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April 20, 2014

Entitlement Reform: Possible Changes to Medicare & Medicaid

With all the talk in Washington about deficit reduction and efforts to craft a “grand bargain,” entitlement “reform” or changes to entitlement programs, such as Medicare and Medicaid, are on the table.  Taken together, Medicare, Medicaid, and the Children’s Health Insurance Programs are an estimated 21% of the federal budget while Social Security is approximately 20%.[i]  According to the Pew Research Center, beginning January 2011 and for the next 19 years, 10,000 people a day are turning 65 – making them eligible for entitlement programs, such as Medicare and Social Security.[ii]  In turn, this demographic reality will cause those slices of the federal budget pie to grow at break-neck speed, unless the Congress does something to stem the tide.  Hence, the growing bipartisan interest in discussing entitlement reform.

So, what does that really mean?  One usual favorite for reducing entitlement spending being touted is cracking down on “fraud, waste, and abuse,” which supporters say could potentially save billions each year (though the independent Congressional Budget Office (CBO) tends to think otherwise).  In addition to that old stand-by, here is a sampling of some of the other changes to Medicare and Medicaid currently under consideration:

  • Reforming Medicare cost-sharing rules
  • Restricting first-dollar coverage in Medicare supplemental insurance (Medigap)
  • Extending Medicaid drug rebates to dual eligibles in Medicare Part D
  • Cutting Medicare payments to hospitals for bad debts
  • Accelerating Medicare home health savings in health reform
  • Eliminating state Medicaid provider tax (a mechanism used by a majority of states to increase their federal Medicaid matching funds)
  • Placing dual eligibles in Medicaid managed care
  • Block granting the Medicaid program
  • Moving some or all of Medicare into a “Premium Support” program
  • Combining Medicare Part A&B deductibles
  • Expanding use of competitive bidding under Medicare
  • Bundling Medicare payments (e.g., moving away from fee-for-service)
  • Increasing the eligibility age for Medicare
  • Increasing means-testing for high-income Medicare beneficiaries

[i] http://www.cbpp.org/cms/index.cfm?fa=view&id=1258

[ii] http://pewresearch.org/databank/dailynumber/?NumberID=1150

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About the Author

Managing Government Relations Director

Ilisa Halpern Paul has more than 20 years of experience in health care, advocacy, and policymaking in non-profit, academic, federally funded, and government settings. Ilisa's practice focuses on advocacy, public policy, and federal support for national patient advocate health professional organizations as well as hospitals and health systems. Prior to joining the firm, Ilisa served as senior government relations director at Arent Fox where she represented and advanced the legislative and regulatory interests of numerous non-profit and advocacy organizations, trade associations,...

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