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21–107 2016

THE PRESIDENT’S AND OTHER BIPARTISAN 

PROPOSALS TO REFORM MEDICARE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MAY 21, 2013 

Serial No. 113–HL04 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

DAVE CAMP, Michigan, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

AARON SCHOCK, Illinois 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

JIM RENACCI, Ohio 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

ALLYSON SCHWARTZ, Pennsylvania 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JENNIFER M. SAFAVIAN, Staff Director and General Counsel 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

PAUL RYAN, Wisconsin 

DEVIN NUNES, California 

PETER J. ROSKAM, Illinois 

JIM GERLACH, Pennsylvania 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

JIM MCDERMOTT, Washington 

MIKE THOMPSON, California 

RON KIND, Wisconsin 

EARL BLUMENAUER, Oregon 

BILL PASCRELL, JR., New Jersey 


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C O N T E N T S 

Page 

Advisory of May 21, 2013 announcing the hearing .............................................. 2 

WITNESSES 

Joseph R. Antos, Ph.D., Wilson H.Taylor Scholar in Health Care and Retirement Policy, American Enterprise Institute ...................................................... 6 

Joe Baker, President, Medicare Rights Center ..................................................... 24 

Alice M. Rivlin, Ph.D., Co-Leader, Bipartisan Policy Center Health Care 

Cost Containment Initiative, Senior Fellow, Economic Studies, Brookings 

Institution ............................................................................................................. 15 

SUBMISSIONS FOR THE RECORD 

AARP, statement ..................................................................................................... 59 

AFSCME, statement ................................................................................................ 63 

Alliance for Retired Americans, statement ............................................................ 66 

American Association of Bioanalysts, statement .................................................. 69 

Center for Medicare Advocacy, statement ............................................................. 71 

National Association for Home Care & Hospice, statement ................................ 82 

National Association of Chain Drug Stores, statement ........................................ 93 

National Committee to Preserve Social Security and Medicare, statement ....... 98 

Pam Casper, statement ........................................................................................... 100 

Partnership for Quality Home Healthcare, statement ......................................... 102 

Partnership for the Future of Medicare, statement .............................................. 109 

Robert N. Young, statement ................................................................................... 112 

Shannon Dwyer, statement .................................................................................... 116 

St. Joseph Health, statement ................................................................................. 117 

Texas Association for Home Care and Hospice, statement .................................. 119 

Torchmark Corporation, statement ........................................................................ 121 

United Auto Workers, statement ........................................................................... 124 

United Steelworkers, statement ............................................................................. 127 

Virginia Association for Home Care and Hospice, statement .............................. 131 

Visiting Nurse Associations of America, statement .............................................. 133 


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THE PRESIDENT’S AND OTHER BIPARTISAN 

PROPOSALS TO REFORM MEDICARE 

TUESDAY, MAY 21, 2013 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:03 a.m., in Room 

1100, Longworth House Office Building, Hon. Kevin Brady [Chairman of the Subcommittee] presiding. 

[The advisory announcing the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3943 

Tuesday, May 14, 2013 

No. HL–04 

Chairman Brady Announces Hearing on 

the President’s and Other Bipartisan 

Proposals to Reform Medicare 

House Committee on Ways and Means, Subcommittee on Health Chairman Kevin 

Brady (R–TX) today announced that the Subcommittee on Health will hold its first 

in a series of hearings to explore the bipartisan proposals, including those contained 

in President Obama’s Fiscal Year 2014 Budget to reform Medicare. This hearing 

will focus on review of proposals to change cost-sharing for services received under 

the Medicare program. The hearing will take place on Tuesday, May 21, 2013, 

in 1100 Longworth House Office Building, beginning at 10:00 a.m. 

In view of the limited time available to hear from witnesses, oral testimony at 

this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for 

consideration by the Committee and for inclusion in the printed record of the hearing. A list of witnesses will follow. 

