Federally Facilitated Exchanges: The draft application for qualified health plans
In at least 23 states, governors are allowing a "Federal takeover" in the form of a federally facilitated exchange (FFE). Now, CMS has published the first draft of the application that health plans need to complete to become a qualified health plan (QHP) in the CMS FFE. To be sure, the exchange regulation allows individual exchanges flexibility in defining rules and operations, provided they meet the basic requirements. This flexibility applies equally to how CMS interprets its role in operating exchanges in the FFE states.
Notwithstanding the publication of proposed rules around benefit packages, actuarial equivalents, risk adjustment and accreditation two weeks ago, the draft QHP application gives us only a glimpse at the sub-regulatory requirements an insurance provider must meet to qualify for a FFE contract. It is normal that laws beget regulation that change into sub-regulatory requirements in the form of manuals, applications and memos. The process is painstaking, long and aggravating as the government attempts to re-explain or respond to every question -- especially for new programs. So early adaptors, beware. There were approximately 100 promises of additional guidance in the final exchange regulation published in March. This draft application puts only a small dent in that promised guidance.
More importantly, for health plans who were expecting to be approved by sending CMS a copy of their state license and a benefit package, the draft application provides real meaning to "Federal takeover". The FFE application is effectively a new licensure process since each health plan is an unknown to CMS. Familiarity with a state regulator has almost no meaning, and a new set of judgments and evaluations are applied. CMS wants to see your state license first, but you will also need to explain that you are solvent and are in good standing with the state. For basics, CMS asks for extensive administrative data on the organization and its staffing. If there are corrective actions in place, CMS will determine if they are sufficient.
The draft application notes that multiple areas will have additional information added over time. One undefined, major area is a new section that will address parameters for network adequacy that may or may not agree with state licensure requirements. Also, a separate listing is required for a new, undefined provider category for essential community providers. No doubt, this section will undergo its own evolution. Additionally, for the FFE, CMS adds new requirements. For example, there is no exchange regulation for a compliance plan. However, for operating in the FFE, it's required.
Similar to applications for Medicare Advantage and Part D, FFE health plan applications will be submitted electronically. This includes the usual complexities given the nature of the systems used by CMS for validation and document uploads. A series of attestations is used to ensure that plans have reviewed requirements.
In the Medicare Advantage and Part D world, manuals and memos provide sub-regulatory guidance that defines these requirements. However, there is little or no sub-regulatory guidance for the FFE attestations. So far, only regulations are cited and, as noted above, there are over 100 places in the exchange regulation where future guidance is promised.
Finally, requirements for benefit plans and risk adjustment are in their comment period and are destined to become a part of the application. At the same time, the application promises that it will change over the next few months before it is final in early Spring 2013. However, the draft application clearly indicates to us that CMS will engage in a serious regulatory process. Clues to their methods have been firmly established in processes used in Medicare Advantage and Part D. Given the expected timeframes, health plans need to identify resources that can efficiently provide the right kind of responses during what promises to be a tumultuous startup to 2014.
What Health Care Federalism Looks Like
Insurers are beginning to grumble about the state-by-state variation in Exchange design as implementation bears down on the industry. Fierce Health Payer has a quick summary of the griping here. While I can't blame them for their frustrations (hey, we have to figure out all 50, too!) I do wonder how they would feel about the alternative: a national exchange whose model may not adequately recognize the dramatic differences in how care is delivered by geography, demography, provider culture, et al. Just look to the Medicare Advantage program and its challenges thus far in creating a quality rating system that does not properly account for the challenges in caring for a rural population.
Curious to know your thoughts, dear readers, on the virtues of the open vs. closed models….
