Healthcare Business News

Healthcare leaders offer deficit-reduction suggestions

By Jessica Zigmond
Posted: September 14, 2011 - 5:15 pm ET

Agreeing unanimously, the leaders of more than 40 healthcare organizations—including providers, hospitals, drug and device companies, and health plans—approved a proposal for the deficit-reduction supercommittee they say will generate more than $410 billion in savings over 10 years and strengthen Medicare's long-term viability.

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On Wednesday, the Healthcare Leadership Council outlined four recommendations for the Joint Select Committee on Deficit Reduction, including one that would create a new Medicare exchange in which private health plans would compete on the basis of cost, quality and value. The concept is based on an earlier model suggested by Alice Rivlin and former Sen. Pete Domenici (R-N.M.), according to Mary Grealy, the group’s president. In this plan, which the group expects to save about $172 billion over 10 years, Medicare beneficiaries would have the option of staying in traditional fee-for-service Medicare. It also calls for a greater inflation factor than the plan proposed earlier this year by House Budget Committee Chairman Paul Ryan (R-Wis.). The council’s proposal calls for that factor to be the growth in the GDP plus 1%.

A second recommendation calls for phasing in an increase of the Medicare eligibility age to 67 from 65, which the group expects to save Medicare about $124.8 billion over 10 years. This idea is similar to the increase in the Social Security age, which is intended to account for greater life spans among Americans. The proposal would also reform Medicare’s cost structure in a few ways: first, it would make Medicare parts A and B more uniform with one deductible, and place a cap on out-of-pocket costs; second, it would require that individuals with annual incomes of $150,000 or more pay their full premium costs for Medicare parts B and D. According to the council, this change would affect less than 3% of Medicare beneficiaries. The fourth recommendation would be to implement medical liability reform measures that include a cap on noneconomic damages.

When asked if the group could prioritize this list, Grealy said the two prominent issues are the Medicare exchange—which would give beneficiaries the same freedom of choice as Medicare Part D prescription drug program beneficiaries and members of Congress who participate in the Federal Employees Health Benefits Program—and tort reform. A third priority would be raising the eligibility age, Grealy said.

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