Statement by Marilyn Moon
Recently, I was fortunate to be invited to participate in a blog series on Medicare Solvency sponsored by the Commonwealth Fund. A number of experts participated offering a broad range of recommendations for how to ensure the solvency of the Part A trust fund into the future. The issue of ensuring that Medicare is on strong financial footing and that its funding reflects our society’s commitment to the long term health of this vital program should be of interest to all Americans. Most of us will depend upon Medicare at a vulnerable time in our lives.
While I do not agree with all the proposals included, the series offers a wide range of opinions and information that should contribute to the debate. The general theme that comes through to me is that this is a program that offers a valuable benefit to seniors and persons with disabilities. It is not overly generous and most writers agree that reductions in spending should be focused on areas of overpayment or inefficiency in the delivery of care rather than in reducing actual services. And most of the authors also recognize the need for increased financing for the program. This is significant, I believe, since in this period of reluctance to raise anyone’s taxes, the need for more revenue is often the elephant in the room—never spoken of but still looming over everything. It is also notable that there are many differing proposals in this area, ranging from small technical adjustments to going big by raising income or payroll taxes. A balanced debate is needed to determine how we ensure Medicare’s future and I believe that this series is a great place to start.
Marilyn Moon is a Visiting Scholar with the Center for Medicare Advocacy.
Summary of Commonwealth Series Articles
Last month (January 2021), the Commonwealth Fund published a series of articles entitled Options for Extending Medicare’s Trust Fund: The Commonwealth Fund Solvency Series.
Recognizing that the Medicare Part A Trust Fund is projected to become insolvent in 2024, the introduction to the series notes that “[w]ithout changes to expected spending or trust fund revenue, the trust fund will not have sufficient funds to cover the entire cost of beneficiaries’ health care.” Noting that the Trust Fund “is primarily funded through payroll taxes paid by employers and employees, with some additional income from interest as well as premiums paid by voluntary enrollees not automatically entitled to Medicare Part A”, the authors ask “[w]ill the trust fund solvency be adequately extended by reducing the projected growth in expenditures, raising revenues, changes to the services covered by Medicare Part A, or a combination of these options?”
The Commonwealth Fund invited Medicare thought leaders with a range of perspectives, including Marilyn Moon, to “outline how they would extend the life of the trust fund.” The articles include a breadth of policy proposals offered by these experts, some of which the Center for Medicare Advocacy agrees with, others we oppose.
Overall, the Center agrees with Dr. Moon that there should be a robust discussion concerning raising additional revenue, and that cost reductions should not lead to a reduction in services for beneficiaries.
With respect to raising additional revenue, we agree with exploring some of the proposals outlined by Dr. Moon and others, such as an “excess profits tax” during the pandemic, and/or a modest payroll tax increase. We also agree with Dr. Bruce Vladeck who promotes expanding the revenue base by taxing all personal income, including returns on capital that are currently not subject to payroll taxes.
With respect to cost-savings, we support proposals such as negotiating drug prices and reining in Medicare Advantage overpayments, including by reforming the quality bonus program and risk-coding adjustments.
We disagree with some of the other proposals, such as transforming Medicare into a premium support program, expanding the role of Medicare Advantage, raising the eligibility age for Medicare, and prohibiting supplemental coverage from offering first-dollar coverage. These suggestions would not attain savings while retaining the intent of Medicare to provide equitable health care for all beneficiaries.
The new Congress and Administration will soon have to address Medicare solvency issues. As Dr. Moon notes, this Commonwealth Fund series provides a good foundation for the coming debate.