Raising the Medicare Eligibility Age and Its Implications in the Fiscal Cliff Negotiations
You'd never guess from what you see in the news, but the fiscal cliff negotiations are proceeding on two tracks and there is a deal to be done in the coming weeks. One track is public: the screeds in the media and parliamentary chicanery on the Hill, all with the goal of proving their ideological purity to their respective bases and beating the crap out of the guys across the aisle. Speaker Boehner last Friday: "There isn't a progress report, because there's no progress to report." That piece has been depressing as hell to watch. Didn't we do this with disastrous results last August? The two parties are like little boys with toys.
The other track is private: the horse-trading going on behind closed doors by Boehner and President Obama. There, a deal is coming together. What we see is a game of chicken between Democrats and Republicans -- Dems won't budge on entitlement cuts and Republicans continue to reject any tax increases on the wealthy -- and at some point in the next two weeks, one party will blink. And the path to a deal is this: raise tax rates a little, giving Democrats a win, but not all the way back to 39.6 percent, giving Republicans a win. They'll cap some tax deductions as well to generate more revenue.
The bigger question is what Republicans will get on the spending side of the deal. There will be cuts to Medicare -- we're thinking in the neighborhood of $400-500 billion -- and the big concession from the Dems is likely to be an increase in the Medicare eligibility age from 65 to 67. It's not great policy as it would disproportionately impact minorities and hospitals and wouldn't actually save much if anything, but it has huge symbolic importance for deficit hawks and Tea Partiers, so it represents an outsize bone for the President to toss in. That's why you see Nancy Pelosi screaming it's a non-starter -- they're making it tastier for the right.
Sarah Kliff from WaPo did a terrific post today on the five biggest implications of an increase in the eligibility age. She points out that the change would move about 5 million seniors out of Medicare, and back to their employers' insurance, into the exchanges, or into Medicaid if eligible. A whopper of a finding: "as the federal government saves $5.7 billion in 2014 by spending less on Medicare, (employers and Medicaid) would spend $11.7 billion more providing the same health care benefits." Not much of a saver there -- but red meat for budget cutters.
The New Post-Reform Core Capability for Health Plans: Risk Adjustment
Medicare Advantage and Part D have for years been the world's largest experiments in paying insurers more for the care of sick members while paying less for healthier members, or risk adjustment. Some two dozen states now risk-adjust Medicaid payments to health plans, and the hundreds of Accountable Care Organizations (ACOs) launching this year and next are risk-adjusted as well. Now that the election has been decided, we know that health plans operating in the insurance exchanges launching in 2014 will also be risk-adjusted based on a similar methodology to that used in MA and Part D. It's the new core capability for health insurers in the post-reform world, and it's examined closely by my two top experts, Bill MacBain and Dr. Jack McCallum, in this month's Managed Healthcare Executive magazine here.
An Old Friend's Newest Challenge: Rein in Massachusetts' Health Costs
An old, dear friend of mine and fellow XLHealth Board member, Stuart Altman, was just appointed chief of healthcare cost containment for Massachusetts' ground-breaking reform effort -- a harbinger of things to come nationally as the Affordable Care Act now hurtles toward implementation. The local NPR affiliate did a great interview with Stu that I wanted to share here. As always, Stu brings tremendous insight and a sense of history and trends to his work, and as goes Massachusetts, so will go the rest of the country in 2014 and beyond.
"Massachusetts is the first state to say that health care costs must stop increasing faster than that of most other goods and services. Prof. Stuart Altman, a Brandeis economist who advised President Richard Nixon on health policy and President Bill Clinton on Medicare, has responsibility for helping the state achieve that goal.
Gov. Deval Patrick recently named Altman to chair the Health Policy Commission, the new board overseeing the sweeping cost-control law. The board, whose other members were announced last week, will monitor progress toward keeping health care spending in line with state economic growth overall. While he's "hopeful" the state can meet this goal, Altman notes that many attempts have failed over the years. WBUR's Martha Bebinger spoke with Altman about the challenge. Here is an edited transcript of that interview:
How do you see this new role?
Massachusetts has put together the best kind of balanced program that I could think of in the country, where it is relying at one level on the many changes that are going on in the private sector. But it also has put together an overarching public assessment of what's going on to make sure that it works, and it actually brings cost down without hurting quality.
