Medicare

Low-income Medicare beneficiaries are eligible for subsidies to help them pay premiums and cost sharing. However, these subsidies fall short of those contained in the Patient Protection and Affordable Care Act (ACA) that help low-income families afford adequate health coverage. In this report we consider policy options to reform Medicare's low-income subsidies to better align with ACA provisions. We estimate that a significant simplification in low-income protection and cost-sharing rules could greatly reduce burdens on the poorest and sickest beneficiaries. Depending on how they are implemented, these reforms could either reduce or only modestly increase total public spending.

To help pay for expanded health insurance coverage, the health reform legislation enacted in 2010 included a new 3.8 percent tax on the net investment income of high-income taxpayers. When it goes into effect in 2013, it will increase the top tax rate on capital gains, dividends, and other investment income, regardless of whether the 2001 and 2003 tax cuts are allowed to expire. Almost all the burden will be borne by taxpayers with extremely high incomes. More than half the burden, for example, falls on taxpayers in the top 0.1 percent of the income distribution.

The report discusses the important budget events of 2011. It begins with the House Republican budget and the president's response. The very different approaches to health and discretionary spending and tax policy are analyzed in detail. The policy debate continued into the confused debt limit negotiations of July. The Budget Control Act finally emerged. It capped discretionary spending and created a "super committee" that was to propose additional deficit reductions. The committee failed miserably. An automatic across-the-board spending cut is supposed to result from that failure. The report describes its effects on defense and nondefense spending.

Proposals to replace traditional Medicare with "premium support"-or vouchers for the purchase of private insurance or, in some cases, Medicare-have once again emerged on the political agenda. This critical commentary on the Rivlin/Domenici proposal (markedly similar to the Ryan/Wyden proposal) finds much wanting in premium support—in particular, that Medicare already provides benefits more equitably and at lower cost than private insurance; that without "regulatory teeth", premium support would actually create coverage inequities and increase costs; and that implementation of the Affordable Care Act's payment and other Medicare reforms, not Medicare replacement, ought to be the nation's top priority in controlling overall health costs. These remarks were presented at a Brookings Institution forum on December 16, 2011.

The growth in U.S. health care spending has become a focal point in debates over federal and state health care reform. While the problem is easy to quantify, strategies for slowing rising expenditures are controversial, and evidence of their effectiveness is often elusive. Our full report provides background that describes the problem and reviews the cost containment provisions of the Affordable Care Act (ACA). It also presents estimates of cost savings from several policies that go beyond those included in the ACA. In this appendix, we provide more detail on the methods used to generate these cost savings estimates.

The United States spent an estimated $635 billion on the chronically ill and disabled in 2010; about half of this was spent on those dually eligible for Medicare and Medicaid. Recently, there has been a series of innovative chronic care management programs that have shown considerable promise in reducing hospital admissions, readmissions, specialty care and prescription drug use. Considerable savings could be achieved if these programs could be expanded broadly. In this paper, we argue that this should primarily be a Medicare initiative because most of the current expenditures and savings from these programs would accrue to Medicare. We estimate potential savings of close to 1% of national health expenditures.

This paper, from The Commonwealth Fund’s international program, examines the origins, content, and potential impact of England's evidence-based End-of-Life Care Strategy. Challenges addressed include moving such care beyond the province of hospice and palliative-care specialists and initiating palliative services before the patient's final days. Aspects of the English approach that may be useful in the U.S include helping physicians recognize when patients are entering a trajectory that may end in death, the use of "death at home" as a metric for measuring progress, improving the skills of clinical and caregiving personnel through Web-based training, and developing a national improvement pathway.

This New England Journal of Medicine perspective piece discusses the problem of unnecessary hospitalizations of nursing home residents, caused to a large extent by the misalignment of Medicare and Medicaid payment incentives, and the opportunity nursing homes have to shift the primary burden of payment from low-paying Medicaid to relatively high-paying Medicare. The piece, by Urban Institute Fellow Robert Berenson and lead author Joseph Ouslander, outlines multifaceted strategies for changing payment approaches and improving care delivery models in nursing homes to avoid costly, avoidable, and disruptive hospitalizations.