The recent withdrawal of Aetna from Health Insurance Exchange, and the expected premiums increase of the remaining plans in 2017 cast significant doubt on the sustainability of the Patient Protection and Affordable Care Act. One of the major lessons we could learn from ACA is: Financing plan, instead of reimbursement method, should be the foundation of the legislation for public financing of health care.
For the next President, besides ACA modification, there is an even more challenging task ahead: Medicare overhaul! Medicare payment accounts for more than 20% of US health care expenditure. To meet the need of the baby boomers and maintain the solvency of the program, Medicare modernization should build on a sound financing reform plan, instead of constant manipulation of the reimbursement formula.
The cornerstone of Medicare legislation, as well as any other health benefit funded by Federal government, is how does the government regulate the cash flow of federal spending on health care. Washington has tremendous power to influence providers' and patients' behavior through financing legislation. Since 2010, two bipartisan structural Medicare financing reform plans have attracted national attention: the Domenici-Rivlin Plan of 20121 and the Wyden-Ryan plan of 20112. Both plans suggest a market-oriented "defined contribution" premium support system to compete with the existing Fee For Service system.
Following the same policy principles of fairness and bipartisanship exhibited in those two earlier plans, I developed a new Medicare financing plan: "Medicare Lifetime Value Based Payment Plan" (Medicare LVBPP).3 Medicare LVPBB includes six major parts: 1. Beneficiaries' free choice between staying with traditional defined benefit FFS plan and joining a private carrier who provides Medicare covered services with several options of defined contribution plan. 2. A lifetime (or long-term) expenditure threshold that triggers additional means tested copayment or co-insurance charge on Medicare reimbursement rate or contribution to private carriers 3. A Health Promotion Reward to encourage behavioral change and competition on preventive care 4. Expanded and more flexible reimbursement for preventive care and innovative chronic disease management models under FFS or primate carrier plans 5. Catastrophic coverage protection, and 6. Financial reward for postponed Medicare initiation age after 65.
The cap, copayment, reward, and catastrophic protection are the key financing tools of Medicare LVBPP to realign the financial incentives and create shared responsibility between the health care providers, the beneficiaries, and the federal government.
For the health care providers, Medicare LVBPP will allow the hospitals, physicians, and benefit carriers to gradually adjust to the new financing system based on their local demand and resources. On the contrary to the "one fits all" top-down mechanism to implement sophisticated reimbursement rules nationwide, Medicare LVBPP encourages the providers to develop their own innovative care models to meet the need of their community, and negotiate the reimbursement mechanisms with the benefit carriers. Instead of creating new bureaucratic or administrative burden, Medicare LVBPP will simplify enrollment and reimbursement paperwork, provide easy transition from private insurance to Medicare carrier, and hence will maintain the continuity of the coverage of the same high quality providers at community level. Most importantly, Medicare LVBPP will stimulate the demand and development of cutting edge technology that makes the diagnoses, treatment, and management of chronic diseases less costly, easier, and more personalized.
For the beneficiaries, instead of leaving the consumers out of the decision making process regarding benefit package, choices of providers, and the comparative effectiveness of services, Medicare LVBPP releases the power of choices to the beneficiaries to pick the benefit carriers and health care providers that fit their personal need and retirement financing plan the best. The precious trust between the consumers and providers that could only be established under continuity of coverage and services will be protected when the beneficiaries retire and start tapping in Medicare support. In addition, Medicare LVBPP provides financial incentives for the consumers to work with the providers to maintain good health through prevention and chronic disease management. It also creates motivations for the healthy workers to stay in the workforce longer, as well as to save and plan for retirement wisely in advance. With the catastrophic coverage, Medicare LVBPP will eliminate the financial uncertainty of catastrophic medical care event, liberate the beneficiaries from dependence on supplemental insurances, and save their out of pocket spending on health care.
For the Federal government, Medicare LVBPP redefines the role of the Washington in health care as an umpire whose responsibility is to level the field for all the players in the health care sector to compete on value of care and patients' satisfaction within a responsible budget. Such approach is completely different from the top-down system that the Federal government acts like an adult pitcher who is manipulating the kids' baseball game.
Washington could hardly accomplish the mission of Medicare modernization without the participation and engagement of the seventy-six million baby boomers, and more importantly, the health care providers nationwide. The boomers, especially the younger ones under age 55 and the females, are more educated, financially independent, and diversified than any previous generation. A new Medicare financing plan that promotes shared responsibility and strengthens trust and cooperation between the patients and providers will enable our society to more fully exercise the government of, by, and for the people.
References:
1. Rivlin A "A Bipartisan Approach to Reforming Medicare " April, 2012, Washington DC. http://www.brookings.edu/research/testimony/2012/04/27-medicare-rivlin
2. Wydon R, Ryan P "Guaranteed Choices To Strengthen Medicare and Health Security For All" Bipartisan Options For the Future, Dec, 2011, Washington DC. http://budget.house.gov/uploadedfiles/wydenryan.pdf
3. Yang Z, "A Lifetime Value-Based Proposal for Medicare Payment Reform" March 14th, 2014 http://healthaffairs.org/blog/author/zyang/
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