If the changes that are currently in place don't do that, this commission is responsible for giving an early warning sign. So we don't have direct regulatory power to force the system to change, but we do have a monitoring role to make sure that it is working. If it's not, [we would] first direct the delivery system and the payers to change, and if that doesn't work, we could also recommend back to the legislature that the state needs more authority.
On one level I'm pretty optimistic. The level of changes that are occurring in the state are really very substantial. And I would say that the delivery systems, including our very big delivery systems, they really are seriously trying to restructure to live within a tighter budget than they had in the past. And the payers too -- Blue Cross, Tufts and Harvard also -- are tightening up the reins and not giving big increases.
But I've been around a long time and I've seen other years and other decades when after a while the cost-containment mechanisms in place began to fall apart, and did fall apart. So while I'm going into this quite optimistic, I also have a degree of skepticism so I'm going to be watching it pretty closely.
You have seen interest in reining in costs wax and wane. How do you rank this period?
If we look back in history we had very strong government regulation environment in the early and middle 1970s, actually put forward by a Republican administration. It looked like the government was going to be a very strong regulator of growing health care spending. We had wage and price controls from '71 to '74. We created health planning agencies all over the country. We had tough certificate-of-need laws.
And then as we move through the '70s we gradually dismantled it all and by the end of the '70s, it was all gone. Then we had a very brief period when the providers had what we called a "voluntary effort" to control their spending. All that fell apart and we had the biggest growth in our history in the 1980s.
Then we introduced managed care, which was extremely effective in slowing the growth in spending, but it was perceived by the patients — and the beneficiaries and the press — as a system that was holding back access and quality. We had this strong backlash and we essentially destroyed managed care by the end of the ‘90s. So I've seen both the private sector fall apart and the government sector fall apart.
Now, I think what's being done is smarter, and not quite as aggressive as the ‘90s, which I think is a good thing. If you're too aggressive you're going to get a lot of backlash too quickly. So I give it a higher probability of success than either the ‘90s or the ‘70s, and I am hopeful.
What's your main worry?
There are two:
Ultimately the constraints begin to hurt certain segments of the provider community, [and they] begin to put out statements to the patients that they're being denied needed care and we begin to develop a new backlash. So I think patients need to be part of this equation and we need to be balancing their needs with the people that pay the bills, so that's one side.
Massachusetts can only be so far ahead of the rest of the country. If inflation really begins to rear its head again in the rest of the country, the likelihood that Massachusetts would be able to really have a significantly lower level of spending growth is hard to hold on to. I'm going to be very conscious of trying to minimize any backlash and I'll also be watching what's going on in the rest of the country.
For patients, are things moving along now in terms of communicating clearly with patients as you think they should?
No. I don't think patients really understand these limited networks and tiered networks and ACOs and the like. I think there needs to be an expanded consumer education program. Also I think we need to do it smarter. You don't force a patient into any one delivery system, you just make it more expensive if they jump out of one to the other, which continues to gives them the choice. What happened in the ‘90s is that often they had no choice, they had to be at a particular network and they couldn't jump out.
So I think we've learned something in the last 20 years. If we're going to ask organizations to have responsibility for total spending of a particular patient population, [the patients] need to know they're in a particular group, but they also need to have the flexibility if for some reason they want to get out. I think we need to better educate our consumers and patients, but I think we've also learned from the ‘90s, so I'm hopeful.
This story is part of a reporting partnership that includes WBUR, NPR and Kaiser Health News.
Election Gives Health Reform the Kiss of Life
It's hard to argue this wasn't a decisive victory for the President and Democrats in the Senate. What remains to be seen is whether intractable Congressional Republicans will come to the table to get stuff done.
