Publications on Medicare

The authors of this paper—longtime federal budget and policy experts—were drawn together by a deep concern about the nation's long-term fiscal outlook. Despite diverse philosophies and political leanings, they found solid common ground and agree that unsustainable deficits in the federal budget threaten the health and vigor of the American economy and the first step toward establishing budget responsibility is to reform the budget decision process so that the major drivers of escalating deficits—Social Security, Medicare, and Medicaid—are no longer on autopilot. The paper provides specific policy recommendations and outlines the reasons action is critical.

Rising health care costs threaten financial security at older ages and lead many older Americans to delay retirement. Continued work reduces the risk of high out-of-pocket health care costs for workers receiving health benefits from their employers. Working longer also increases retirement incomes, making health care costs more affordable. This report shows that men with very high expected health care costs after age 65 retire 11 months later than those with very low health care costs. For women, the difference is 12 months.

Seven case studies of provider organizations implementing innovative approaches to care coordination and disease management of patients with one or more serious chronic conditions and to the homebound frail elderly demonstrate a range of issues that need to be addressed to produce rapid dissemination of these approaches throughout the health care system. Study participants all describe perverse incentives within fee-for-service environments that frustrate chronic care-oriented activities. Nevertheless, innovative programs, some providing an important role for hospitals working collaboratively with physicians and others featuring geriatric home visiting, appear to be models for expansion.

Primary care is essential to the effective and efficient functioning of health care delivery, yet we face an impending crisis due in part to a dysfunctional payment system. The paper proposes a new payment model to replace fee-for-service. A comprehensive payment would support health information systems and teams essential to the delivery of comprehensive and coordinated care. In theory, expecting-and paying-primary care physicians to take greater responsibility for patients as they encounter the health care system should result in higher quality and lower costs. Field tests of the new approach are needed to test the hypothesis.

A large, widening gap exists between the incomes of primary care physicians and those of many specialists. This disparity is important because noncompetitive primary care incomes discourage medical school graduates from choosing primary care careers. The Resource-Based Relative Value Scale, designed to reduce the inequality between fees for office visits and payment for procedures, failed to prevent the widening primary care–specialty income gap for 4 reasons: 1) The volume of diagnostic and imaging procedures has increased far more rapidly than the volume of office visits, which benefits specialists who perform those procedures; 2) the process of updating fees every 5 years is heavily influenced by the Relative Value Scale Update Committee, which is composed mainly of specialists; 3) Medicare's formula for controlling physician payments penalizes primary care physicians; and 4) private insurers tend to pay for procedures, but not for office visits, at higher levels than those paid by Medicare. Payment reform is essential to guarantee a healthy primary care base to the U.S. health care system.