NEJM: Ryan plan worth revising, not tossing
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| Percentage of adults reporting serious problems paying medical bills. Image source: 2010 Commonwealth Fund International Health Policy Survey |
After a decade of increasing Medicare costs, often growing at rates several percentage points above GDP growth, the U.S. budget deficit and the retirement of the country’s baby boomers has spurred an intense public policy debate over how to reform the nation’s healthcare system. With provisions of the PPACA already being rolled out, a Republican-controlled House of Representatives has proposed an alternative plan, the Roadmap for America’s Future.
Whereas the PPACA aims at savings to Medicare by cutting reimbursements, while making pilot changes to reimbursement incentives (such as the launch of accountable care organizations, or ACOs), the plan put forth by Congressman Paul Ryan proposes subsidies for seniors’ healthcare and the elimination of traditional Medicare as a defined-benefit health plan.
“The question is whether a Medicare program that relies on reductions to provider reimbursements without fundamentally altering the incentives that providers face will be sustainable,” proposed Gail R. Wilensky, PhD, from Project HOPE, an international healthcare organization based in Bethesda, Md. “Indeed, the actuary of the Centers for Medicare and Medicaid Services (CMS) has repeatedly questioned whether the ACA’s reductions will be sustainable without producing major problems of access.”
Under the Roadmap for America’s Future, seniors would receive a defined contribution (starting at $8,000 in 2022) toward the purchase of private health insurance, a contribution which would grow at a rate fixed to the Consumer Price Index. Beneficiaries could then use these effective vouchers to purchase private-payor insurance, much as is done currently under the Federal Employees Health Benefit Plan (FEHBP).
Congressman Ryan’s plan has come under significant scrutiny, with particular concerns being voiced about whether the government subsidy would be of an adequate amount to ensure access to care for beneficiaries. This concern is perpetuated by Commonwealth Fund survey data showing more than three times as many Americans reported problems paying for their care than did the average European.
“I agree with some concerns that have been raised about [the proposal], but rather than dismiss it in its entirety, I would relax some of the harsher provisions, recognizing that by doing so, I would diminish some of the savings it would create,” Wilensky offered.
The author first argued that the rate of increase for subsidies proposed under the plan is too stringent. Rather than fixing the growth rate of government contributions to the Consumer Price Index, Wilensky recommended setting the rate to approximately 1 percent higher than GDP growth, “especially for the new program’s first decade.”
“Second, the subsidy must be sufficient for purchasing at least one available health plan in each geographic area at whatever percentage of premium coverage is assumed to be appropriate at the outset,” the author continued. If the government subsidy in any geographic area were to fall short of covering 75 percent of a beneficiary’s cost for the lowest-priced plan, Wilensky argued, “the subsidy would need to be modified.”
Finally, Wilensky recommended that the elimination of traditional Medicare as an actual insurance plan should be given extra consideration. Instead, Wilensky offered the alternative of preserving the government plan as an available option, which the author argued might be beneficial for seniors and an important political compromise.
“This approach, in my view, is much more attractive than the [PPACA’s] strategy, which focuses exclusively on reducing provider reimbursements and perhaps changing some provider incentives if the pilot programs are successful and are implemented nationally (of which we have no assurance),” Wilensky concluded.
“A modified Ryan plan would allow private plans to introduce many of these changed incentives without permission from the government and would, for the first time, give seniors a reason to care about these alternative plans. That’s a very powerful difference.”