Medicare: Your kids hold the key

Friday, April 30, 2004

LAS VEGAS - During his tenure as HCFA (now CMS) administrator from 1993 to 1997, Bruce Vladeck learned that only two strategies save Medicare money: decrease payments to providers or make beneficiaries pay more.

The recently passed MMA includes disease state management and other preventative measures, and “we ought to be encouraging these, but will they save Medicare a nickel? Forget it,” Vladeck told more than 200 attendees at his keynote speech at Medtrade Spring in March.

Beneficiaries and their kids love Medicare, and today’s seniors are healthier than ever before. But as baby boomers begin to retire and the ranks of Medicare beneficiaries swell, paying for the program becomes increasingly problematic. As is, for example, the program’s hospital insurance trust fund will go broke by 2019 unless changes are made in how it’s run, according to a March report by Medicare trustees.

“Medicare is the 800-pound gorilla, and we don’t know where it will jump yet,” Vladeck said.

Because Medicare provides scanty coverage - on average 53% of a beneficiary’s needs - cutting benefits to save money isn’t an option. Making beneficiaries pay higher deductibles helps offset program increases, but steep increases are tough to justify because 70% of beneficiaries earn $25,000 a year or less, he said.

In the current political climate, he added, increasing taxes is unthinkable. Privatization doesn’t reduce expenditures either, and over time costs about as much as Medicare’s fee-for-service program, he said, using a graph to make his point. Even cutting payments to providers is, for lawmakers, hard to stomach. Sure, MMA hit the HME industry with a slew of reimbursement cuts. But that’s because lawmakers perceived existing rates to be so good providers could absorb a reduction and still maintain patient access. Most other providers, however, received payment increases, Vladeck said.

The future of Medicare, he said, depends on how “disposed our kids will be toward us because they’ll have to pay for it.

“I think they will be generous,” he added, “but I’m concerned how bossy they will be.”