Medicare-Democratic Side

As discussed in last week’s blog entry, Medicare is a central issue right now for our country. I went into more detail in that previous post about many Republicans’ desires to increase the privatization of payment for Medicare services, but what do the Democrats want? After Representative Paul Ryan’s (R-Wis.) proposal was released, President Obama shared with the nation what his agenda for Medicare included.  Many members of the Democratic Party believe Ryan’s subsidy plan would be a colossal error. Obama, also not wanting to move to a Medicare voucher system, said in a speech given in April of 2011¹ that his plan for Medicare would protect the fundamental commitment our country has to the elderly, disabled, and poor, which he and other Democrats feel Ryan’s plan fails to do. The President has outlined several ways in which he will create savings within the Medicare program.

Obama plans to make certain changes that directly affect Medicare beneficiaries. For example, increasing deductibles by $25 in 2017, 2019, and 2021, increasing premiums for higher-income beneficiaries, and increasing the percentage of beneficiaries paying higher premiums from 5%-25%. He also calls for new beneficiaries to pay co-payments of $100 for home healthcare visits starting in 2017². Finally, new beneficiaries who buy private insurance to help fill gaps in Medicare would see an increase in Medicare premiums by 30%. These are all actions to increase the revenue received by Medicare through its beneficiaries. Another target source of revenue in Obama’s proposal is pharmaceutical companies. There would be a requirement for drug companies to lower their rates and pay out additional rebates to low-income beneficiaries. Those producing brand name drugs would pay a rebate of 23% and generic drug makers would pay a 13% rebate³.

These actions to increase revenues could affect the decisions made by both Medicare beneficiaries and many pharmaceutical companies. Those about to enroll in Medicare may choose to take advantage of the program much differently than before changes were made. Also, the drug companies might change what proportions of what drugs they produce depending on how the rebates affect them.

Cutting expenses is another way President Obama plans to reform Medicare. Slowly lowering Medicare payments to nursing homes, home health agencies, and rehabilitation hospitals, cutting payments from nursing homes where large numbers of patients were hospitalized because they did not receive proper care at the home, and reducing payments to hospitals and other providers for bad debts that result when beneficiaries fail to pay deductibles and co-payments are all ways to save money for Medicare⁴. Implementing these changes will not only save Medicare money, but it will help to change the incentive system and encourage providers to execute higher quality care.

I believe Obama’s plan has positive underlying ideas. Changing the incentive system to provide higher quality products and services for those enrolled in Medicare is a difficult task to accomplish. Making healthcare more accessible and affordable is also a key to the President’s suggested changes. Whether the Democratic Party and President Obama are given the chance to implement their changes, or Paul Ryan and the Republicans are given the opportunity, all who are somehow active in the healthcare system should be ready to make some adjustments of their own.

Author: Jamie Notaro

Edited by: Ken Chiang

 

¹Remarks by the President on Fiscal Policy: http://www.whitehouse.gov/the-press-office/2011/04/13/remarks-president-fiscal-policy

^2,4New York Times: http://www.nytimes.com/2011/09/20/us/politics/medicare-and-medicaid-face-320-billion-in-cuts-over-10-years.html?_r=1&emc=tnt&tntemail0=y

³Kaiser Health News: http://www.kaiserhealthnews.org/Stories/2011/September/19/Obama-Plan-To-Cut-Health-Programs-By-320-Billion.aspx

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