There are
potentially substantial financial losses associated with that.
Mr. PRICE. How about for an incident of care right now?
Mr. ANTOS. For an incident of care, that is not possible.
You are either in----
Mr. PRICE. Should it be?
Mr. ANTOS. It runs certain risk. I believe that this----
Mr. PRICE. The freedom runs the risk.
Mr. ANTOS. Freedom runs the risk. That is right. The
question is, will the physician have the patient's best
interest at heart or will the physician----
Mr. PRICE. Have you ever read the Hippocratic Oath?
Mr. ANTOS. I have read it, but there are plenty of ways to
interpret it. And the question is----
Mr. PRICE. Can one interpret the Hippocratic Oath to not be
in the interest of the patient?
Mr. ANTOS. It needs to be in the interest of the patient,
but the financial system that the physician is under in
Medicare works across purposes oftentimes to the patient's----
Mr. PRICE. But coercion to the physician is not to provide
the best care to the patient.
Mr. ANTOS. The financial system promotes oftentimes
services that are not useful or not very useful to the patient.
Mr. PRICE. That is not the physician's design, that is the
system's design.
Mr. ANTOS. That is the system's design, and so we need to
reform the system in order to make that relationship between
the doctor and patient much more productive.
Mr. PRICE. And maybe a little freer.
This is going in an interesting direction. So my time is
about to run out and I want to get to this other issue. We seem
to be having contradictory themes. We say that the government
control will produce value, push value--that is what we want,
we want value--yet some of the things like home health care
that provide some of the highest value for patients or care in
ambulatory surgery centers that provides some of the highest
value for patients, this proposal and others dis-incentivizes
the use of those. So you have to ask the question, whose value?
Is it the patient's value or the government's value?
Ms. Rivlin, whose value should we be talking about here, is
it the government's value or the patient's value?
Ms. RIVLIN. We should be trying to measure the value to the
patient and rewarding that. It is not easy. And the question of
home health care I think is a good example. Clearly it is
valuable to many, many patients and you don't want to
discourage it, but you don't want abuse either, and you have to
weigh the advantages and disadvantages of a copay.
Mr. PRICE. Complex issue, Mr. Chairman. Thank you.
Chairman BRADY. Thank you.
Mr. Buchanan is recognized for 5 minutes.
Mr. BUCHANAN. Thank you, Mr. Chairman. I want to also thank
our panelists today for taking your time to be with us.
I represent a community in Florida, Sarasota, but it is
pretty much the demographics of Florida when you look across
it, 700,000 people we all represent, 300,000 55 and older. But
I went to, probably a month back, went to an assisted-living
facility in our area, these were seniors, very capable, active
and engaged, and I usually go there once a year to talk to this
group, 300 residents. So on the way in they mentioned to me,
Vern, I would like to have you come meet a few of the
residents, and very coherent. But I would say of the four I
met, one was 108, there were three or four others in the
assisted-living facility over 100. Another assisted-living
facility in Venice, Florida, the average age, the guy had been
there 40 years, it is a Lutheran organization that runs that
out of Wisconsin, I think Wisconsin or Minnesota. He said the
average age there today is 90, and he said 20 years ago it was
72.
So maybe it is just the sunshine in the State of Florida, I
don't know, but I can tell you I am very concerned just looking
forward from the viability as people are living longer. I think
the statistics, the numbers used to be, people lived, when they
put the program in place, I think it was 5 years. Today they
claim 13.4 years. Have we looked down the road the next 10
years or so at what the age is that people are expected to live
to or how many more years that is and are we factoring in the
idea that the program, Medicare, is going to go broke in 10
years, Mr. Antos?
Mr. ANTOS. Well, certainly, the Medicare actuaries take
longevity into account. But longevity isn't the principal issue
here, I don't think, it is the rising cost of health care, it
is the rising use of services.
Mr. BUCHANAN. Well, you mentioned this, just real quick,
how many people did you say come a day, are coming into the
program at 65?
Mr. ANTOS. According to AARP it is about 8,000 a day.
Mr. BUCHANAN. Yeah, I have heard 8,000, 10,000, 12,000,
somewhere in that range, every day for the next 30 years.
Mr. ANTOS. Well, for the next 20 anyway.
Mr. BUCHANAN. Yeah, for the next 20. But go ahead,
continue, what were you going to say?
