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Health On The Hill: Competing Prescriptions For Medicare’s Financial Health

KHN’s Mary Agnes Carey and Marilyn Werber Serafini join Jackie Judd to preview this week’s House hearings on Medicare and to dig into the details of the Medicare trustees’ report.

>> Listen to audio of the interview.

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>> Trustees Issue Warnings On Medicare, But Make No Changes To Solvency Projections


JACKIE JUDD: Good day, this is Health on the Hill. I’m Jackie Judd. A House subcommittee returns this week to the idea of expanding the role of the private sector in Medicare. This against the backdrop of the latest projections about Medicare’s financial health. Joining me to discuss all of this: Mary Agnes Carey and Marilyn Werber Serafini of Kaiser Health News. Welcome ladies.



JACKIE JUDD: Mary Agnes, you first, give us a preview of the hearing and why now. 

MARY AGNES CAREY: The hearing will look at this idea of premium support, of the government limiting the contribution per beneficiary in Medicare. And the committee wants to do this now because there is all this discussion about the debt and the deficit. As you mentioned the Medicare trustees’ report just came out. The solvency has not been extended. It’s still at Year 2024. So the idea is let’s look at the idea of limiting the government’s contribution.  Let’s bring in a lot of witnesses. They are going to include Henry Aaron of the Brookings Institution, who is one of the founding architects of the premium support idea. Another witness is John Breaux, a former Democratic senator of Louisiana, who along with the former Ways and Means Committee Chairman Bill Thomas of California came up with a premium support idea. So they want to do this now in part because of the trustees’ report from yesterday and also, you know, the Republican message has been let’s control federal spending, especially in entitlements and here’s a way to do it.

JACKIE JUDD: When Paul Ryan brought this idea back again last year, some members of the Republican establishment were pretty chilly toward the idea.  Has that changed at all?

MARY AGNES CAREY:  One change that Paul Ryan made was to include Medicare fee-for-service as an option for beneficiaries.  That wasn’t in the plan last year.  And also, as we know, Paul Ryan has been reaching out to Democrats, including Ron Wyden, a Democratic senator from Oregon, to revise and work on his idea on premium support. 

They feel with this addition of traditional fee-for-service, it inoculates them from attacks from President Obama and Democrats who are saying Republicans are trying to change Medicare as we know it.

JACKIE JUDD:  Marilyn, you dug pretty deep into this report we’ve been talking about, particularly what Rick Foster, the chief actuary, had to say.  What struck you?

MARILYN WERBER SERAFINI:  What struck me is that you had a report that was almost 300 pages long, and right at the end of it were three pages that Rick Foster wrote – his opinion – that basically said the projections by the trustees: They’re accurate. They did their job. But those projections are based on current law, and current law contains many changes that he says are unrealistic. Congress will not let them stand.

He says Congress will not allow 30 percent cuts to physician payments in Medicare starting in January, that Congress will not allow deep cuts to hospitals and other medical providers that were created by the 2010 health care law. He’s saying that the kind of productivity improvements that are assumed will take place because of the health care law – you know he says that they will lower the health care costs but not the overall growth.  Growth will still continue on an unsustainable path.  So he’s saying that given all this, Congress will absolutely step in and they will change those provisions so that they are more generous in payments to medical providers.  And if you do that, that means less savings, and if you have less savings, that means a harder financial hit to Medicare. 

JACKIE JUDD:   Even before this report came out, the White House talked about it.  Soon after it came out, the Republicans started talking about it.  Does it become a lightning rod for each side and how is each side positioning it to work in their favor?

MARILYN WERBER SERAFINI:  It already is a lightning rod.  This is something that Romney talks about all the time.  He came out with a statement yesterday already saying, “Look, what they’re doing, this is bad news, it’s only going to get worse.”  And actually, two hours before the trustees’ report came out, the Obama administration came out with something of a pre-emptive strike with a small report that said, “Medicare is getting better, beneficiaries are going to get – their costs are going to go down.”  They, again, are basing those projections on current law and what’s supposed to happen and that’s based on all of these assumptions that Rick Foster says are unrealistic. 

JACKIE JUDD:  A lot of debate, a lot of spinning.  But Mary Agnes, you’ve covered the hill for a long time as it pertains to health care policy.  Is it safe to presume that nothing of substance will happen this year?  No votes will be taken –  

MARY AGNES CAREY:  That’s correct.

JACKIE JUDD:  – to change the program?

MARY AGNES CAREY:  In the lame duck session which is predicted to happen after the elections, I think that both parties will be laying out their markers: this is what we will do about the deficit; this is what we will do about the debt.  Of course, we have this automatic sequestration – this two percent cut in Medicare just to providers – about to kick in in 2013.  They’ve got to figure out a way around that.  But most folks predict that nothing really major is going to happen until next year.

JACKIE JUDD:  OK, thank you both so very much.



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