While it was a distant #2 issue in exit polls, this election was a de facto referendum on health reform. The ACA will not be repealed and is now assured to be Obama's lasting legacy. The "repeal and replace" campaign -- over three dozen repeal attempts in Obama's first term at taxpayer expense of more than $50 million -- is over. The GOP fought the ACA fiercely but I expect it will be hugely popular by 2016. Our hope is that Congressional Republicans will lay down their arms and help shape the ACA's implementation so they can share the credit when it's as successful as Medicare Part D has been. House Speaker John Boehner made some welcome gestures this week, asserting that "ObamaCare is the law of the land" and that the repeal agenda is over. We'll see.
Here are some thoughts on what happens in government health programs now that the election is over:
Sequestration and Fiscal Cliff: the 2% across-the-board sequester will not happen and the two parties will make a deal on the fiscal cliff that leaves everyone pissed — like compromise is supposed to. The political dynamics strongly favor the President, as his ideal scenario — raising taxes on the wealthy to accompany budget cuts -- occurs without any legislative action, and nothing happening in Congress is always a safe bet these days. Any deal reached will now involve both entitlement cuts and tax increases, we'd guess in the neighborhood of $2T or roughly half that recommended by the Simpson-Bowles Commission, and it will have bipartisan support.
"Doc Fix": The Sustainable Growth Rate (SGR) or the "doc cut" will be fixed, but it has to be paid for — and that's the obstacle both parties struggle with. MA rates are profoundly impacted by this issue, and Congress's inclination to deal with it through annual increments rather than the 10-year price tag in CBO estimates means that MA plans must wait until the next year's rates are announced. The discrepancy between how and when MA rates are set vs. FFS means that MA plans are never really made whole. It's a tremendous challenge for our industry — and an enormous windfall for MA in 2014 and beyond if Congress solves the problem.
Exchanges: Many Red State governors held out hope the election would settle whether they must prepare for health reform. The 11th hour means most have been caught flat-footed and the Federal Exchange will operate in over 30 states and will be the defining marketplace for health insurance starting in 2014. Far-right governors in Kansas and Virginia will eat the Federal fallback; Wisconsin Governor Scott Walker is now scrambling to get his own exchange together, and a handful of others may follow. It's one of the supreme ironies of Obama's reelection: the governors who screamed loudest of a "government takeover of health care" are about to get just that for their inaction, when the Federal Exchange comes to town in 2014.
Medicaid: most, if not all, of the 7-8 Red States who opposed expansion following the Supreme Court ruling will fold and take the expansion funds in the next 90 days — it's just too good a deal to pass up. Most of the 16 Million new Medicaid beneficiaries envisioned by the ACA — many childless uninsured adults -- will be assured of coverage in a second Obama term.
Dual Eligibles: The migration of dual eligibles to health plans will now move forward in more than two dozen of states in the next two years. The state fiscal crisis will overwhelm concerns about the speed of the migration, and it will result in over $200 Billion in new annualized premiums for plans in the next 3 years. The duals are now affirmed as the biggest opportunity for health insurers in a generation — bigger than the exchanges. They're also the most vulnerable, complex and expensive patients in the entire US health system and will challenge health plans like never before.
Medicare Advantage and Part D will continue on the course set by the ACA, and we expect the consolidations within the industry to accelerate with the election's uncertainty resolved. Look for a much tougher CMS in a second Obama term, with a continued increase in oversight, bolder regulations raising the bar, and a tougher compliance posture from CMS for Medicare Advantage and Part D plans.
- The Stars program's current trends will continue: Standards will change every year and underperforming plans will be hunted down and eliminated. CMS may get moving on SNP-specific rating standards, as SNP plans will be in trouble soon without them. Plans with 4+ Stars will continue to get bonuses and rebates under the ACA, but 2013 will usher in a new era of sub-3 Star plans being shut down by a much tougher CMS.
- CMS will keep trying to find a better way to risk adjust. We expect an attempt to recalibrate the HCC coefficients based on encounter data, which will change the dynamic: Plans will have to find missing codes to avoid being cut, rather than getting paid more. How CMS adjusts for the FFS error rate will be crucial.
