Medicare

This Health Affairs brief provides an overview of accountable care organizations (ACOs), which are networks of physicians and other providers that agree to be held accountable for the cost and quality of the full continuum of care delivered to a group of patients. The brief covers the origins of the ACO concept, describes what makes ACOs different from existing health plans and provider arrangements, and summarizes the current status of adoption by Medicare and private health insurance plans. It also notes that based on the results of a five-year demonstration, ACOs will likely be able to improve clinical care quality but may have a harder time generating meaningful savings.

This Robert Wood Johnson Foundation-funded paper by Robert Berenson and Nicole Cafarella provides a status report on the Innovation Center's activities to date—including delineating the goals envisioned by Congress, detailing the new tools it was given, and emphasizing how the enhanced authority compares with CMS’s traditional demonstration programs. The paper describes the Center's major initiatives to date, including those that address primary care redesign, bundled payments, ACOs, dual-eligible beneficiaries, and the health care system's capacity for spreading innovative ideas. The authors note that some observers have expressed concern that the Innovation Center's fast-paced approach may be overwhelming to smaller delivery systems.

Low-income Medicare beneficiaries are eligible for subsidies to help them pay premiums and cost sharing. However, these subsidies fall short of those contained in the Patient Protection and Affordable Care Act (ACA) that help low-income families afford adequate health coverage. In this report we consider policy options to reform Medicare's low-income subsidies to better align with ACA provisions. We estimate that a significant simplification in low-income protection and cost-sharing rules could greatly reduce burdens on the poorest and sickest beneficiaries. Depending on how they are implemented, these reforms could either reduce or only modestly increase total public spending.

To help pay for expanded health insurance coverage, the health reform legislation enacted in 2010 included a new 3.8 percent tax on the net investment income of high-income taxpayers. When it goes into effect in 2013, it will increase the top tax rate on capital gains, dividends, and other investment income, regardless of whether the 2001 and 2003 tax cuts are allowed to expire. Almost all the burden will be borne by taxpayers with extremely high incomes. More than half the burden, for example, falls on taxpayers in the top 0.1 percent of the income distribution.

The report discusses the important budget events of 2011. It begins with the House Republican budget and the president's response. The very different approaches to health and discretionary spending and tax policy are analyzed in detail. The policy debate continued into the confused debt limit negotiations of July. The Budget Control Act finally emerged. It capped discretionary spending and created a "super committee" that was to propose additional deficit reductions. The committee failed miserably. An automatic across-the-board spending cut is supposed to result from that failure. The report describes its effects on defense and nondefense spending.

Proposals to replace traditional Medicare with "premium support"-or vouchers for the purchase of private insurance or, in some cases, Medicare-have once again emerged on the political agenda. This critical commentary on the Rivlin/Domenici proposal (markedly similar to the Ryan/Wyden proposal) finds much wanting in premium support—in particular, that Medicare already provides benefits more equitably and at lower cost than private insurance; that without "regulatory teeth", premium support would actually create coverage inequities and increase costs; and that implementation of the Affordable Care Act's payment and other Medicare reforms, not Medicare replacement, ought to be the nation's top priority in controlling overall health costs. These remarks were presented at a Brookings Institution forum on December 16, 2011.

The growth in U.S. health care spending has become a focal point in debates over federal and state health care reform. While the problem is easy to quantify, strategies for slowing rising expenditures are controversial, and evidence of their effectiveness is often elusive. Our full report provides background that describes the problem and reviews the cost containment provisions of the Affordable Care Act (ACA). It also presents estimates of cost savings from several policies that go beyond those included in the ACA. In this appendix, we provide more detail on the methods used to generate these cost savings estimates.

The United States spent an estimated $635 billion on the chronically ill and disabled in 2010; about half of this was spent on those dually eligible for Medicare and Medicaid. Recently, there has been a series of innovative chronic care management programs that have shown considerable promise in reducing hospital admissions, readmissions, specialty care and prescription drug use. Considerable savings could be achieved if these programs could be expanded broadly. In this paper, we argue that this should primarily be a Medicare initiative because most of the current expenditures and savings from these programs would accrue to Medicare. We estimate potential savings of close to 1% of national health expenditures.