Mr. ANTOS. They are youngsters. When you turn 65 you are
basically a healthy person. It is at the other end of life
where the money is being spent. And I think the issue here is
not so much, we are not going to have people stop turning 65
and joining the Medicare program. The issue is how do we get
unnecessary spending under control? How do we get better
treatment for these patients?
Mr. BUCHANAN. Ms. Rivlin, did you have any comments on
those about longevity?
Ms. RIVLIN. No, I agree with that. It is certainly
increasing. But as Mr. Antos said, it is the rising cost per
patient combined with the longevity, but the rising cost per
patient is really the driving force.
Mr. BUCHANAN. The other thing I think that a lot of seniors
are concerned about is the fact that we are not doing much
about it. There is a 10-year window ideally. What is your
opinion of waiting and not dealing with this in a real way? I
mean, we are talking about some adjustments and things that we
might be able to do today, but in the scheme of things long
term it doesn't seem like it is going to have a huge impact in
terms of the overall dollars. By waiting, what happens from
that standpoint? How long can we wait and not deal with it in a
big way? Ms. Rivlin.
Ms. RIVLIN. Every year you wait makes it more difficult. We
have waited too long already on many of these things and I
would include Social Security. We need to put all of these
programs on a firmer basis.
But with respect to the healthcare programs it is a
question of moving to better, more effective, more cost-
effective delivery systems that is the most important. And the
faster we can do that the better, although it is going to take
time to transition.
Mr. BUCHANAN. Thank you, Mr. Chairman. I yield back.
Chairman BRADY. Thank you.
Mr. Smith, you are recognized for 5 minutes.
Mr. SMITH. Thank you, Mr. Chairman. And thanks to our
witnesses for sharing your time today. I appreciate the
testimony and your insight. And I think the urgency cannot be
overstated. And yet we want to build on what we know works, and
we want to do what we can to eliminate that which we know does
not work.
I get a little concerned when the term ``fraud'' that we
should all be concerned about is often used to describe what
might have been an innocent mistake amidst a bureaucracy in
piles and piles of paperwork, and we don't want the heavy hand
of government to overreact. But I am curious to know what you
might have to suggest about States coming up with innovative
solutions. One thing we do know is that with our 50 States they
are different among themselves. I know that, representing rural
Nebraska, the definition of rural has a different application
in different parts of the country. And so if you might, any of
you, elaborate on perhaps how we could maybe rely on the States
for innovation and incentives to increase the effectiveness of
care and access. Not all at once, but go ahead.
Mr. ANTOS. States obviously have a very strong fiscal
interest in this question because of course they are
responsible for about 42 percent of the cost of the Medicaid
program. The Medicaid program, many Medicaid people are
essentially young, relatively healthy people. But the older
Medicaid beneficiaries are among the sickest and among the most
expensive patients that we have. Many of them are dual
eligibles in Medicare.
So States are very concerned about improving delivery of
health care. I think in terms of rural America the idea of
being able to bring modern electronics out there where you if
can't get a doctor, let's get somebody who is trained at the
local level and have communications back with a medical center.
In addition, States, I don't think States are rushing to do
this, but increasingly we are going to need to look at the
personnel who provide healthcare services. We are going to have
a doctor shortage, there is no question about that. We are
going to have a lot more people who will be demanding care, we
are not going to be producing that many more physicians,
because it takes so long to produce a physician, a good
physician. So we are going to have to look at expanding the
scope of practice for nurse practitioners, for example,
physician's assistants. States control that, they need to take
a look at that issue.
Mr. SMITH. Okay.
Ms. Rivlin.
Ms. RIVLIN. I would agree with that. It is the Medicaid
program which you ought to look to for giving States the most
flexibility. And the potential is there. The situation now with
waivers is much too complex, and it would be important, I
think, to provide a more uniform system where States can take
the measures that they think are most cost effective and are
rewarded for that, but don't have to go through a very
complicated waiver process.
Mr. SMITH. Mr. Baker.
Mr. BAKER. I would agree. I think some of the
experimentation that is happening under the ACA but also
outside of it with regard to dual eligibles, people that are
eligible for both Medicare and Medicaid, and there the States
really are pushing the envelope in many instances in combining
those funding streams and coming up with creative ways to
manage their care. The typical statistic is these are the 20
percent of people that generate 80 percent of the costs. If we
can control those costs better, much of it through better
coordinated care, managing that care better, breaking down
those silos. And States have been doing that. And I think we
need to continue to encourage that.