- SNP and 1876 reauthorizations will both get paid for, but we need a vehicle to get the 1876 extension quickly, since it expires the end of December 2012. SNPs expire at the end of 2013, and so have more time for reauthorization.
Medicare: We expect Medicare will serve as a piggy bank for deficit-reduction proposals, given its size and fiscal situation.
- The Ryan/Wyden Medicare reform proposal will be debated as a gesture of "cross the aisle" goodwill from the President, but won't come close to enactment. But "premium support" will go mainstream in the debate and become more palatable over time — it reeks of inevitability and Democrats must come to the table to save the program we all hold so dear. The discussion begun by Ryan and Wyden must have its day.
- We expect the cuts that have been considered in prior budget proposals will be back on the table, including: fraud detection, reforming Medicare cost sharing rules, restricting first dollar coverage in Medigap, extending Medicaid drug rebates to duals and LIS, and more means testing. Provider cuts will also be on the table, especially for hospitals.
- An increase in the eligibility age to 67 is a possibility. But unlike with Social Security, deferring the eligibility age merely cuts off the lowest-cost tail of the distribution. The cost reduction would be disproportionately small compared to the number of people politicians would upset.
ACOs: with the ACA intact, the truly astounding surge in ACOs participating in Medicare, Medicaid and the commercial market will continue. Over 100 ACOs are already operating in Medicare. Over 500 applications were received by CMS for the September filing deadline for the Medicare Shared Savings Program, and over 300 ACOs are active in the commercial market and Medicaid reforms. With the election ACOs are here to stay as the bedrock contracting vehicle for the evolution and enrichment of forward-looking providers.
While it ended up a "status quo election" it gave the Affordable Care Act an indelible kiss of life and ushers in one of the biggest changes in our domestic policy in a generation. Now it's time to get down to the real work of implementing it.
Public and Private Exchanges
It appears that Medicare beneficiaries who use the most health care services and are often considered the least able to shop over the internet for health insurance may have been the trailblazers for how health insurance will be purchased in the future. Medicare took a first step in the 1990s when it created a voluntary online marketplace where Medicare beneficiaries could select a Medicare Advantage private plan from the government run internet site "Medicare Compare". Medicare expanded the experiment when it implemented the Part D prescription drug plan benefit in 2006. At that time, all seniors and disabled beneficiaries who were not covered by an employer drug plan were required to shop and select from an online menu of new prescription drug plans during a short open enrollment period.
The automobile industry can be credited for targeting Medicare retirees in 2008 when it began a major shift from group health insurance plans to individual plans offered through a private Medicare exchange operated by Extend Health. The financially strapped auto industry cushioned the move from defined benefit plans to defined contribution health plans by offering cash to cover additional benefits and Extend Health "coordinators" to help Medicare retirees choose an individual insurance policy from a menu of private plans. Other private sector employers cautiously followed and the Extend Health private exchange serves 130 employers and 200,000 retirees. Employers report savings of $400 million annually in retiree health insurance costs and a substantial reduction in administrative burden.
This year Towers Watson bought Extend Health with plans to broaden the private exchange to serve employers in the commercial market. Aon Hewitt also announced plans to expand its private exchange to serve the commercial market. On September 27, 2012 the Wall Street Journal in a front page article discussed how two large employers, Sears Holding Group and Darden Restaurants Inc. are "planning a radical change in the way they provide health benefits…giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace". This shift is different from the auto industry shift since employees will still remain in employer group plans and will not select from plans in the individual market. The online marketplace operated by Aon Hewitt will offer 150,000 Sears and Darden employees 5 plans which is substantially fewer than the up to 30 plans offered by Medicare. The Journal reported that this move will be closely watched since it "might parallel the transition from company provided pensions to retirement 401k". Several recent surveys of employers find that 40 percent expect to participate in a private exchange over the next three to five years driven largely by the CFO's interest in cost savings.