BACKGROUND: 

Created in 1965, the Medicare benefit was originally modeled on the Blue Cross 

Blue Shield plans that were prevalent throughout the Nation at that time. However, 

since its creation, Medicare’s cost-sharing has been largely unchanged and has not 

kept up with changes in the growth of the Medicare population or how health care 

is delivered. The current Medicare spending trajectory is unsustainable and has led 

the Medicare trustees to estimate that the Part A trust fund will be bankrupt in 

2023 and insolvent in 2024. The Medicare Health Insurance (HI) trust fund has not 

met the trustee’s formal test of short-range financial adequacy since 2003. The Supplemental Medical Insurance (SMI) trust fund is considered adequately financed, 

however, this is a result of the SMI trust fund being reliant on general revenue 

transfers. By 2037, the Medicare trustees estimate general revenue transfers will 

account for 56 percent of Medicare outlays. 

To address these and other concerns, the Obama Administration has identified 

several key policies to modify cost-sharing within the Medicare program. In the 

President’s FY14 budget, the Administration focused on three key cost-sharing policies: (1) increasing income-related premiums for Medicare Parts B and D; (2) increasing the annual Medicare Part B deductible; and (3) establishing a home health 

copay. The President’s FY14 budget estimates that these three policies will save $54 

billion over 10 years. In addition to the President’s budget, several other bipartisan 

policy organizations, such as the Bipartisan Policy Center, The Moment of Truth 

project, and the Medicare Payment Advisory Commission, have collectively made 

recommendations to alter Medicare’s cost-sharing policies as a means of extending 

the longevity of the program. 

In announcing the hearing, Chairman Brady stated, ‘‘The current Medicare 

spending trajectory is unsustainable. There is bipartisan recognition that 

modifying seniors’ cost-sharing is appropriate and can be done in a way 

that maintains access to critical healthcare services. Medicare is fast going 

broke and the time to act to save this program is now.’’ 


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FOCUS OF THE HEARING: 

The hearing will review policies that modify beneficiary cost-sharing within the 

Medicare program. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you 

would like to submit, and click on the link entitled, ‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance 

with the formatting requirements listed below, by the close of business on Tuesday, June 4, 2013. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

Buildings. For questions, or if you encounter technical problems, please call (202) 

225–1721 or (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word format and MUST 

NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised 

that the Committee relies on electronic submissions for printing the official hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone, and fax numbers of each witness. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://www.waysandmeans.house.gov

f 

/. 

Chairman BRADY. Subcommittee will come to order. I want to 

welcome everyone to today’s hearing on the President’s budget and 

other bipartisan proposals to reform Medicare. This is the fourth 

hearing for our Subcommittee this Congress, and the second Ways 

and Means Committee hearing in a series focused on proposals to 

reform Medicare and Social Security. During our first hearing of 

Congress we focused on redesigning the Medicare benefit package 

to make it more rational, more responsive to seniors and Medicare 

patients. Today’s discussion is an extension of that hearing discussing the details around these three specific policies: 


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One, increasing income-related premiums for Medicare Parts B 

and D; two, increasing annual Medicare Part B deductibles, and 

three, establishing a home health copay. We focused on these three 

policies because they are included in the President’s 2014 budget 

and supported by several bipartisan organizations. All too often recently, discussions surrounding finding Medicare savings have 

come under the context of a ‘‘grand bargain’’ or a ‘‘super committee.’’ As the committee of jurisdiction over these critical topics, 

we have an obligation to discuss them publicly and determine how 

best to craft policy in these areas. That is why we are holding this 

hearing today. 

The President’s budget estimates that these three policies will save $54 billion over 10 years. These are real savings for a program 

that is facing bankruptcy in 10 short years. Asking seniors to pay 

more when they have the means to do so is not a new concept. In 

2003, Republicans led the charge with income-related premiums for 

Medicare Part B in the Medicare Modernization Act, which ensured 

that seniors have access to accessible, affordable, high-quality 

medicines through free market competition for their business. 

In 2010, Democrats included income-related premiums in the 

Medicaid program, Health Exchanges, and increases for Medicare 

Part D in the Affordable Care Act, known as ObamaCare. Throughout Federal programs, there has been recognition that some seniors 

can contribute more and some seniors need additional assistance. 

