February 12th, 2013
The mistake policymakers have long made in debating Medicare (and Medicaid, though that’s a topic for another day) is that they talk about Medicare the same way they talk about Social Security. It’s understandable at some level, since these two programs are the country’s largest entitlement programs and serve similar populations. However, the two programs could not be more different.
Social Security is a relatively simple program of transfer payments. The fundamental issue for Social Security is how to manage the inflow and outflow of funds.
Medicare is an entirely different animal.
Historically, legislative changes to the program have attempted to mimic the Social Security focus on budgetary inflows and outflows by adjustments to benefits and provider reimbursements. While expanding coverage has largely been an attempt to be more inclusive of vulnerable populations and allow access to needed services to improve overall health (while simultaneously lowering beneficiaries’ cost burden), it has always come at a price, literally. Similarly, while provider payment cuts — and in some cases increases — have often been critical to increasing access or controlling spending in the near-term, they have done nothing to address the structural reforms desperately needed to sustain the program over the long-term.
Unfortunately, while there remain budgetary questions to consider, the opportunities and demands inherent in future structural changes to Medicare are an order of magnitude more challenging.Read the rest of this entry »