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HEARING: Ways and Means Members Move Forward with Much-Needed Medicare Reforms

March 16, 2016

Members of the Health Subcommittee, chaired by Rep. Pat Tiberi (R-OH), today held a hearing on how policymakers can reform the Medicare program to better serve America’s seniors. Members and witnesses on both sides of the aisle agreed that Washington’s current approach to delivering high-quality health care is not working.   As a result of an outdated program and harmful Obamacare policies, seniors today must navigate a disjointed program, face rising health care costs, and have fewer healthcare choices.

As Chairman Tiberi explained:

Today’s seniors [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. Despite major improvements and innovations in the health care sector that have transformed how care is delivered, traditional Medicare has barreled through the last 50 years on the same trajectory of increased costs and little innovation.”

In addition to the structural challenges facing the program, critical parts of Medicare are expected to run out of money by 2026. In other words, the benefits Americans were promised stand to disappear if policymakers don’t act soon.

As Heritage Foundation Senior Fellow Robert Moffit warned:

“Of federal entitlements, Medicare presents the most difficult challenge.”

That said, Dr. Moffit outlined several reforms that “have generated genuine bipartisan support” and promise to preserve and strengthen the program for generations to come, including:

1. Simplifying the Medicare benefit into a single plan by combining Parts A and B – including catastrophic coverage, an out-of-pocket cap, a single deductible, and uniform coinsurance – as well as reforming Medigap coverage;
2. Retargeting Medicare benefits to lower-income enrollees so that the program can continue to serve those most in need of assistance;
3. Updating Medicare’s eligibility age to 67 – the same eligibility age for Social Security – to reflect today’s medical and technological advancements and longer life expectancy; and
4. Cultivating competition through Premium Support to improve transparency and accountability, encourage innovation, and drive down health care costs.

When it comes to simplifying Medicare and incorporating catastrophic coverage, Chairman Tiberi called the need for reform a “no-brainer.” Dr. Moffitt overwhelmingly agreed, stating:

“It is a no-brainer. It is absolutely a no-brainer … [seniors] do not have protection from the most important thing that health insurance should deliver, which is that ultimate protection.”

As Dr. Moffit explained, the lack of catastrophic coverage in Medicare not only puts financial strain on the beneficiary, but it also causes a significant increase in unnecessary health care spending.

Harvard University Professor of Health Economics Katherine Baicker echoed the importance of advancing these commonsense solutions. Her testimony specifically focused on the need for increased competition, highlighting the role that the Medicare Advantage program plays in promoting innovation, as well as providing more seniors flexibility, choice, and quality at an affordable cost.

As Dr. Baicker emphasized:

“A thriving and competitive Medicare Advantage program can be a vital contributor to high quality beneficiary care in a sustainable health care system.”

At the conclusion of the hearing, Chairman Tiberi stressed the importance of bolstering support for Medicare Advantage, which serves approximately one-third of seniors today. Obamacare cut billions of dollars from Medicare Advantage and redirected those resources toward a one-size-fits-all, Washington-run entitlement.

When asked which Obamacare provisions Congress should work to immediately repeal in an effort to protect Medicare Advantage, Dr. Baicker replied:

“I would like to see the cap on quality bonuses removed … and removing the double bonus for quality so that you’re appropriately rewarding plans for delivering the high-quality care that beneficiaries are seeking out.”

As the Chairman concluded:

“If we continue to berate a system that has been wildly successful … I don’t think that’s a really good way to try and figure out how we best serve patients, seniors, in a more cost-effective, value-added, comprehensive way.”

Following today’s discussion, members will continue to examine Medicare reforms as they move forward with efforts to ensure current and future seniors receive the high-quality, patient-centered health care they deserve.