On a separate track, health care reform is building health exchanges or marketplaces that will be available in October 2013 for individuals and small employer groups to purchase health insurance. The ACA exchanges are projected to provide insurance to 16 million persons. Large employers will not be eligible to participate in the ACA exchanges until 2017.
The developments under the ACA are spurring large employers to rethink their current retiree health care options. With the loss of the tax benefits from the Retiree Drug Subsidy in 2013, many employers are moving their Medicare eligible retirees into Employer Group Waiver Plans, either Medicare Advantage or Prescription Drug Plans. This trend will continue. Other employers will consider private exchanges. The 2012 Retiree Health Care Survey conducted by Aon Hewitt reports that 63 percent of employers have either made or plan to make retiree strategy changes in the near future.
So the trend is clear - increasingly Medicare retirees and active workers and their families will be using health exchanges, either public or private, to select their health care insurance in the future.
Affordable Care Act and Insurers of Last Resort
From the Detroit News, 9/12/12:
Gov. Rick Snyder says his plan to reform Blue Cross Blue Shield of Michigan would make health care more affordable and improve health, but it was met Tuesday by resistance from other insurers, the state's attorney general and a consumer group.
Snyder's proposal would convert the state's largest health insurer into a mutual insurance company owned by its members, end its special exemption from state taxes and make it comply with state rules that other insurers must meet.
This reminds me of BCBS of NW Ohio, which became Medical Mutual. They gave up not-for-profit status to go mutual, and, unlike Michigan (at least so far), gave up the Blue Brand. Surprisingly, they have remained a mutual company and not gone the rest of the way to stockholder ownership.
If the economy in Michigan turns around, and people start moving to Michigan instead of away, I could see BCBSMI going for-profit. Until then, I would expect their stock would fare worse than Facebook.
I do expect the exchanges to generate a trend among Blues to try to shed their "insurer of last resort" role. They will compete better outside the exchanges if they can get the exchange plans, including their own, to carry the last resort risk. Sort of like bad banks and good banks dealing with toxic assets. This would be another step in the process of turning the exchanges into high risk pools. Health insurance will continue to be a game of Old Maid until everyone operates by the same set of rules. I'm thinking Medicare for all, with MA at the center, but we'll see.
That would also fix the biggest problem with Ryan/Wyden: the GDP+1 cap on the vouchers to buy Medicare plans will shift more costs into the commercial sector, which has no such cap. If the Medicare and commercial sectors merge, that problem goes away.
Obama, Ryan, and the Myth of Competition
Both the exchanges at the heart of ObamaCare, and the competing plans in the Ryan Medicare reform proposal rely on competition among health insurance plans to reduce the upward trend in the costs of health care. But health insurance isn't health care.
With the consolidation of health care providers that is happening throughout the US, more and more health care is being purchased in non-competitive markets. Health insurers are faced with large systems that must be included in the carriers' networks if they, the insurers, are to offer a competitive product in the market. Consumers expect access to the big systems, and insurers must include them. That is the description of an oligopolistic market for health care. Nothing that happens in the exchanges or among the Ryan-esque Medicare plans will change that dynamic. Eighty to eighty-five percent of the cost of health insurance is driven by the cost of health care. Costs determined by the health care oligopolists will inexorably drive up the costs of health insurance.
A 2011 RAND study found that "hospital markets are much less competitive than health plan markets nationally and, importantly for consumers, that hospitals operating with little competition are able to charge health plans much higher prices, which are passed on to consumers in the form of higher insurance premiums."
Anna Wilde Mathews, writing in the August 27, 2012 Wall Street Journal cites hospital acquisition of physician practices as another cost driver that is immune to health insurance competition. She notes that prices for procedures can double after an acquisition, sometimes even when the procedure is performed by the same people in the same facility with the same equipment.
