Solutions for Medicare

Many Nebraskans depend on Medicare Part D and Medicare Advantage plans to meet their health care needs and the cost of prescription drugs. These plans are also examples of how fiscally responsible market-based reforms can reduce health care costs and should serve as a model for reforming other government programs. Instead of celebrating the success of these programs, the Obama Administration is undermining them through two recent actions.

Passed in 2003, Medicare Part D has enabled seniors to purchase private prescription drug plans at affordable prices. Prices are low for consumers because health plans compete for their business, and negotiate with providers and drug manufacturers to keep costs low.

Part D also has been a success for taxpayers. In 2004, the program was projected to cost $122 billion in 2012. The program actually cost $55 billion in 2012; or 55 percent less than estimated. It is very unusual for any government program to come in under budget, especially at less than half of what was anticipated. Competition and negotiations have reduced costs at every level of the program, while maintaining high levels of satisfaction among seniors.

This success is threatened by a recent action by the Centers for Medicare and Medicaid Services in which the agency announced its intention to end low-premium plans, reduce the number of plans available in each region, and interfere in the ability of insurance companies to negotiate contracts with pharmacies. These changes would increase costs for seniors and taxpayers by limiting choice and reducing the market based competition which has proven successful.

The Administration has also detailed further cuts as part of the implementation of the Affordable Care Act, or Obamacare, to the popular Medicare Advantage program which allows seniors to purchase traditional Medicare benefits through private insurers. These reductions will be passed along to seniors in terms of higher premiums, increased copayments, and fewer benefits. A new report by Oliver Wyman, an independent consulting firm, predicts the cuts will disproportionately affect low income seniors.

There is no question we must reform Medicare in order to make sure it is sustainable for future generations. However, the proposed changes to Medicare Part D and the cuts to Medicare Advantage are a step in the wrong direction and will reduce options and increase costs for seniors and taxpayers alike.

House Republicans have offered solutions to reform Medicare through market-based ideas including an option for premium support. Our plan would not affect current beneficiaries and would build upon the success of Medicare Part D and Medicare Advantage. Reasonable people can disagree, but they must come to the table with ideas and plans to save this program. To do nothing is to endorse the demise of Medicare.