Medicare must be reformed, and one rep is taking it seriously
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In their 2015 report, the Medicare trustees call for "timely and effective action" to cope with Medicare's deteriorating fiscal condition, including trillions of dollars in long-term debt. At least one member of Congress, Rep. Kevin BradyKevin Patrick BradyRepublicans pour cold water on Trump's term limit idea Republicans' rendezvous with reality — their plan is to cut Social Security The Social Security 2100 Act is critical for millennials and small business owners MORE (R-Texas), chairman of the House Ways and Means Subcommittee on Health, is taking that official challenge seriously.


In an interview with National Journal, Brady indicated he will start the hard work of crafting a detailed plan for Medicare "premium support." The good news for Brady: this reform has a rich history, stretching from the 1980 Stockman-Gephardt bill to the 1999 Breaux-Thomas proposal to the 2012 Wyden–Ryan proposal. This means Brady and his Ways and Means colleagues have a treasure trove of sophisticated policy work from which to draw.

But Brady and his colleagues should prepare themselves for what Washington Post editorialists once memorably described as "Mediscare": the tiresome onslaught of demagoguery, crafted to frighten bewildered seniors.

Despite what the fear-mongers will say, what Brady is proposing is evolutionary — not revolutionary — change. Substantively, it is updating and expanding the defined-contribution financing that governs the private Medicare Advantage health plans and Medicare Part D drug coverage, and applying it to the rest of Medicare. Today, 32 percent of seniors are already enrolled in comprehensive private plans through Medicare Advantage, and over 90 percent of seniors have drug coverage, mostly through Medicare Part D's system of private plans. In other words, most seniors are already enrolled in a modern system of defined contribution financing that promises superior performance. Congress's big job is to rationalize Medicare financing and improve it.

Brady has already outlined his basic reform to simplify traditional Medicare: combining Medicare Parts A (hospitalization) and B (physicians' services) into a single Medicare plan with a single deductible, uniform coinsurance and protection from the financial devastation of catastrophic illness. That proposal, as noted, has been a staple in the list of Medicare reforms that have long attracted bipartisan support.

Beyond these reforms are other steps to modernize Medicare that merit congressional consideration. And these proposals have also attracted bipartisan support at one time or another:

Raise the normal age of Medicare eligibility. President Obama, the Breaux-Thomas Commission, and former Congressional Budget Office Director Alice Rivlin of the Brookings Institution have all endorsed raising the retirement age to 67. Even better, raise it to 68, over a period of 10 years, and index it to longevity.

Reduce taxpayer subsidies for wealthy Medicare beneficiaries. This can be done by expanding — to 10 percent (from 6 percent) of the total Medicare population — the number of beneficiaries affected by "means-testing" rules. Obama, former Sens. Joseph Lieberman (I-Conn.) and Tom Coburn (R-Okla.), Sen. Ron Wyden (D-Ore.), and Rep. Paul Ryan (R-Wis.) have all endorsed expanded "means-testing."

Increase the Medicare beneficiary share of the total Medicare premiums from 25 percent to 35 percent. This could be done over a period of five or 10 years, while retaining the existing "hold harmless" rules to protect poor seniors. The Bipartisan Policy Center endorsed this approach, as well as the Heritage Foundation and Lieberman and Coburn.

Create a Part A premium to be effective in 2024. Such a premium would be implemented in any future year that the Medicare hospitalization insurance (HI) trust fund runs a deficit. Under the Heritage proposal, the premium would be calibrated to cover the cost of any annual deficit.

Replace ObamaCare's home healthcare payment reductions with a 10 percent copayment. The ObamaCare payment cuts are unnecessary and too tough; a copayment option is a superior cost control mechanism.

Change Medicare Advantage's payment system to pure market-based bidding. Payment would thus be set separate and apart from Medicare's fee-for service benchmarks. In the past, this approach was endorsed by President Clinton, Obama and more recently by analysts at the Brookings Institution.

It is refreshing to see a real congressional leader taking a proactive approach to reforming Medicare. Because, as the trustees' report warns, the longer Congress waits, the harder the mounting problems will be to solve.

Moffit is a senior fellow in the Heritage Foundation's Center for Health Policy Studies.