As good as it gets? The future of Medicare+Choice.
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As home care agencies change from cost-based reimbursement to the managed care risk paradigm, many lack experience with organizational resources and functions needed to successfully operate in the managed care environment. This survey assessed the level of "readiness" for managed care reported by 162 randomly selected home care agencies in three mid-western states. Managed care readiness was measured by a 32-item mailed questionnaire addressing clinical, financial, operational, and informational systems within each agency. Higher levels of readiness were significantly related to the perception of being ready, proprietary auspices, and moderate agency size in a multivariate regression model. Agencies with these characteristics appear to be well positioned as home care moves into the managed care environment.
This paper examines policy options for addressing health care challenges posed by the aging of the baby boom generation. Universal Medical Savings Accounts (UMSAs) are proposed. UMSAs are defined-contribution vouchers coupled with medical savings accounts. The proposal includes significant equity protections for those with low income/wealth, including balance billing limits and stop-loss protections, together with subsidies for risk-adjustment. The policy would control costs while promoting quality, accessible, and affordable health care. UMSAs provide new behavioral incentives, both for cost-conscious health care decision-making and for healthy lifestyle choices.
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Medicare+Choice was established under the Balanced Budget Act of 1997 to expand the range of health plan options available to beneficiaries and to encourage plans to compete on the basis of price and quality, with potential savings to beneficiaries and the program. However, it is unclear whether the envisioned positive outcomes will occur. This paper reviews the rationale for expanding choices under Medicare. It considers how the rapidly changing health insurance market poses uncertainties for beneficiaries and concludes with a discussion of safeguards that may be necessary to assure that the program continues to work well for beneficiaries with diverse needs and circumstances.
Although future Medicare costs are highly uncertain, reasonable projections of those costs suggest a major financing problem. The Balanced Budget Act of 1997 will provide temporary relief, although it introduced some new problems, including its geographic adjustment of Medicare+Choice rates. For the future we propose a premium-support system and an expanded benefits package. Such a system would provide a more flexible means to adjust the division of the financing burden between the elderly and the nonelderly, potentially gain some efficiencies from greater price competition and less reliance on administered pricing, and partly address the issue of uninsured early retirees.
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There is much policy talk about making Medicare more competitive, like private markets. But when reform proposals near implementation, local opponents of competition are often able to stop reform experiments. This paper reports on one recent example, the Competitive Pricing Advisory Committee, created by the 1997 Balanced Budget Act (BBA) to bring competitive bidding to Medicare + Choice plans. After design and site-selection choices were announced, members representing local interests were able to delay and perhaps kill competitive bidding before it could start, once again. A public report of this story may save future market-based Medicare reforms from a similar fate.
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This paper assesses the desirability of transforming Medicare into a premium-support system. I focus on three areas crucial to the future of Medicare: cost savings, beneficiary choice, and the stability of traditional Medicare. Based on my analysis of the Bipartisan Commission on the Future of Medicare plan, I find substantial problems with adopting premium support for Medicare. In particular, projections of premium-support savings are based on questionable assumptions that the slowdown in health spending during 1993-1997 can be sustained and extrapolated to future Medicare performance. Consequently, premium support may inadvertently destabilize public Medicare and erode beneficiary choice without achieving substantial savings.
Based on national surveys of employers from 1988 through 2001 and recent key-informant interviews, this paper examines trends in employer-based retiree health benefits. We assess trends in the availability of coverage to early and Medicare-eligible retirees, the cost of coverage, plan choice and enrollment, prescription drug coverage, and recent changes in plan design. During a period of low health care inflation and record prosperity, retiree coverage declined slightly, unlike the coverage of active workers. Indemnity enrollment remains strong among retirees, and employers are cautious about Medicare+Choice because of continuing plan withdrawals. Numerous indicators point to a further and accelerating decline in retiree coverage.
This paper examines racial variation in quality of and access to care experienced by elderly persons enrolled in Medicare+Choice plans. We used eight individual-level Health Plan Employer Data and Information Set (HEDIS) measures to compare whites with blacks, Asians, Hispanics, and Native Americans. Across all measures, black enrollees received lower-quality care. Hispanics and Native Americans were less likely to receive some types of care but were as likely or more likely to receive other types of care. Asians received equal or better care for all measures. It is important that studies of health care quality include all racial subgroups since the black/white patterns may not apply.
Tom Scully, administrator of the Centers for Medicare and Medicaid Services (CMS), the nation's largest health insurer, discusses the Medicare program with Princeton University economist Uwe Reinhardt. Scully's previous appointments in both the public and private sectors have given him a diverse set of experiences from which to draw in his current position. He praises the agency's staff for devising innovations to cope with a changing health care environment, praises the program for continuing to meet most seniors' needs, and staunchly defends the Bush administration's focus on the private sector as the way forward for Medicare.
We surveyed a random sample of 1,500 elderly people with chronic diseases who were enrolled in eight Medicare+Choice plans with a zero-premium, dollars 200-dollars 300 annual drug benefit and no deductible. An estimated 32 percent did not fill a prescription or reduced a prescribed dosage because of out-of-pocket costs. Lower drug benefits, higher out-of-pocket costs, lower income, and poorer health were associated with underuse of medications. Drug benefits with high out-of-pocket costs might not be effective for beneficiaries who use medications for chronic diseases, especially those with low incomes.
Although millions of older Americans rely on employer-sponsored retiree health benefits to help pay their medical expenses, declines in this coverage have been documented. Using data from the Medical Expenditure Panel Survey, our findings reveal steady erosion in retiree health benefits since the mid-1990s. Based on this much larger survey of private establishments than previous studies have used, we conclude that in 2003 only about one-quarter of private-sector employees worked at establishments that offered health benefits to retirees, down from 32 percent in 1997. Private firms have also been passing higher shares of health insurance costs to retirees.
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