It is less possible in true rural areas that are sparsely
populated, but some of the other ideas around allied
professionals getting involved with physicians and others to
kind of bring that care to the areas. Many times folks don't
need that intensive medical care, they need kind of social
supports or other supports, kind of to live in their
communities and stay healthy. And I think those are important
initiatives that States are engaged in right now.
Mr. SMITH. And, Mr. Baker, I think you touched briefly on
perhaps cost-sharing with emergency room or other areas. Could
you elaborate on that?
Mr. BAKER. Well, my point there was that if we increase
cost-sharing up front, many times people don't access the kind
of primary care or preventative care that they need. In many of
the proposals preventive care would be covered first dollar up
front, but other primary care would still need a copayment or a
deductible to get through. So what happens is people put off
care, end up in emergency rooms, or higher, more expensive care
settings.
Mr. SMITH. Okay. Thank you, Mr. Chairman.
Chairman BRADY. Thank you.
Mr. Kind is recognized for 5 minutes.
Mr. KIND. Thank you, Mr. Chairman. I want to thank our
panelists for your testimony today. Mr. Chairman, I hope this
is the first of many more hearings that we can do to explore
avenues of bipartisan cooperation on reforming a healthcare
system that is in desperate need of reform. And I guess one of
the frustrating things sitting here and listening even to
today's conversation, is that there are so many of those tools
that are currently a part of the Affordable Care Act right now.
Ms. Rivlin, delivery system reform, getting to a more
integrated, coordinated, patient-centered healthcare delivery
system. There are tools in the Affordable Care Act right now to
drive the system in that direction, including payment reform.
Demanding value-based payments, quality reimbursements, as
opposed to volume is already in the Affordable Care Act right
now and vast experimentation taking place. Would you agree with
that assessment?
Ms. RIVLIN. I agree with that, and I said that actually.
And we want to strengthen and build on what is already going on
and accelerate it.
Mr. KIND. And I applaud the work the Bipartisan Policy
Center has come up with additional recommendations on reform.
In fact, the New Democrat Coalition just had Bill Hoagland and
Chris Jennings before us to walk us through a lot of the
recommendations, and many of which we embrace.
If there is one concern or one criticism I might have about
the Bipartisan Center is you do maintain fee-for-service in a
hybrid type of form, but nevertheless it is still there out in
future years. And I happen to believe that we are going to have
to kill this thing, we are going to have to have a date certain
on fee-for-service so there will be institutional pressure from
all over to maintain a fee-for-service or volume-based payment
system that we are never going to be able to slay and get rid
of.
Ms. RIVLIN. I think we kill it with incentives to move away
from it, but we do preserve a choice so that no one can say we
are destroying Medicare as we know it.
Mr. KIND. Well, and again on the whole topic of Medicare
fraud, and I look forward to working with my good friend from
Pennsylvania because I think he has some good ideas to bring to
the table how we can do a better job. But, Mr. Antos, I don't
know if you are sure, if you looked at the Affordable Care Act,
but pay-and-catch is no longer the law of the land, it is a
system of verification. And regional offices now have stepped
up enforcement and funding to crack down or Medicare fraud. In
the first 2 years we were able to recapture over $15 billion in
fraudulent payments made in the Medicare system because of what
is in the Affordable Care Act already. And that is moving
forward. And maybe we need more personnel on the ground and
more resources to do it, but again, as part of the Affordable
Care Act, there has been a stepped-up measure to crack down on
Medicare fraud. And I don't know, your testimony made me
believe that you weren't aware that pay-and-catch is no longer
allowed under Medicare.
Mr. ANTOS. Oh, I didn't address it in my written statement.
It is not allowed but it still happens. It is great that CMS
has been able to take actions, but obviously the problem isn't
solved. The problem will never be solved.
Mr. KIND. Well, again, I think we can continue working in a
bipartisan fashion on what stepped-up enforcement are needed.
There would be wide bipartisan support because no one is going
to be here defending fraudulent practices, especially in the
Medicare program.
