5 Bipartisan Health Care Reform Options

Alyene Senger / February 06, 2013

Photo credit: Newscom

Addressing our nation’s overspending problem cannot be done without reforming entitlements, especially Medicare and Medicaid. As Washington remains clearly divided over how to get it done, Senator Orrin Hatch (R–UT) has outlined 5 health care reforms that are bipartisan.

These reforms have had the support of both parties in the past and are capable of effectively reining in spending:

1. Raise Medicare’s eligibility age. Hatch proposes raising the Medicare eligibility age gradually from 65 to 67, which would coincide with Social Security. This proposal enjoys a wide range of support from both sides of the aisle and would garner significant savings for the Medicare program. Heritage’s reform proposal would raise the eligibility age to 68, which would yield an estimated savings of $243.6 billion over 10 years.
2. Reform Medigap to incentivize better behavior. Limiting Medicare supplemental plans that cover initial out-of-pocket costs would decrease the excessive utilization currently occurring. This would incentivize better behavior from seniors and lower Medicare’s costs over time.
3. Simplify cost-sharing and add a catastrophic benefit. Hatch proposes to “[s]treamline complicated Medicare cost-sharing into a single combined annual deductible for both Medicare Part A and B services, establish a uniform coinsurance rate for amounts above the deductible, and institute an annual catastrophic cap to financially protect seniors in cases of serious health events.”
4. Allow for competition in Medicare. Hatch offers a version of defined-contribution financing, known as premium support, for Medicare, where private plans would compete for beneficiaries against traditional Medicare. Competition among plans has the power to reduce costs while preserving quality of care. There are many different versions of premium support; Heritage has a comparison of existing premium support proposals, and a detailed plan of its own.
5. Cap Medicaid spending per beneficiary. Hatch explains that “[p]er capita caps are similar to a proposal put forward by President Clinton in 1995. Spending limits would be set by beneficiary eligibility categories and adjusted for patient health condition. This approach would put the Medicaid program on a sustainable budget, and it would be combined with new tools for states to implement patient-centered reforms.” Heritage has a Medicaid reform proposal that would go further, building off defined-contribution financing, similar to Medicare premium support. The key is that Heritage’s plan would give adults and children in Medicaid a tax credit and additional subsidy to purchase private insurance of their choosing—giving them a way out of the failing Medicaid program.

As Senator Hatch recently wrote in Politico, “These ideas aren’t new, but they are bipartisan and they deserve to be a part of any deficit discussion if we are going to get serious about our debt. They represent a reasonable path forward for both our seniors and the financial future of our country.”