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Bipartisan Center Offers Plan To Reduce Health Spending

By Mary Agnes Carey

April 19th, 2013, 6:12 AM

Medicare beneficiaries would have access to better coordinated medical care and the current Medicare physician payment formula would be scrapped as part of a health care cost containment plan the Bipartisan Policy Center unveiled Thursday.

The plan offers more than 50 recommendations that would cut the federal deficit by about $560 billion over the next decade.  About $300 billion of those savings would come from Medicare.  The document makes a variety of recommendations to change how health care is delivered and financed in both the public and private sectors.

“What we’re trying to do is bring about better value for every person in health care today. We spend too much, we give too little, in our current system,” said former Senate majority leader Tom Daschle, D-S.D., one of the report’s authors. “We want a high performance, high value health care marketplace with better access, better quality and lower cost. That’s value.”

Daschle’s co-authors include another former Senate majority leader, Bill Frist, R-Tenn., as well as former Senate Budget Committee Chairman Pete Domenici, R-N. Mex., and former Congressional Budget Office Director Alice Rivlin.

Building upon the 2010 health law’s accountable care organizations,  or groups of doctors and hospitals that share responsibility for providing care to patients, the proposal would create new  “Medicare Networks”  that would offer lower premiums and cost-sharing to beneficiaries and financial incentives to physicians, hospitals and other health care providers to better coordinate medical care.  Rivlin described them as accountable care organizations “on steroids.”

The current Medicare deductibles for Part A (hospital care) and Part B (outpatient services like doctors’ visits and laboratory services) would be combined into one $500 yearly deductible, and the proposal calls for a new $5,315 out-of-pocket cap on beneficiary cost sharing.

Cost-sharing assistance would be expanded to Medicare beneficiaries with incomes of up to 150 percent of the federal poverty level, or $17,235 for an individual based on current poverty guidelines.  Beneficiaries could choose either the new networks, the traditional fee-for-service or Medicare Advantage for coverage.

Generous Medigap insurance, which many people now buy to supplement their Medicare, would be replaced with plans that have a  deductible of at least $250, could cover no more than half of beneficiary copayments and coinsurance, and cap beneficiary spending at no less than $2,500.

Beyond Medicare, the report would do away with the 40 percent excise tax on high-cost health plans that the health law would implement in 2018, and the proposal would also scrap the current system in which employers have an unlimited deduction on insurance they provide workers. Instead, employers could deduct the dollar amount equivalent to the 80th percentile of single and family employer sponsored insurance premiums in 2015, with adjustments for age and gender.

The report’s authors said its findings have been well received by Capitol Hill lawmakers and staff, and Daschle said that White House Chief of Staff Denis McDonough “is very encouraged by our progress here.”

But that doesn’t guarantee smooth sailing ahead. President Barack Obama, Democrats and Republicans are deeply divided over tax policy and entitlements. Maybe the report can help break the logjam, Daschle said.

“”The signs are good here that we’ve got a product that both sides can feel comfortable beginning a dialogue. That’s all we can do,” Daschle said. “It’s too early to predict just how far this can go.”

The Peter G. Peterson Foundation and the Robert Wood Johnson Foundation provided funding for the report.

This article was produced by Kaiser Health News with support from The SCAN Foundation.

2 Responses to “Bipartisan Center Offers Plan To Reduce Health Spending”

  1. Jimmy1920 says:

    On one hand the plan calls for “cost sharing assistance”. On the other hand it requires a minimum out of pocket maximum for Medigap policies.
    The one good idea here is the elimination of the 405 excise tax

  2. misty says:

    ACOs on steroids do nothing to put the most important responsibility for a patient’s care on the patient personally. You can starve doctors all you want to the point where dangling the carrot of payment for a good patient outcome will sound promising, but if the patient has no desire or intention to comply or participate successfully in his/her own treatment, there will be no successful outcome. Punishing a doctor financially for what the patient is unwilling to do is folly, and is the huge unspoken pitfall in this untried and unproven design that only academics and Obamacare boondogglers could possibly love. Obamacare is a recipe for disaster, and this unrealistic, nonsensical fix will not save it.