But, Mr. Baker, I also notice that you have been one of the
panelists on the second Institute of Medicine panel trying to
change volume to value-based payments. My only encouragement to
you and the panel, I know it is hard with peer review with IOM,
you have high standards, but you have to go bold and you have
to go courageous. And if you guys can't come up with a path to
get to a fee-for-value-based reimbursement system it is going
to be very hard for this institution to embrace something as
well. So I don't know if you want to give us a quick update
where IOM 2 is going right now, but soon you are going to be
reporting out.
Mr. BAKER. Well, we are in the peer review process so I
can't really talk specifically about it. But I think that, as
you saw from our interim report, we are very concerned about
the present system. And I think you will be seeing some ideas
about moving forward some of the value-based reforms that are
already in the ACA. I think we are all agreed that those kinds
of things and the kind of delivery system reform that we have
all been talking about is key.
I would point out that, and I do believe that we need to
move away from fee-for-service, as we have been talking about,
but we also have to recognize that within some of these hybrid
or some of these even in classic managed care fee-for-service
is still used and still might be appropriate to encourage the
provision of some services. So I think it is a hybrid system
and one that definitely needs to move away----
Mr. KIND. I will need to be educated on the value of doing
that, but I also agree with Mr. McDermott, if at the end of the
day all we are doing is talking about cost shifting, that is
not the path forward because that is not the reform that we
need to create the right incentives to get better value at a
better price within the healthcare system. I think we are all
in agreement on that. And my concern is with SGR fix and
everything else that this cost--and time is of the essence. The
Ryan bill does nothing to reform Medicare for 10 years because
they exempt the first 10 years of entrants into the program. So
if time is of the essence, I don't know why we are repealing
the Affordable Care Act 37 times and then trying to move
forward on a plan that does nothing for the next 10 years when
10,000 seniors are joining Medicare every single day in this
country.
My time has expired, Mr. Chairman, thanks for your
indulgence.
Chairman BRADY. Thank you.
Mr. Thompson is recognized for 5 minutes.
Mr. THOMPSON. Thank you, Mr. Chairman. I want to thank all
the witnesses for being here today and for your longstanding
commitment to making health care work in this country.
I want to pick up where Mr. Kind left off, where Mr.
McDermott started, and that is with the whole issue of cost
shifting. And one provision I would like to explore a little
bit is found in the President's budget as it relates to a copay
for home health care. And I, too, am worried about the idea
that we would be cost shifting. And while the President's
program saves close to $800 million--I don't know if it does
save that, but it is scored at saving $800 million--and I just
want to be very, very careful that we do the scoring correctly,
because my concern is if this copay discourages folks from
doing what they should be doing in regard to health care, it
could end up costing us a lot more.
Specifically, if people don't get the care and they become
more ill or they become injured and have to go into the
hospital, that is a direct cost to Medicare and the Federal
Government, or it could even turn out to be a cost shift to the
specific States.
And on that note I would like to ask unanimous consent that
we put in the record two letters from two different States who
share the same concern, one from Governor O'Malley, a Democrat
from Maryland, and the other from Governor Deal, a Republican
and former colleague of ours from Georgia.
Mr. Chairman.
Chairman BRADY. Without objection.
Mr. THOMPSON. And I think that is important to note that,
and I would like to know what your thoughts are on that, and we
can start with whomever. Mr. Baker.
Mr. BAKER. Okay. Yes, I think that is a potential. I mean,
in 1972 Congress actually took out copayment amount for the
home health benefit after finding that it had led to increased
hospital usage and institutionalization in other kind of more
expensive and restrictive care settings. And I do believe that
most of the savings that are scored there in the President's
proposal don't come from collecting the actual copayments, but
come in from analysis about the utilization being tamped down
and folks just not accessing the benefit at all.
And particularly the way this copayment is structured, as
has been mentioned, is for people that have not had a
hospitalization that need extended or longer-term care, even
though Medicare doesn't cover long-term care per se. Some folks
can get ongoing home health care needed in order to stay in
their homes through the Medicare benefit. And those are the
folks that are at risk of either hospitalization or of
deterioration of their condition either leading to
hospitalization or nursing home care.
So I think it is misguided, I think it is penny wise and
pound foolish, as they say, and certainly to the extent it has
the potential to lead to higher health costs, that was
recognized in the early 1970s and I think that lesson should be
relearned.
