Conservative Medicare Reform is a Must

Many people weigh in on the Medicare debate solely from an emotional standpoint.  That’s a problem.  But arguably even more damaging is when people conflate or confuse conservative Medicare reform with recklessly damaging Medicare.

The opposite is true.

Conservative reforms to Medicare are designed to increase efficiency, control costs, and provide high quality care.  The reforms would restructure Medicare, which is currently outdated and flawed.   Finally, rather than leaving a failing Medicare program untouched, conservatives acknowledge that the Medicare population is growing, and the reforms Heritage has proposed are based on that reality.

First with regard to costs, the Heritage Foundation explains:

The rising cost of Medicare is placing an increasing burden on current and future taxpayers, as well as exacerbating the poor financial condition of a program on which America’s seniors depend in their retirement. The traditional program’s fee-for-service payment system, in which doctors and hospitals are paid a fixed price for each and every procedure or service that they perform, encourages an increase in the volume of services provided, which drives excessive spending. The system also does not ensure that quality care is delivered, which contributes to unnecessary costs and higher spending as well. Today, roughly three of four Medicare patients are enrolled in the traditional Medicare program.

After enacting on short term reforms designed to cover cash deficits in the Federal Hospital Insurance (HI) Trust Fund, they should embark on a long term reform plan:

Congress and the President should adopt a defined-contribution (“premium support”) system of financing. Modeled after the best features of Medicare Part D and the Federal Employees Health Benefits Program (FEHBP), such a model would inject intense competition into the program that would align incentives of beneficiaries and patients and plans and providers, root out costly inefficiencies and waste, and slow the growth in Medicare spending—which would benefit both enrollees and the taxpayers.

The problems of inefficiency and high costs of Medicare result from an outdated structure that is desperately in need of reform.

Medicare’s current structure determines the way it functions. It also entails certain undesirable consequences. For example, it requires Medicare beneficiaries to pay additional premiums and purchase supplemental coverage; employs price controls to control costs that often result in underpayment or overpayment for medical goods and services; places massive levels of detailed regulation on doctors, hospitals, and other medical professionals; generates tens of billions of dollars annually in waste, fraud, and abuse; and uses an administrative payment system that, as an arena for special interest lobbying, results in the politicization of decisions over health care financing and delivery for America’s senior and disabled citizens.

Finally, demographics cannot simply be denied, and “Medicare as we know it” is actually insufficient to meet the needs of this growing population of individuals.  Heritage explains:

The sheer number of beneficiaries is projected to grow from 50.7 million in 2012 to 81 million in 2030.  This will create an unprecedented demand for technologically advancing medical services in the 21st century. Current taxpayers already pay almost nine out of every 10 dollars in total Medicare costs in any given year, and general revenues will account for an increasingly larger share of Medicare spending.   In other words, current and future taxpayers are being saddled with enormous obligations.

Our government does all of us a huge disservice by ignoring these realities.  They need to face the facts and make changes to Medicare accordingly, even though it’s easier just to play politics with this flawed program.

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