The Health Care Cost Institute published a study of health care costs in May of 2012, based on an analysis of commercial insurance claims from over 33 million beneficiaries of several large carriers. The Institute found that "the increase in per capita health care expenditures from 2009 to 2010 was primarily driven by higher unit prices and not by the utilization (amount) or intensity (mix) of services." This was in the wake of the Great Recession, when competitive pressure should have been driving prices down, as in other markets. But competition among the major carriers who provided the data for this study had no apparent effect on prices charged for care.
In this study, increases in the cost of care determine increases in the cost of health insurance, in a way that competition, even among major insurance carriers, could not alter.
The policies of both parties regarding affordability of health care are built on a myth. Expecting competition among health insurers to control the cost of health care is akin to expecting competition among auto manufacturers to control the price of gasoline.
Politics Distort Similarities Between RomneyCare, ObamaCare and RyanCare
I was quoted in Monday's New York Times story on the success private plans are having in Medicare, pointing out the similarities between RomneyCare, ObamaCare, and RyanCare -- Paul Ryan's proposal for Medicare reform, now receiving unprecedented scrutiny following his selection as Vice Presidential candidate. When you remove the distortion of election-year politics, it's easy to see the three approaches share the same DNA.
Only in an election year could you see a conservative advance a proposal for Medicare reform with a liberal pedigree and get demagogued for it. The same could be said for Obama -- a liberal advancing health reform with conservative concepts. Consider:
- RyanCare's premium support or vouchers resemble the subsidies of Romney's Massachusetts' health reform and Obama's Affordable Care Act. All three proposals have roots extending to President Clinton's and subsequent bipartisan entitlement reform commissions, as well as to conservative think tanks like the American Enterprise Institute and the Heritage Foundation.
- All three feature a government-regulated insurance exchange, modeled after Medicare Advantage and Part D, as the central marketplace where consumers will choose the coverage that fits best.
- All three feature critical insurance reforms and foster regulated competition among payers and providers at their core. To be clear, Ryan's second Medicare proposal with Senator Ron Wyden (D-OR) features much stronger consumer protections.
Medicare really wasn't a leading issue in the election; now it is with Ryan's selection, especially in senior-heavy swing states like Florida and Pennsylvania. Both camps are jockeying to define the other, with Ryan the Democrat's poster boy for "Medi-Scare" or "Medagoguery" tactics. An honest debate over Medicare is delusional in an election year -- but will be unavoidable in 2013 as the "fiscal cliff" looms and the deficit debate comes to the fore again.
My concern is that Democrats and Republicans will stake out positions during the election cycle that prevent them from having the thoughtful discussion the country needs about Medicare's future next year. We must first agree that Medicare in its current form is unsustainable. The most recent Medicare Trustee's report stated the Part A Trust Fund will be bankrupt in 2024 under a rosy outlook, and we know the program is a major contributor to deficit projections. We can't go on this way.
Ryan-Wyden lays out a carefully considered approach shown to be successful in Medicare Advantage and Part D. Without Ryan-Wyden's kind of structural reform, we have no hope of getting our debt under control. Ryan-Wyden was a significant improvement over "Ryan 1" -- his first, draconian Medicare reform proposal two years ago -- and it shows Wyden's liberal, former Gray Panthers fingerprints. It keeps traditional Medicare as an option, with heavily-regulated competition at its core. Ryan-Wyden is adequately funded whereas Ryan 1 pegged subsidy growth to inflation, which would result in a huge cost shift to beneficiaries. Ryan-Wyden's subsidies are pegged to the second-lowest bid or traditional Medicare, whichever is cheaper. Seniors who choose a plan above the benchmark would pay the difference, just like in Part D. It calls for the formation of a Medicare exchange modeled after www.Medicare.gov, and even adds a new catastrophic benefit, also like in Part D. It is inextricably related to both RomneyCare and ObamaCare.
The fundamental difference between the parties is what we'd do with the savings, and that's what elections are for. My hope is that it doesn't get so nasty that battle lines harden and Ryan-Wyden doesn't get its moment.