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Foundations’ Funding of Research on Medicare: Useful Insights as the Budget Battles Begin



February 16th, 2011
by Lee-Lee Prina

Medicare and other entitlement programs are back in the news in the coverage of President Barack Obama’s Fiscal Year 2012 budget, which was released this week.

In this post, I mention a selected sampling of recent foundation-funded efforts on Medicare.

Recent Publications:

DataBrief:

The SCAN Foundation and Avalere Health say that low-income Americans who qualify for both Medicare and Medicaid (“dual eligibles”) are more than twice as likely to use the emergency department of a hospital than Medicare-only beneficiaries. According to a new DataBrief from the two organizations (which, for this point, cites Henry J. Kaiser Family Foundation [KFF] research), duals also are more than twice as likely to have a mental illness than the Medicare-only crowd. Dual eligibles, who are “among the sickest and costliest patients” in the U.S. health care system, the brief says, are twice as likely to use a skilled nursing facility or a hospice as people with Medicare only. The brief, which uses 2008 Medicare claims data, suggests that higher service use by dual eligibles than by Medicare-only beneficiaries could be caused in part by lack of care coordination between the Medicare and Medicaid programs. Read more in this one-pager about duals’ use of services and how the Affordable Care Act of 2010 addresses the challenges of paying for the care of this population. The brief, “Dual Eligibles—Health Services Utilization”, was released Feb. 3.

Primer:

People often talk about the effects of the baby boomers getting on Medicare. However, the authors of a new primer published by the KFF note, “The contribution of increased enrollment and an aging population” to increasing Medicare spending “is modest” compared with the “effects of rising health care costs.”

As Congress and the Obama administration focus on the federal budget deficit, many policy experts and several bipartisan deficit-reduction panels have proposed major changes to Medicare to decrease federal spending and address increasing health care costs, the KFF commented in a Feb. 15 e-alert. Thus, this operating foundation’s new online publication, Medicare Spending and Financing: A Primer, February 2011, is timely indeed. The foundation cites research from a number of sources and pulls it together in a clear and informative way. Here are some nuggets from this primer by Lisa Potetz of Health Policy Alternatives and Juliette Cubanski and Tricia Neuman of the KFF.

• Ever since Medicare was enacted (in 1965), spending on this large federal program “has grown steadily, as measured in absolute dollars, as a share of the federal budget, and as a share of the gross domestic product (GDP), and these trends are expected to continue.”

• However, the authors say, Medicare spending is projected to grow more slowly (about 6 percent a year) during the decade ahead, compared with the average annual rate of growth between 1985 and 2009.

• Costs of administering Medicare have stayed low over the years—less than 2 percent of program expenses, the authors note.

• Ever wondered just how Medicare is financed? See the authors’ explanation on pages 7–8 of the primer.

• Medicare financing projections are “always uncertain,” the authors caution, because the U.S. economy and the U.S. health care system are complex.

• The authors of this well-written report say in conclusion that policy on Medicare will be shaped as much by concerns about the size of the federal budget deficit and national debt as by worries about Medicare’s financial sustainability.

Policymakers have their work cut out for them: They need to find “cost-reducing strategies that sustain or improve quality of care, and possibly new sources of revenue as well, while balancing the needs of beneficiaries, taxpayers, and health care providers,” the authors say in summary. A Herculean task, I would say!

Related resources:

“Are You Paying Your Fair Share for Medicare?” Gene Steuerle of the Urban Institute, in the “Government We Deserve” series of periodic commentaries, published by the Tax Policy Center of Urban and the Brookings Institution, Jan. 6. The center receives funding from numerous foundations including the Annie E. Casey, Ford, Bill and Melinda Gates, John D. and Catherine T. MacArthur, Nathan Cummings, Rockefeller, and Smith Richardson Foundations. Steuerle is a former vice president of the Peter G. Peterson Foundation.

“The Federal Budget: Fiscal Year 2012—Budget Overview,” White House, Office of Management and Budget (OMB), February 2011. President Obama’s budget released this week pays for the first two years of the so-called doc fix—which would prevent a big cut in Medicare physician-reimbursement rates. That fix will be paid for “with $62 billion in new, specific health care savings,” the document says.

