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Brady Opening Statement: Hearing on Medicare’s Benefit Design

February 26, 2013

Welcome to the first hearing of the Health Subcommittee for the 113th Congress.
Today we will review the outdated and confusing benefit design of the traditional Medicare program, the structure of which is essentially unchanged from its inception in 1965.  It maintains separate programs and benefits for hospital and physician services, and doesn’t coordinate care between the two.
Because of the outdated structure of the Medicare benefit, today’s beneficiaries are inundated with an array of confusing deductibles, coinsurance and copayments with no protection from high health care costs unless they enroll in a private plan.  As a result, over 90 percent of seniors must obtain some type of supplemental coverage, whether purchased on their own, through an employer or from Medicaid.
Despite vast improvements and innovations in the health care sector that have transformed how care is delivered, Medicare has lumbered through the past half-century on the same trajectory.
Can you imagine a world in which someone has to buy hospital and nursing home coverage from one insurance company, physician office coverage from another insurance company, prescription drug coverage from yet another company, and likely supplemental coverage from a fourth insurance company?  Yet this is exactly how the current Medicare benefit is designed.  No private insurance company in its right mind would design and offer a benefit that looks like this. And given a choice, most seniors wouldn’t accept it.
The need to reform the outdated Medicare benefit is long overdue. I appreciate the work of the non-partisan Medicare Payment Advisory Commission and bipartisan groups like the Bowles-Simpson Commission and Bipartisan Policy Center to further this issue.  Their effort to dig into this complicated topic and advance long-overdue reform has been critical.
Updating the Medicare benefit design will bring the program into the 21st Century and meet the needs of current and future seniors.  It would bring the traditional Medicare benefit in line with the types of benefits and cost sharing that one-in-four beneficiaries currently enjoy from Medicare Advantage plans.  These plans are able to offer predictable copayments versus coinsurance, protection against high out-of-pocket costs, and are often able to incentivize beneficiaries to receive care in high-quality and efficient settings.
However, as we will hear today, because of changes included in ObamaCare and regulations developed by the Centers for Medicare and Medicaid Services, Medicare Advantage plans have fewer opportunities to design the benefit packages that beneficiaries want.  Instead of promoting this model, the President’s new health care law is pulling these plans and the 13 million beneficiaries enrolled in them back into the 1960s.
For the sake of our seniors, we need to break down barriers and give these plans greater flexibility to continue to innovate and offer affordable coverage while improving patient outcomes. This is something traditional Medicare has not been able to do.
Moving from Medicare’s half-century old design to one that provides beneficiaries with rational cost-sharing and protection from high health care costs will be challenging, but it is necessary.  Simply maintaining the current outdated, confusing and inefficient structure while the program remains on a glide path to insolvency, is not the answer.
Instead we must move forward to improve this critical program, providing greater protections for seniors and placing the program on sound financial footing.  It is my hope that this hearing will be the start of efforts to work in a bipartisan fashion to modernize the Medicare program for all seniors and people with disabilities.