Senators Offer Blueprint for Comprehensive Medicare Reform

Senators Offer Blueprint for Comprehensive Medicare Reform
February 21, 2012

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Republican Senators Tom Coburn of Oklahoma and Richard Burr of North Carolina have unveiled a new comprehensive blueprint for Medicare reform in Washington, DC. They say their proposal, which goes further than prior legislative solutions for Medicare reform put forward by Republican House Budget Chairman Paul Ryan of Wisconsin, represents the degree of significant change the program requires in order to be made fiscally sustainable.

Called the Seniors’ Choice Act, the blueprint combines some aspects of Ryan’s reforms with a previous proposal put forward by Coburn and Independent Connecticut Sen. Joseph Lieberman. It accelerates a shift of the Medicare system toward a premium support approach, which Coburn and Burr maintain is necessary to ensure the program survives.

“Right now, the American people have little faith in Congress’ ability to do anything to fix the problems facing our nation, and with good reason. But let’s prove them wrong. The Medicare program is broken, and we have an obligation and an opportunity to fix it,” Dr. Coburn said at a press conference announcing the proposal.

Action Needed Now

Coburn and Burr pointed out estimates by the Congressional Budget Office (CBO) and Centers for Medicare and Medicaid Services actuary Richard Foster state Medicare could become insolvent as early as 2016.

“With insolvency predicted to hit as soon as 2016, and with budget experts warning that Medicare represents the nation’s single largest fiscal challenge, Americans are right to be concerned,” said Coburn. “What we are proposing is the catalyst needed to strengthen and save Medicare for our nation’s seniors and ensure the program will be there for future retirees.”

While Burr acknowledged the political challenge of making dramatic changes to the Medicare program, as opposed to methods proposed by Ryan and others which delay policy shifts and insulate imminent retirees from any significant changes, he noted the fiscal challenges demand more immediate action.

“The numbers require us to do something now, not in 2022,” said Burr. “So the politically smart way has been tried, but it doesn’t answer the mathematical challenges that we’re up against. Tom and I believe, if we say we’re saving Medicare, we want to save it on all fronts.”

Immediate Reforms

The Seniors’ Choice Act would make significant changes almost immediately, giving patients in traditional Medicare a unified deductible (a single annual deductible of $550 for both Part A and B services) beginning in 2014, gradually increasing the eligibility age, repealing President Obama’s Independent Payment Advisory Board, and making significant reforms to Medigap. It also creates a new independent agency, the Medicare Consumers’ Protection Agency, which is designed to ensure the existing Washington bureaucracy does not undermine the new competitive bidding process.

Coburn and Burr maintain this new agency would be modeled after the Office of Personnel Management, which currently administers the Federal Employee Health Benefits Program (FEHBP).

“We see markedly less inflation [in FEHBP] than in the private market,” said Coburn. “People start to pay attention to where they’re getting their health care and what it costs.”

Freezing the Doc Fix

Regarding the effect on doctor payments by the Medicare Sustainable Growth Rate (SGR), which was intended to function as a global cap on payments to providers, Burr and Coburn would freeze reimbursement at current rates—not capping them, but also not allowing for dramatic increases. Congress has repeatedly struck deals to keep reimbursement from going down, as SGR demands.

“How well have caps worked?” said Sen. Coburn. “The caps don’t work.... We’ve tried everything except market forces to control health costs.”

Burr noted the Seniors’ Choice Act also includes proposals by former CBO director Alice Rivlin and former Sen. Pete Domenici (R-NM) as well as the bipartisan Medicare Commission led by former Sen. John Breaux (D-LA) and former Rep. Bill Thomas (R-CA).

“We made a promise to our seniors that Medicare will be there when they need it most, but the program as it currently stands is broken. We have a moral obligation to our parents, children, and all Americans to take steps now to save Medicare. The Medicare program in its current form is unsustainable, and we have an obligation and opportunity to improve it for our nation’s seniors within the next few years,” Burr said.

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)