The Social Security and Medicare Board of Trustees has announced that Medicare’s Hospital Insurance Trust Fund will run out of money in 2026. 2017 projections showed this insolvency was expected to occur in 2029 – so it’s getting worse. In 2026, Medicare will only be able to cover 89% of Part A costs, dropping to 77% in 2046. And Social Security is expected to run out of cash in 2034.
This really shouldn’t be surprising to anyone – the changing demographics of the American worker and healthcare inflation have long been a problem seeking a solution and it’s easier to kick the can down the road than to face the political minefield associated with change.
But the politicians are running out of time. So what are the options? Pretty easy; 1. reduce benefits, 2. increase taxes or 3. find a more efficient way to provide benefits. The first two are more unpopular than the third.
This week the Department of Health and Human Services (HHS) embarked on option three, announcing that beginning in 2020 they will shift reimbursement for primary care for at least 25% of patients from the current fee-for-service model to a capitated arrangement where the providers are paid a fixed fee and future reimbursements are tied to health performance. At the same time, we are seeing a rapid expansion of patients enrolling in insured Medicare Advantage products available under Medicare rather than stick with confusing and more limited regular Medicare.
So let’s get this straight – at the same time that virtually the entire slate of 2020 democratic presidential hopefuls are pushing for Medicare for All, Medicare is pushing those new enrollees into insurance contracts (Medicare Advantage) or into the risk-based contracts (tied to provider performance) they are just starting to figure out, but which the insurance carriers have been perfecting for many years. Who do you think is going to get better results with risk-based contracting: the government bureaucrats who are new to this or the insurance professionals with years of healthcare management experience? Who would you want to run these programs? Not to mention, that Single-Payer is not looking like a streamlined, easy-to-access platform, but much like the current system – a mess of confusing, different options developed closely like our current system.
There really aren’t any quick solutions and the voice of all constituents are going to be loud and hard to shift through, both at the onset of a government program as well as each and every time a change may be needed.
Insurance carrier profits add about 3% to cost of care. Insurers have been a pretty good guardian of the gate, being able to agilely come up with solutions to offset the provider shell games. While they are not perfect, they are certainly not the enemy in solving this complex cost/care delivery discussion. I think it makes sense for plans to stay private, but the government should exercise their muscle in hospital cost controls and price controls for medication. This would be a good start.