July 28, 2005 -- Medicare is starting to use its enormous financial heft to try to alter the way the government pays for increasingly expensive medical services, its chief said Thursday.
Speaking at a commemoration of the 40th anniversary of the enactment of Medicare and Medicaid programs, current administrator Mark McClellan, MD, touted moves to focus the programs' $500 billion-per-year budget on preventive care and better health outcomes.
July 30 will mark four decades since President Lyndon Johnson signed the two programs into law.
Medicare's costs are projected to rise nearly 7.5% per year over the next decade, a cost increase that has put the program in financial peril. Medicaid's costs are rising at a similar rate, causing a political clash between the federal government and the states as the Bush Administration moves to cut $10 billion in spending.
"We simply cannot afford to spend what by some estimates is as much as 30 to 40 cents of every health care dollar on treatments that may be unnecessary and on complications that could be prevented," McClellan said of Medicare in a speech to reporters.
"How we spend matters, because it affects how our whole health care system works."
Congress directed Medicare to begin offering screening tests and preventive care for several high-cost chronic diseases, including heart failure and diabetes. The program is also paying for general physicals for every senior entering the program from now on.
The agency is getting set to launch pilot projects designed to pay doctors more for following accepted treatment guidelines or getting better outcomes for patients. The project remains controversial with doctors' groups including the American Medical Association.
McClellan said the programs are designed to change Medicare from a system that simply pays for treatments once seniors become ill to one that pays to prevent them in the first place.
"It makes better public health sense and it's a better way to spend dollars to diagnose heart disease early and to treat it effectively with medications and other steps that are proven to slow or prevent cardiovascular disease," he said.
Coming Soon: Prescription Drug Benefit
Getting those drugs to seniors could be a big challenge for Medicare. The program is set to begin in November signing up seniors for the Part D prescription drug benefit, with benefits scheduled to begin Jan. 1, 2006.
Medicare and dozens of private groups have launched an education campaign designed to alert seniors about the benefits and how to apply. One survey released Wednesday suggested that interest in the program so far is low.
Less than a third of 821 beneficiaries surveyed by Texas-based DSS Research said they were likely to sign up for the benefit when it becomes available. Interest was higher among poorer seniors and those with higher annual drug costs.
McClellan said his agency is working with Social Security and a range of national and local groups to educate seniors in time for Part D's scheduled start.
"It takes a lot more than a few ads or speeches to help seniors make confident, informed decisions about their coverage," he said.
Still, the financial condition of Medicare and Medicaid remain a contentious issue. The Bush administration this week convened a commission charged with recommending ways to cut $10 billion in spending.
Consumers groups are deeply opposed to the cuts, saying they will damage the health care safety net relied upon by millions of low-income Americans.
"Tell your members of Congress: On Medicaid's birthday, don't cut it -- protect it," the consumer health group Families USA said Thursday in a statement.
Medicare's long-term finances also loom even as policy makers focus on reforming Social Security. AARP warned Thursday that beneficiaries' out-of-pocket premium costs are expected to keep rising as Medicare's costs go up in future years.
"As the nation looks for ways to keep Social Security solvent, it must protect its guaranteed benefit which will be vital not only to the economic security of older Americans, but to their health security as well," said John Rother, the group's director of policy.