Mr. THOMPSON. Anyone else?
Ms. RIVLIN. I think it is a difficult balancing act to the
extent that there are people using home health care that don't
really need it because there is no copay and you might as well.
We need to discourage that and be careful that it doesn't hurt
people who have very low income or who really need the care.
Mr. THOMPSON. Ms. Rivlin, I am glad that you raised that
issue, because I suspect a lot of that savings is directed at
detecting fraud abuse and getting away from that. But MedPAC
has noted that there are patterns of abuse in home health care,
primarily found in 25 different counties in Texas and Florida.
So it seems to be a pretty focused issue or for the most part
focused, and a pretty wide, sweeping way to deal with it. Is
there a better way?
And I am glad that Mr. Gerlach raised the issue of going
after the fraud because I am one who believes that we can
accomplish a lot in fixing the system if we are able to nail
the fraud stuff. Is there a better way to go after the fraud
than the copay?
Ms. RIVLIN. Well, there may be, but I think the copay would
probably help.
Chairman BRADY. Thank you, Mr. Thompson.
Mr. Blumenauer is recognized for 5 minutes.
Mr. BLUMENAUER. Thank you, Mr. Chairman. And I do
appreciate an opportunity for a conversation like this, zeroing
in on what actually can happen. And I want to follow up on
comments from both my colleagues Mr. Thompson and Mr. Kind
because I think we have embedded in the Affordable Care Act
some opportunity to change the delivery mechanism. We are doing
some experimentation in Oregon, and we are optimistic globally
that it can have some significant effects. What Mr. Thompson
said about being able to identify outliers, counties in a
couple of States that are clearly having a pattern that screams
abuse, the same way that we have had some pill mills where
there are a handful of pharmacies that are responsible for
certain narcotic drugs that find their way into the system. And
I am a proud cosponsor of Mr. Gerlach's legislation for the
secure card, which I think could help us get at that.
I am open to other systematic adjustments, some of which
have been proposed, Mr. Chairman, by some of your colleagues,
some from the Administration. But I am hopeful that we are able
to focus on the big picture, things that we can do now that
clearly attack problems of abuse and mismanagement that should
share broad bipartisan support. And I am hopeful, Mr. Chairman,
that our Subcommittee could zero in on a few of these proposals
that have bipartisan support on the Committee, that aren't
going to solve everything overnight, but will make a
significant difference improving the system.
I am of the opinion that the more we can do on some of
these smaller things that will make a difference, that are
bipartisan, that are not particularly controversial except for
some people who are taking advantage of the system, will help
us establish a foundation for what we are going to have to do
for the next half dozen years as the nature of healthcare
changes in this country.
And I will wrap up, we have things to do. I don't want to
debate particularly some of these modest points, although I
would put on the table one other bipartisan proposal that will
give people better health care, what they want, and will
actually save money. And that deals with letting people know
what they face at the end of life, that Medicare will pay
untold billions to give hip replacements to 92-year-old people
in the last months of life, it will hook them up to machines,
it will do anything, but it won't pay to have a conversation
with the medical professional of their choice about what they
face.
There is a reason why doctors actually consume less health
care in their final months of life, because they know what they
are facing, they know what works, they know what doesn't, and
they have a way of making those decisions and making sure
whatever the decisions are that they are respected.
And I would hope that there would be an opportunity for us
to deal with legislation like that, that is bipartisan, that
will make a difference, that surveys tell us over 90 percent of
the American public wants, that will not just save money but
will give people a better quality of care.
I appreciate your commitment to make the Subcommittee zero
in on some of the big picture, some controversial, some not.
But I hope that we can circle around to some of the stuff that
doesn't have to be controversial which will save money and
bring the Committee together while, above our pay grade,
certain things are battled out. Thank you, Mr. Chairman.
Chairman BRADY. Thank you, Mr. Blumenauer.
Ms. Black for the final question.
Mrs. BLACK. Thank you, Mr. Chairman. And I appreciate being
able to sit here on the Committee and for being given an
opportunity to ask a question.
My question is going to go to two pieces here. One is the
solvency and the other is the quality. And being a healthcare
provider, as Dr. Price talked about, the quality is very
important to me as well, but making sure that we have a system
at the end of the day that is solvent, that we can actually
have a system.
