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How To Cut Health Care Spending Without Harming Benefits

By Sy Mukherjee  

"How To Cut Health Care Spending Without Harming Benefits"

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Last week, the Center for American Progress (CAP) released a report titled “The Senior Protection Plan” that outlined serious ways to cut U.S. health care spending without shifting the burden onto sick, poor, and elderly Americans. This past weekend, a misleading editorial in the Minot Daily News falsely claimed that such a proposal would lower seniors’ care quality and raid the Medicare entitlement.

But the claims about the Senior Protection Plan’s allegedly negative effect on seniors’ health coverage don’t consider the fact that many conservative Medicare “reform” plans would actually cripple the safety-net program by turning it into a voucher system and shifting costs squarely onto seniors’ premiums. Here’s what the Minot Daily News got wrong about the Senior Protection Plan:

1) “President Barack Obama’s health care law will slash $716 billion in funding for the Medicare program.” This was one of the 2012 presidential campaign’s most repeated lies, but it was untrue then, and it is untrue now. Obamacare does not “cut” Medicare funding — in fact, it slows the growth of Medicare spending by eliminating wasteful overpayments to private insurers, incentivizing better performance by providers, and cracking down on fraud and abuse in the Medicare system. These reductions will actually result in Medicare being solvent for an additional eight years, as well as more affordable care for seniors.

2) “[Obamacare] and the federal-state Medicaid system were not targeted by the CAP for cuts to help lessen the seemingly ever-expanding United States spending deficit.” The CAP plan specifically calls for $10 billion in savings from Medicaid. But unlike conservative proposals to throttle federal spending on the program and throw millions of low-income Americans off their insurance rolls, the Senior Protection Plan encourages savings by making sure that Medicaid does not have to overpay relative to third-party insurers and decreasing future payments to safety-net hospitals that will become unnecessary as more states implement Obamacare’s Medicaid expansion. CAP also does not score multiple proposals in its plan — such as better care coordination and case management between Medicare and Medicaid, bundled payments, and competitive bidding — that have the potential to further reduce medical spending while simultaneously improving care quality.

3) “The CAP insists the only Medicare cuts would be in reimbursements to health care providers. Give us a break. That would lessen the quality of care for senior citizens. And the CAP plan calls for very real cuts in funding for Medicare beneficiaries, too.” The Senior Protection Plan is centered precisely on the belief that American seniors should not have to sacrifice their benefits in exchange for nominally reducing the deficit. This is in stark contrast to conservative proposals that aim to voucherize Medicare, transforming it from a “defined benefit” program into a “defined contribution” program without actually stemming the long-term upward trend in health care spending. Much of CAP’s proposed $385 billion in savings result from requiring drug companies to pay higher rebates for medications prescribed to “dual eligible” seniors who are on both Medicare and Medicaid. Furthermore, its proposed reductions to providers are precisely that — reductions in historical overpayments for certain type of care facilities and services — and the plan may actually result in significantly higher savings by moving towards more consumer-friendly, efficient practices such as prospective bundled payments, pay-for-performance measures, competitive bidding, and fraud prevention.

All told, the Senior Protection Plan is a serious proposal to reduce national health spending by addressing the actual factors driving costs — overpayments to providers and pharmaceutical companies, a poorly-coordinated system of care management, and inefficient modes of care delivery — rather than balancing the budget on the backs of sick, elderly, and poor Americans without even addressing the concerning trajectory of U.S. health care costs. By transforming the health care payment and delivery structure to be more logical and efficient, CAP’s proposal would lead to genuine savings by actually improving the way American health care works — without pushing costs onto Americans.

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