As the presidential election enters full swing, Medicare reform should be atop the federal agrnda
For decades, the Medicare program was the gold standard of health coverage. Then, something unexpected happened: it started to show its age. The program—signed into law in 1965 during Lyndon Johnson’s presidency—has failed to keep up with the changing needs of our society. And so, when we turn our eyes towards the traditional Medicare program these days, we see its flaws.
What are these flaws? Earlier today, JAMA Internal Medicine published an article in which I detail several of them. I think it’s worth visiting them in this space too.
Participation in Medicare is expensive. Depending on one’s retirement income, one might pay up to $1,000 in monthly out-of-pocket costs after having spent a lifetime paying into the system through paycheck deductions. While traditional Medicare was imagined as a plan to provide income security for older adults, it is now best described as a high-deductible health plan that exposes older adults to high premiums and out-of-pockets costs for physician and prescription drug coverage. The median income of older adults is $50,290; most can ill-afford all of these additional costs—but that’s the reality of the Medicare program in 2024.
Medicare fails to prevent illness. Medicare reasonably reimburses doctors and hospitals to manage the costly complications of chronic disease—but does very little to drive delivery of preventative services. Though there have been efforts to make healthcare payments more “value-based” (rewarding doctors and hospitals for outcomes instead of the volume of procedures performed), Medicare’s primary underlying payment methodology is still “fee-for-service.” Doctors and hospitals are reimbursed when patients are sick, rather than when they are healthy, inviting higher volumes of high-cost procedures and tests. Wouldn’t we rather have a health system that’s aligned with health and not sickness?
Medicare is incomplete. The list of services that should be covered by the program but are not is extensive. Vision coverage? No. Audiology and hearing aid coverage? No. Dental coverage? No, again. And there’s a reason for these omissions. For better or worse, we have left big changes to the Medicare program in the hands of Congress. While new authorizations of federal funding should lie in the hands of our government, it is not a particularly efficient way of managing or innovating our health benefits, particularly at a time of prolonged partisan dysfunction. And so we have a program that denies the existence of our eyes, ears, and teeth—and the connection between the health of those organs and our overall well-being. Not to mention programs to address the underlying social determinants of health, such as transportation and food insecurity.
A Path Forward
How do we begin to address these deficiencies? We can start by bolstering the Medicare Advantage program. (I lead SCAN Health Plan, a Medicare Advantage plan.) Medicare Advantage is the program through which private health plans administer the Medicare program for older adults. While benefits are richer and more innovative in Medicare Advantage—and out of pocket costs are lower—these benefits are often harder to access because of stringent utilization management protocols. More thoughtful administration of the Medicare program would include: better models of risk adjustment; a new STARS program; and tougher rules requiring plans to provide greater access to care and more patient-centered utilization management processes.
More ambitious but even more valuable would be to extend enrollment cycles. The program’s annual enrollment cycles prevent plans from making necessary investments in prevention. If plans had a 3-5 year horizon over which to impact health outcomes, they would have added incentives to make upfront investments to lower costs and improve care.
A ‘Major Reboot’
The next presidential administration—Republican or Democrat—must take a hard look at the Medicare program in its totality and consider a major reboot. At the heart of the reboot must be:
- Fully retiring the fee-for-service payment system and replacing it with one that rewards doctors and hospitals for long-term quality with an emphasis on episodes of care rather than discrete services;
- Creating robust, long-term incentives for doctors and hospitals to keep patients healthy and independent by eliminating annual enrollment in both Medicare health plans and commercial health plans;
- Establishing a more nimble, non-political process by which the needs of older adults are assessed and incorporated into the set of basic benefits delivered to them in government-based health plans;
- Overhauling the administration and management of the Medicare Advantage program to broaden access to care and hinder the use of utilization management tools that take care decisions out of the hands of clinicians.
Medicare is often described as a third rail of politics. As a result, it plods on, reformed only by rare instances of Congressional action. Incrementalism rules the day. While some of the changes I recommend can be accomplished via minor tweaks to the existing Medicare program, we have seen where decades of incrementalism have gotten us: a Medicare program that, all told, is too expensive for beneficiaries (and society) and poorly suited to meet the needs of today’s older adults. Now is the time for us to reimagine the Medicare program and rally around an approach that more fully and consistently meets the demands of this group of people, who deserve more than we are giving them.
