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Herger Opening Statement: MedPAC’s June 2012 Report

June 19, 2012

(Remarks as Prepared)

Today, we will be hearing from the Medicare Payment Advisory Commission (MedPAC) on the analysis and recommendations contained in its June 2012 report.

This Subcommittee has heard from numerous witnesses over the last year and a half about the financial challenges facing the Medicare program.  In fact, the Medicare Trustees reported in April that the program will go bankrupt in 2024, a mere 12 years from now.  Clearly, time is of the essence.

The Subcommittee has also heard from several experts on ways to reform and improve the program in order to bring the program into the 21st Century, slow the rate of growth, and protect Medicare for future generations. 

It is in this vein that we welcome MedPAC Chairman Glenn Hackbarth here today to discuss the Commission’s June report.  The Commission has scrutinized the design of the traditional Medicare benefit, and found it lacking.

The traditional Medicare benefit consists of a patchwork of premiums, deductibles, copayments and coinsurance. It neither encourages appropriate utilization of care, nor protects beneficiaries from high out-of-pocket costs.  Because of this fragmented structure, nearly 90 percent of Medicare beneficiaries have some type of supplemental insurance.  And evidence shows that supplemental coverage that eliminates some beneficiaries’ cost-sharing responsibility results in higher program costs and higher premiums for all beneficiaries.

I look forward to hearing more about MedPAC’s recommendation on how to design a new benefit structure that meets and reflects the health care needs of today’s seniors rather than remaining trapped in the 1960s.

The June report also contains a chapter that examines several topics related to Medicare beneficiaries in rural areas.  While maintaining an appropriate level and quality of care in rural areas is a challenge, it is what our constituents deserve.  This issue is of critical importance to me and the rural northern California district that I am privileged to represent.  It is also important to many of the members of this panel as well as to maintaining a high-functioning health system.  We must ensure that payments made on behalf of beneficiaries and taxpayers are appropriate.

MedPAC took on this challenge and provided some suggestions on how Congress may devise policies to maintain rural beneficiaries’ access to quality care, while ensuring taxpayer dollars are spent wisely.  This information is especially helpful as Congress assesses a series of special payment adjustments which are set to expire by the end of the year.

There are no one-size-fits-all answers to these challenging health care questions, but in light of Medicare’s, and our nation’s, financial challenges, we must critically review our existing payment policies to ensure they are accomplishing their goals.

Finally, I am eager to discuss MedPAC’s view on how to better improve care coordination for Medicare beneficiaries, including the dual-eligible population. 

The dual eligibles are among our nation’s most vulnerable and have unique challenges.  There are several current delivery systems within Medicare that integrate care for these beneficiaries, which show promise. 

However, with the new duals demonstration program being rolled out by the Centers for Medicare and Medicaid Services, some of the past successes may be at risk. 

Further integration is clearly necessary, but I am concerned that the Administration’s unilateral actions to address this population’s needs may undermine the protections guaranteed to all Medicare beneficiaries. 

This is a critical issue to get right the first time, and I know that MedPAC is concerned about it too.


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