Turning Up the Heat on Medicare
About This Event

Though Medicare has long faced financial challenges in meeting the health needs of its participants, as a result of recent health reforms the program is expected to lead the way in finding better ways to pay for, and more efficient ways to deliver, Americans’ health care. Yet Medicare will Listen to Audio

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soon face the growing needs of baby boomers turning sixty-five, while providers are still paid for services--not health improvements--and large cuts in reimbursement could force some of them out of the program. Furthermore, beneficiaries are confronted with confusing and incomplete program benefits that cause most to seek additional coverage. At this AEI event, speakers discussed what the latest reforms mean for Medicare, whether the program is up to the job, and what is at stake for doctors and patients.

Event Summary

WASHINGTON, SEPTEMBER 15, 2010--A panel of health experts gathered at AEI Wednesday to discuss the Affordable Care Act's impact on Medicare. Expected to lead the way in payment and delivery reform, Medicare now faces new financial challenges from the legislation and retiring baby boomers entering the program. James Capretta, a fellow at the Ethics and Public Policy Center, argued that the reported savings from the law will not occur because provider-productivity improvements, accountable care organizations, and other initiatives in the legislation are unlikely to produce the anticipated cost reductions. He also said that Medicare reimbursement rates could drop below Medicaid levels over the next few decades, threatening beneficiary access and quality of care. Panelist Scott Gottlieb, M.D., a resident fellow at AEI and a practicing physician, discussed the impact of the fee-for-service payment structure on provider behavior, while Marilyn Moon of the American Institutes for Research emphasized the need for a less exclusively Medicare-focused reform approach.

  • "[Medicare beneficiaries] don't have any financial incentive to participate in the ACO [accountable care organization] concept. The only way it works is if the ACO can subtly and maybe in ways that are not visible to the beneficiary steer them in ways to different providers and new networks without them objecting to it. Now, maybe that can work to some extent, but can it work in a big way to actually bring costs under control? I find it unlikely. These patients are going to be able to eventually figure out, 'Hey what they're trying to do is steer me away from this specialist I've been seeing for years and years. I don't want to do that. And there's no skin in the game for me to want to do it.' They don't participate in any kind of the financial rewards, nor do they participate in any of the financial penalties. So, I think hanging our hat on ACOs being different from all of the other alphabet soup initiatives that have been tried by [the Centers for Medicare and Medicaid Services] over the last twenty-five years to get to delivery-system reform is really a lot of wishful thinking."
    --James Capretta, Fellow, Ethics and Public Policy Center

  • "Do I think that if we suddenly moved away from private fee-for-service and Medicare fee-for-service and move to a system of private plans everything would be great? Not particularly, because if you look at the Medicare Advantage program, which has grown dramatically, most of it was in private fee-for-service. People don't want to go into managed care at this point. We've got to change attitudes and beliefs in people, and blaming it on the Medicare program as if all of that could be solved by just tweaking that program here and there is not going to do it. We are going to really have to change attitudes. We are going to have to have some real biting the bullet, and I think that means some government leadership as well as private-sector leadership."
    --Marilyn Moon, Vice President and Director of the Health Program, American Institutes for Research

  • "There is not a lot of private capital available to invest in these ACO [accountable care organization] concepts. Certainly there is not a lot of capital to invest in hospitals. Nobody is investing in hospitals right now, and there is not a lot of capital in the venture community to form independent ACOs. . . . The venture-capital community does not want to put money into health care services."
    --Scott Gottlieb, M.D., Resident Fellow, AEI

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Speaker Biographies

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI. He is also a commissioner of the Maryland Health Services Cost Review Commission and a health adviser to the Congressional Budget Office. Before joining AEI, Mr. Antos was assistant director for health and human resources at the Congressional Budget Office. At AEI, Mr. Antos’s research focuses on the economics of health policy, including Medicare reform, health insurance regulation, and the uninsured. He has written and spoken extensively on the Medicare drug benefit and led a team of experienced, independent actuaries and cost estimators in a study to evaluate various proposals to extend health coverage to the uninsured. Mr. Antos is the coauthor of a recent AEI paper called A Better Prescription: AEI Scholars on Realistic Health Reform.

James C. Capretta is a fellow at the Ethics and Public Policy Center, where he studies and provides commentary on a wide range of public policy and economic issues, with a focus on health care and entitlement reform, U.S. fiscal policy, and global population aging. Mr. Capretta is also a health policy and research consultant with Civic Enterprises LLC, a senior advisor to Leavitt Partners, and an adjunct fellow with the Global Aging Initiative of the Center for Strategic and International Studies and with the Hudson Institute. His essays and articles have appeared in numerous print and online publications, including USA Today, Health Affairs, National Affairs, Kaiser Health News, the Weekly Standard, National Review, the New Atlantis, and Tax Notes. He is the author of the health care blog Diagnosis and a frequent contributor to National Review Online. Mr. Capretta has also testified before Congress and appeared as a commentator on Fox News, Fox Business News, CNBC, MSNBC, EWTN, and numerous national and local radio programs. Previously, he served as an associate director at the White House Office of Management and Budget (OMB) from 2001 to 2004, where he was the top budget official for health care, Social Security, education, and welfare programs. Earlier in his career, Mr. Capretta served in Congress as a senior analyst for health care issues and as a budget examiner at OMB.

Scott Gottlieb, M.D., is a resident fellow at AEI, researching the regulatory policies of the Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS), the development of new medical technology, and political and clinical trends in medicine. He is a practicing physician, a former FDA deputy commissioner, and a former senior adviser to the administrator of CMS at the Department of Health and Human Services. Dr. Gottlieb has served on the editorial staffs of the Journal of the American Medical Association and the British Medical Journal. Previously, he worked as a health care investment banking analyst at Alex. Brown & Sons.

Marilyn Moon is vice president and director of the Health Program at the American Institutes for Research. She is also the program director for the Commonwealth Fund’s Program on Medicare’s Future. Previously, Ms. Moon held positions as a senior fellow at the Urban Institute, a public trustee for the Social Security and Medicare trust funds, an associate professor of economics at the University of Wisconsin–Milwaukee, a senior analyst at the Congressional Budget Office, and the founding director of the Public Policy Institute of the American Association of Retired Persons. She has written extensively on health policy, both for the elderly and the population in general, and on social-insurance issues. Recent publications include "A Place at the Table: Women’s Needs and Medicare Reform" and "Stretching Federal Dollars: Policy Trade-Offs in Designing a Medicare Drug Benefit with Limited Resources." From 1993 to 2000, Ms. Moon also wrote a periodic column for the Washington Post on health reform and health coverage issues. She has served on a number of boards for nonprofit organizations and is currently on the board of the Medicare Rights Center.

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