So the current Medicare spending trajectory is
unsustainable and we know that. It has actually led the
Medicare trustees to estimate the Part A trust fund will go
bankrupt in 2023 and insolvent in 2024. So that has already
been established. But recent data has showed that Medicare
spending is actually lower and some have suggested that this
means that we don't need to make any changes to the program.
And so I ask the panelists, and starting with you particularly,
Mr. Antos, and then working down the line, wouldn't you agree
that this is the wrong way to look at this?
And then, second to that, instead of waiting should we be
acting now to extend the solvency of this program? And if we
make those changes now would you agree that the changes would
be smaller now rather than waiting? And then the end piece of
that, can you discuss how you think a well-designed Medicare
program would benefit the outcomes for our beneficiaries? So,
Mr. Antos, can you go to that?
Mr. ANTOS. Thank you. What is lower now is not Medicare
spending, what is lower is the last 2 or 3 years of growth per
beneficiary. But of course the number of beneficiaries is
growing every year. So in fact Medicare spending is continuing
to grow, just at a somewhat slower rate than in the past. But
we only have evidence for the last 3 years of slower Medicare
spending. So I think it is way premature to announce victory
and to hang up our hats.
Clearly, the sooner we take responsible actions to shore up
Medicare financing and to improve the program so that it
actually does a good job for patients, the easier the
transition will be to whatever the new Medicare program will
be. I tend to agree with many of the suggestions of the
Bipartisan Policy Center and the other groups, certainly in
general terms, and they all imply changes in the way patients
act, physicians act, health plans act, and the traditional
Medicare program acts. That is a lot of change, and that takes
a lot of time. The sooner we start on that the more successful
we will be without having what could be a disastrous experience
for vulnerable people.
Mrs. BLACK. Thank you.
Ms. Rivlin.
Ms. RIVLIN. I agree with all of that. I don't think it is
the bankruptcy of the Part A trust fund that should drive this
primarily. You can always put more general revenues in the
trust fund and you are doing that already in Part B. But the
opportunity that you have now to change the way Medicare
reimburses organizations and to incent more cost-effective
delivery systems seems to me just major, and you ought to take
it right away and push on that continuously.
There is no one thing you can do to fix the whole thing, we
will all be back here again. But there is a big opportunity now
to accelerate the reforms, many of which are already in the
Affordable Care Act, to improve the delivery system for
Medicare and the rest of the health system.
Mrs. BLACK. And might I add to that, because I think I
heard you say earlier that one of the things you think is a
benefit of this is that the quality of care is actually going
to increase.
Ms. RIVLIN. Yes, absolutely.
Mrs. BLACK. Mr. Baker, in my little bit of time I have
left.
Mr. BAKER. Of course. I think I agree with a lot of what
has been said. I think the crisis isn't as acute a crisis as it
has been because of the slowdown in growth in Medicare costs.
And if you are looking 10 years ahead we do have this window
now where, if this projection keeps up--and projections are
projections, right--but we feel that there is some breathing
room. That doesn't mean we should be complacent. Definitely, as
we have all discussed, not only in our Medicare program, but
also in our private health insurance and private coverage
schemes we need to be looking at how to save money and, as you
are saying, increase the level of quality of care and get
higher value.
And so we think once again that some of the reforms in the
Affordable Care Act, some of the things that are happening in
the private sector that mirror that, and I agree with Ms.
Rivlin that those things coming together and Medicare working
shoulder to shoulder can drive a lot of good change. I mean,
Medicare has had that role in the past and can have it now. I
think my concern is that some of the cost-sharing that we see
here isn't driving in that direction.
Mrs. BLACK. Thank you, Mr. Baker.
Yield back.
Chairman BRADY. Thank you. On behalf of Mr. McDermott and
myself, I would like to thank all three of our witnesses for
their testimony today on the President's budget proposals. Your
experience and ideas on how to reform Medicare to keep it
solvent for our Nation's seniors are constructive, and your
continued thoughts and feedback will be very helpful as we move
forward with these efforts in the coming months.
As a reminder, any Member wishing to submit a question for
the record will have 14 days to do so. If any questions are
submitted, I ask the witnesses respond in a timely manner, as I
know you will.
With that, the Subcommittee is adjourned.
[Whereupon, at 11:35 a.m., the Subcommittee was adjourned.]
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