The Kaiser Family Foundation website’s Medicare section is chock full of information. See, for example, a Dec. 2010 issue brief titled “Income-Relating Medicare Part B and Part D Premiums: How Many Medicare Beneficiaries Will Be Affected?” This short publication focuses on provisions in the Affordable Care Act that call for higher-income Medicare beneficiaries to be charged more for their monthly Parts B and D premiums. The authors, who are with either KFF or Actuarial Research Corporation, point out that the income thresholds ($85,000 for an individual and $170,000 for a couple) that trigger the higher premiums “are substantially lower than the thresholds often used to define higher-income individuals in other policy discussions,” and that could be a problem for some folks.

Also, see the KFF’s Medicare and Prescription Drug Plan Tracker. The tracker, which includes 2011 updates, lets site users monitor trends for Medicare Advantage plans since 1999 and for Medicare prescription drug plans since they began in 2006, according to a Jan. 26 e-alert. Confused about the difference between those types of plans? Just go to the Web page’s “Start with a Topic” and slide your computer mouse over either term. A handy explanation of both types of plans, which I will not repeat here, pops up!

Obama: Tax Cut Deal Not Perfect, but Worth Passage,” Ben Feller, Associated Press (AP), on WTOP.com, Feb. 15. Feller reports on Obama’s news conference where the president said directly that tougher decisions on the country’s biggest expenses (Medicare, Medicaid, and Social Security) will have to be grappled with by Republicans and Democrats together, not by directives from the White House.

“Obama’s Health Care Budget: ER Visit but No Cure,” Ricardo Alonso-Zaldivar, AP, on WTOP.com, Feb. 14. This article on how Obama’s FYI2 proposed budget will affect some federal health programs mentions staving off that Medicare doc fix (see above). However, the president’s budget is “largely silent” on big cuts to the major entitlement programs, such as Medicare and Medicaid, Alonso-Zaldivar says. Also, economist Alice Rivlin, a former vice chair of the Federal Reserve Board and a former member of Obama’s deficit reduction commission, comments in the article: “I believe that the president, probably as a tactical move, did not propose changes in the big entitlement programs.” She adds, “He wants to work that out on a bipartisan basis with the Congress.” One thing leading to Republicans’ taking back a majority in the U.S. House of Representatives was their “unrelenting criticism” of the Accountable Care Act’s cuts to Medicare, the article also notes. Many Republicans, though, want even more “sweeping changes” to Medicare, such as converting it to a voucher plan in which older Americans would receive a fixed payment for their health care, Alonso-Zaldivar states.

SCAN Foundation and Avalere Health, “New Resources to Improve the System of Care for Dual Eligibles,” Feb. 3 Webinar on improving care for low-income Americans eligible for, and enrolled in, two public programs—Medicare and Medicaid. View the event in its entirety.

Peter G. Peterson Foundation: Visit its website for information on fiscal challenges facing the United States, including those related to health care. This funder seeks “long-term solutions that transcend age, party lines and ideological divides in order to achieve real results.”

“Health Policy Brief: Paying Physicians for Medicare Services,” Health Affairs, Updated Dec. 16. Funded by the Robert Wood Johnson Foundation. Consultant Mark Merlis is the author of this brief, which concerns the one-year “doc fix” that Congress enacted in late 2010. The fix prevented a reduction in Medicare physician-reimbursement rates.

“Why Are Medicare’s Innovations More Secret than the Joint Strike Fighter?” Chris Langston of the John A. Hartford Foundation on its Health AGEnda blog, Jan. 20. Langston describes the inordinate amount of time he spent trying to get information on a Medicare demonstration project being conducted at Massachusetts General Hospital. He comments that not only are we doing too few demonstration projects on innovations in Medicare, as compared with those in commercially insured programs and populations, “but we are making it really hard to find out about those few we have.” New leadership at the Centers for Medicare and Medicaid Services (CMS) seems to be interested in “being more transparent” and learning while improving care, he comments. In conclusion, Langston says that he hopes that CMS will try “to more fully share the knowledge that we as taxpayers have already purchased.” By the way, the joint strike fighter is some sort of “super secret” military aircraft, in case you don’t follow U.S. Department of Defense matters!

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