Medicare reform unlikely to save government much money

October 10, 2001

Washington, D.C. -- Proposed reforms of Medicare's managed care program, Medicare+Choice (M+C), are unlikely to yield significant savings for the federal government unless beneficiaries are required to increase their monthly contributions. This is the key finding in a new study by Kenneth E. Thorpe and Adam Atherly of the Rollins School of Public Health, Emory University, released on as a Web exclusive on October 10. In fact, one major reform proposal sponsored by Senators John Breaux and Bill Frist could actually increase Medicare spending by $12 billion over the next ten years.

The M+C program has been floundering over the past several years, plagued by low enrollment and plan withdrawals. Critics have suggested that the current payment system has hampered plan expansion by creating uncertainty among plans about payment rates, and has created inefficiency by overpaying plans in some counties while underpaying plans in others. Recent congressional proposals, such as, S.357 and S.358, have advocated dropping the current system in favor of a system based on competitive bidding by plans.

Thorpe and Atherly analyzed three model plans, including two that closely resemble S.357 and S.358. Their results suggest that although competitive pricing could reduce plan uncertainty and better match costs and reimbursement, it is unlikely to raise enrollment in the M+C sector and is also unlikely to reduce government spending for the Medicare program. Total government spending on Medicare could be reduced, but only by greatly increasing the amount beneficiaries pay in premiums.

One key difference between the different proposals is the impact on geographic equity. The generosity of M+C benefits is now linked to the generosity of the county-specific payment rate. While some proposals would maintain the current spending distributions and the resulting intercounty inequities in benefits, other proposals would not. Although the net national effect of reforms may be slight, specific counties may be dramatically effected by the changes.
Add'l contact: Kenneth E. Thorpe: 404-727-3373

Health Affairs, published by Project HOPE, is a bimonthly, multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Copies are provided free to interested members of the press. Address inquiries to Jackie Graves at Health Affairs, 301-656-7401, ext. 255, or via e-mail, This Web-exclusive paper, as well as selected contents from the print edition, is available free on the journal's Web site, (the Web exclusive will be posted 10 October).

Health Affairs

Related Medicare Articles from Brightsurf:

Falling Medicare reimbursement rates for orthopaedic trauma
The amount Medicare reimburses for orthopaedic trauma surgery has fallen by nearly one-third over the past two decades, reports a study in the Journal of Orthopaedic Trauma.

Medicare coverage varies for transgender hormone therapies
A new study has shown substantial variability in access to guideline-recommended hormone therapies for older transgender individuals insured through Medicare.

Medicare changes may increase access to TAVR
The number of hospitals providing TAVR could double with changes to Medicare requirements.

Inequitable medicare reimbursements threaten care of most vulnerable
Hospitals, doctors and Medicare Advantage insurance plans that care for some of the most vulnerable patients are not reimbursed fairly by Medicare, according to recent findings in JAMA.

Medicare may overpay for many surgical procedures
For most surgical procedures, Medicare provides physicians a single bundled payment that covers both the procedure and related postoperative care over a period of up to 90 days.

Only 1 in 4 Medicare patients participate in cardiac rehabilitation
Only about 24% of Medicare patients who could receive outpatient cardiac rehabilitation participate in the program.

How common is food insecurity among Medicare enrollees? 
Nearly 1 in 10 Medicare enrollees age 65 and over and 4 in 10 enrollees younger than 65 with long-term disabilities experience food insecurity.

Medicare for All unlikely to cause surge in hospital use: Harvard study
Despite some analysts' claims that Medicare for All would cause a sharp increase in health care utilization, a new study finds the two biggest coverage expansions in US history -- Medicare and the ACA -- caused no net increase in hospital use.

Critical heart drug too pricey for some Medicare patients
An effective drug to treat chronic heart failure may cost too much for senior citizens with a standard Medicare Part D drug plan, said a study co-authored by a John A.

Research suggests strategy for more equitable Medicare reimbursement
Those who were enrolled in both Medicare and Medicaid were sicker, had more cognitive impairments and difficulty functioning, and needed more social support than those who were not enrolled in both government programs, Saint Louis University research found.

Read More: Medicare News and Medicare Current Events is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to