The Center for American Progress (CAP) on Wednesday released a proposal that would cut $385 billion from U.S. health care expenditures without shifting the burden of costs onto America’s seniors and the middle class.
Dubbed “The Senior Protection Plan,” the proposal was unveiled in the face of impending budget negotiations between President Obama and Congressional leaders that will have enormous consequences for the federal safety net, particularly Medicare and Medicaid. While Obamacare has already made significant cuts to health spending, patient advocacy and provider groups have expressed concerns that a forthcoming “grand bargain” aimed at further reducing the federal budget deficit might be brokered on the backs of poor, elderly, and sick Americans.
Instead of instituting cuts that would only nominally reduce health care spending by cutting Americans’ health benefits and raising their premiums and out-of-pocket costs — as Republican proposals to slash Medicaid funding and turn Medicare into a voucher program would do — CAP’s plan hones in on the systemic factors that drive long-term medical inflation. Here are five proposals from the Senior Protection Plan aimed at cutting national health costs in a fair manner while improving the efficiency and quality of health care delivery to elderly and low-income Americans:
1) Reduce low-income Americans’ prescription drug costs. Drug manufacturers pay significantly lower rebates for drugs provided to Medicare beneficiaries than they do for drugs provided to Medicaid beneficiaries. This has led to drug companies shifting prescription drug coverage for so-called “dual eligibles” — particularly sick and poor Americans who qualify for both Medicare and Medicaid — from the Medicaid program into the Medicare prescription drug plan, allowing the companies to reap massive profits without providing these vulnerable Americans any tangible benefit. The Senior Protection Plan would extend the higher Medicaid prescription drug rebates to brand-name medications purchased by dual eligible, low-income Medicare beneficiaries, leading to more affordable drug coverage for the poorest Americans as well as significant cost savings in the lucrative drug industry. Altogether, these proposals would reduce spending by $160 billion.
2) Curb waste and excessive payments to Medicare providers. The plan calls for an additional $88.6 billion in savings by bringing Medicare reimbursement rates in line with the actual costs of care while rooting out fraud and administrative waste in the program. Skilled nursing facilities, rural hospitals, and home health providers currently receive as much as $33 billion in excess payments, while Medicare overpays hospitals for inpatient services that are no more complex or time-consuming than less costly outpatient procedures. While the Obama Administration has been aggressive in cracking down on fraud in Medicare, the Senior Protection Plan finds even more savings by asking providers and caregivers to share eligibility, claims, and benefits information electronically, while aggressively pursuing perpetrators of Medicare billing fraud.