As the baby boomers are rapidly aging out of the workforce, the nation’s Medicare program is not financially secure enough to handle the increase in health care beneficiaries, according to a group of panelists who discussed reform proposals for the social safety net Monday night.
“The issue with Medicare is, we need to find more resources and we need to find better ways of delivering care,” said Cheryl Matheis, national senior policy strategist for the American Association of Retired Persons (AARP). “We need to kind of hit a balance, but nobody has agreed on what the actual balance should be in order to make [the program] sound for the long term.”
Attempting to address what challenges the Medicare program faces and potential solutions for those challenges, Matheis was joined for the panel discussion by U.S. Reps. Peter Roskam (R, IL-6) and Danny K. Davis (D, IL-7), and Richard Baehr, chief political correspondent of the daily conservative online magazine, American Thinker. The Union League Club of Chicago, at which the panel was held, and WLS 890 AM, a broadcast radio station in Chicago, sponsored the event.
The panelists discussed reform proposals that might ensure the long-term viability of the federal program that guarantees access to health care for certain Americans, including younger people with permanent disabilities and residents aged 65 years and older.
As the baby boomer generation, the largest generation in American history with about 76 million children born between the mid-1940s and mid-1960s, ages out of the workforce, the increasing number of Medicare beneficiaries represents a likely fiscal challenge for the program.
Almost 10,000 people will become eligible for Medicare each day for the next 17 years, according the Pew Research Center. By 2030, experts anticipate the population of Americans aged 65 years and older will jump to 18 percent, from 13 percent in 2011.
By 2024, the Medicare Part A trust fund, which subsidizes certain benefits, like inpatient hospital care, is expected to dry up and no longer be able to pay for 100 percent of the program’s costs, CNN reported in 2012.
To contend with increased enrollment due to an aging population, panelists discussed a proposal to raise Medicare’s eligibility age from 65 to 67.
While Baehr said on the panel he considers the plan a “reasonable” solution, Davis expressed apprehension over excluding 65 and 66 year-olds from a program that, according to the AARP, provided 15 percent of the nation's population with health insurance in 2012.
“One good way to measure the greatness of a society is by how well it treats its young, how well it treats its old, and how well it treats those who have difficulty looking after themselves,” said Davis. “I think the idea of a discussion is fine, but its not something that, at this particular time, I would vote for."
Of the more than 49 million people insured by Medicare in 2012, AARP reports that 45 percent were living with three or more chronic conditions. Also, half of all beneficiaries were living off incomes of less than two times the federal poverty level ($21,660) in 2010 and, that same year, more than one in four beneficiaries had less than $10,000 in total savings.
Meanwhile, of the beneficiaries with incomes of $85,000 or more in 2012, only 4 percent would have been affected by an increase in the program's eligibility age, according to AARP.
"I think that quality of life is what we're really talking about, what we're really dealing with," Davis said. "If we start pushing forward, pushing forward, pushing up — there's some people at 65 who have reached a point where they're getting old, and other people at 65 are quite young and still able to be engaged, fully employed and working. So, I think we need some more debate, some more discussion, before I'd be prepared to say 'let's do this.'"
Here’s more from the panelists as they discuss the controversial policy:
Other potential reforms panelists touched on include changing the physician payment formula; raising Medicare premiums for higher-income beneficiaries; requiring drug companies to give rebates or discounts to Medicare; and enrolling all beneficiaries covered by both Medicaid and Medicare in managed care and subsequently increasing care coordination.
Each panelist agreed that addressing Medicare fraud, meaning an individual or corporation collecting health care reimbursement under false pretenses, should be high on the priority list.
Medicare fraud reportedly costs taxpayers more than $60 billion a year, according to a 2010 report by ABC News.
“There are some things that Peter and I will disagree on, but one thing that we will certainly agree on is that we need to do everything in our power to make sure that fraud waste is wiped out of our health care system,” Davis said.
Roskam used the discussion as an opportunity to promote a piece of legislation he sponsored, the Prime Act, H.R. 2305, which attempts to minimize Medicare fraud by phasing out the Medicare "pay and chase" policy and incentivizing contractors to avoid errors and overpayments by establishing penalties for not meeting specific payment accuracy goals.
“Medicare will receive a bill from a provider, physician or hospital. It basically presumes that to be valid, it pays it out, then chases it down later to determine whether its fraudulent or not,” said Roskam who serves as the U.S. House chief deputy whip. “There is nobody in this room that operates their own life like that.”
Introduced in June, the bill has garnered 29 Republican cosponsors and 22 Democratic cosponsors, including U.S. Rep. Tammy Duckworth (D, IL-8). It was assigned to the House Ways and Means Committee and the House Energy and Commerce Subcommittee on Health in June.
Companion legislation, S. 1123, has received 24 cosponsors, 11 of which are Democratic, and has been assigned to the Senate Finance committee.
“This is not a partisan issue, this is not a geographic issue, this is not a left-right issue, this is just a let’s be smart issue,” said Roskam, adding that AARP has endorsed the legislation. “You’re talking billions of dollars when right now Congress is scrubbing around looking for loose change.”
But regardless of how the Medicare program is reformed, Matheis said Congress should start the discussion sooner, rather than later.
"Medicare needs to be made financially secure, and the sooner we start, the less painful it'll be," she said. "It seems we have three choices, we either cut benefits and limit services to beneficiaries, or we raise more money from the taxpayer, or we change the delivery system."
When asked if AARP would support a proposal to raise the Medicare eligibility age, Matheis said "it would require a little bit of thought."
"Medicare needs more money, or it needs to cost less," she said. "Let's think about ways in which we can really change perhaps the delivery system in order to save money."