New Report: 3 Reforms to Improve Medicare

By leveraging the success of Medicare Part D and Medicare Advantage, Congress can improve Medicare’s finances and provide seniors with coverage that best suits their needs

NEW YORK, NY – The Affordable Care Act isn’t the only health care program in need of reform: Medicare, the largest health care entitlement in the U.S., is taking up a growing share of the federal budget and suffers from an outdated benefit structure that doesn’t serve the needs of senior citizens. A new paper by the Manhattan Institute’s Yevgeniy Feyman proposes three reforms that would provide a safety net guarding against costly medical events, especially for low-income seniors, while increasing the efficiency and cost-effectiveness of the program. Feyman proposes:

1. Creating a single deductible for physician and hospital services and capping out-of-pocket spending. Unlike private insurance, Medicare patients currently pay separate deductibles for these services, which often leads to higher health care spending through Medigap plans.
2. Developing a premium support system that encourages efficient plan choice among seniors. The CBO estimates this approach would save between $69 and $275 billion over a six-year period.
3. Requiring providers to pass drug rebates on to patients. When a manufacturer’s rebate lowers the drug price below Medicare reimbursement rates, 340b providers often pocket the difference. These savings should be passed on to patients and taxpayers.

The ideas behind the reforms Feyman proposes have historically enjoyed bipartisan support and represent an opportunity for both sides of the aisle to collaborate on meaningful reform. Taken together, these changes could save patients hundreds of dollars in out-of-pocket costs each year and reduce federal spending by hundreds of billions over 10 years.

Click here to read the full report.