Post on 13-Jun-2020
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Medicare: Balancing Cost, Access and Quality
Marilyn MoonAmerican Institutes for Research
September 9, 2005University of North Carolina
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Cost Issues Dominate
Share of federal budget and view of the public sectorFuture projectionsChanges can have a major impact but often viewed narrowly
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Source: CBO 2005
Medicare as a Share of the Federal Budget
3.5%4.2%
5.8%
7.4%8.6%
11.7% 12.1%12.8%
16.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1970 1975 1980 1985 1990 1995 2000 2001 2011
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Growth in Medicare Spending as a Share of GDP and in Beneficiaries as a Share of Total Population
0.73% 1.24% 1.74% 2.02%1.32% 1.90% 2.29%2.77%
3.73%5.03%
6.12%
0.70%
14.8%
18.2%
23.1%
9.5%
12.1%13.2% 13.8%
21.9%
0%
5%
10%
15%
20%
25%
1970 1980 1990 2000 2010 2020 2030 2040
Medicare as a Share of GDP
Prescription Drug Benefit as a share ofMedicareMedicare as share of the population
Source: 2005 OASDI and Medicare Trustees Report
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Projected 2025 Medicare spending as a share of GDP
3.6%2.5% 2.2% 2.0%
2.9%
2.8%2.2%
2.0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
1997 1998 1999 2000
Projection year
Perc
ent o
f GD
P
Part A percent of GDP Part B percent of GDP
Source: Medicare Trustees Report, 1997-2000
6.5%
5.3%
4.4%4.0%
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No Magic Bullets
Many Beneficiaries are not well offBeneficiaries already pay a substantial amount for careManaged care has been problematic in Medicare
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Distribution of Per Capita Income of Elderly 2003
6%
22%21%
13%
9%
6%4%
3% 4%3%
2% 1% 1% 1%2%
0%
5%
10%
15%
20%
25%
0-$5,0
00
$5,00
0-$10,00
0
$10,00
0-$15
,000
$15,00
0-$20,0
00
$20,00
0-$25,0
00
$25,00
0-$30
,000
$30,00
0-$35,0
00
$35,00
0-40,00
0
$40,00
0-$50,0
00
$50,00
0-$60,0
00
$60,00
0-$70
,000
$70,00
0-$80,0
00
$80,0
00-$90
,000
$90,0
00-$10
0,000
$100,0
00+
Income
Perc
enta
ge
Source: Current Population Survey, 2004®®
Out-of Pocket Spending as a Share of Income Among Elderly Beneficiaries
19.1%
11.0% 11.2%12.3%
14.3%
22.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1965 1970 1978 1984 1987 2004
Source: American Institutes for Research Calculations Using NHE, CPI, CPS, and Trustees Report, MCBS
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Figure 1.2Yearly Enrollment in Medicare Advantage Plan
2.4872.84
3.467
4.368
5.414
6.4166.857 6.856
6.166
5.5385.302 5.376
0
1
2
3
4
5
6
7
8
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Calendar Year
Enr
ollm
ent (
in m
illio
ns)
Source: Board of Trustees, 2004®®
Cumulative Growth in Per Enrollee Payments for Comparable Services, Medicare And Private
Insurers, 1970-2000*
0
500
1000
1500
2000
2500
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Year
Gro
wth
(%)
Private health insurers
Medicare
Private Insurers
Medicare
*Includes hospital care, physician, and clinical services, durable medical equipment, and other professional servicesSource: Boccuti and Moon, 2003
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Access to Care
Affordability of benefits“Sustainability” of Medicare
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Affordability
From 2003 to 2040Increase in GDP per worker- 63%Increase in GDP per worker if take out Medicare burden- 55%To do this requires tax increase
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Hold Line on Spending?
No tax increase approach 42% cut
Growth proportional to income 33% cut
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Challenges for Quality
Rapid Changes in HealthcareCoverage limitationsDiversity of beneficiary populationFlexibility
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Medicare Expenditures by Type of Service: 1967 and 2003
Hospital Outpatient
1% Physicians and other Part B
29%
Skilled Nursing Facility
7%
Home Health1%
Hospital62%
Managed Care13%
Hospital Inpatient40%
Hospital Outpatient5%
Physicians and other Part B
33%
Skilled Nursing Facility
5%
Home Health4%
1967: 70% Part A; 30% Part B 2003: 46% Part A; 41% Part B; 13% Part C (Medicare+Choice)
Source: Health Care Financing Administration, 2000 and Medicare Payment Advisory Commission 2004®®
Demographic and Health Characteristics of Medicare Beneficiariesby Poverty Share
Share of Population
22.218.019.82.471.147.8250%+
29.923.527.53.558.754.2200-249%
31.225.429.64.147.557.4150-199%
33.932.536.17.030.664.9100-149%
41.442.941.811.223.368.7<100%
Physical Difficulties
CognitivePoor or Fair Health
InstitutionalizedMarriedWomenFPL
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How Does Quality Fit?
Competition for attention in this environmentOn what scale?Does quality increase costs?Linking quality to reimbursementDemonstrationsOther approaches