The growth of the retiree population has been and will continue to 

be a tremendous source of stress on Medicare’s finances. 

When Medicare was enacted in 1965, the average life expectancy 

was 70.2 years. It was anticipated that Medicare would cover an 

average person’s health expenditures for the last 5.2 years of their 

life. In 2010, the average American lived to the age of 78.4, which 

means Medicare covered the last 13.5 years of life, a 158 percent 

increase. Yet, we have not made changes to the Medicare benefit 

structure to address this increase. 

Now, I know that some may want to reject these policies out of 

hand and may suggest that the overall Medicare spending for seniors has decreased. They may contend that this means there is less 

of a need to find Medicare savings. But I, too, am glad to see Medicare spending is down, but the program is headed toward bankruptcy in 10 short years. Burying our heads in the sand and waiting for the looming crisis to overwhelm us will only force future 

Congresses to take more drastic measures. 

Even the Medicare trustees recognize the growing challenges of 

Medicare’s financial future as the baby boomers enter Medicare. 

Even if per-senior spending decreases, that will not help the sustainability of the trust fund when the number of new seniors coming into the program begins to dramatically increase. 

And simply cutting providers is not the answer. In fact, the 

Medicare trustees warn because of cuts already in law, 15 percent 

of our Part A providers will be unprofitable by the end of this decade. Roughly 40 percent would be unprofitable by 2050. The actuaries warn that these cuts will force providers to withdraw from 

providing services to our Medicare seniors and patients. 

Finally, instead of simply focusing on how much money a policy 

might save Medicare or how many more beneficiaries will pay 


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more, I challenge this Committee and our witnesses today to think 

differently. The question we should be asking ourselves is, how can 

we act now, this year, to extend Medicare solvency? If not permanently, how about for an additional 10 years beyond 2023? Why not 

extend its life an additional 20 years? We owe it to current and future seniors to examine and pursue these critical goals. It will require hard decisions, yes. But making them now will ensure a vibrant Medicare for generations to come. 

Before I recognize Ranking Member McDermott for the purposes 

of an opening statement, I ask unanimous consent that all Members’ written statements be included in the record. Without objection, so ordered. 

I now recognize Ranking Member McDermott for his opening 

statement. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

There was a time in the Congress when the procedure was that 

the President proposed and the Congress disposed. And so I would 

just put a caveat on anything that has been proposed by the White 

House that that is not holy writ brought down from the mountain 

by Moses. That is to be looked at by the Congress and we will 

make a decision. 

The Majority keeps holding hearings on supposedly bipartisan reform ideas, but over and over it is the same song: Cut the benefits, 

shift the costs to the poor and the elderly. These reforms were offered by the President in a spirit of a grand, balanced bargain. 

That package has shared sacrifice and included some spending cuts 

and revenue increases, but when it is cherry picked, when you 

catch the low-hanging fruit, they are nothing more than partisan 

cuts. How many times and how many ways can we rehash the 

same old idea? We have been trying to get blood from a stone. 

Fifty percent of the Medicare beneficiaries in this country have annual incomes at or below $22,500. Our seniors, our parents, our 

grandparents, 50 percent of them are living barely above the poverty line. They should not be our go-to source for savings. 

We are long overdue on fixing the physician payment system and 

I sincerely hope we can work in a bipartisan way to do it. In particular, we need to address inequities in payment for primary care 

physicians, and we need to do it in a way that encourages the most 

efficient delivery of health care so we can be pushing more of the 

right kind of care, not just more care overall. 

Now let me be clear, and I am speaking as a physician here: It 

is the physicians who are driving the healthcare utilization in the 

system, not the beneficiaries. The notion that beneficiaries have to 

have more skin in the game to encourage smart healthcare shopping is ridiculous. When your doctor tells you you need an extra 

test, or to come back in 2 weeks, how many of you poll other doctors to see if they agree? Of course not. There is a major information asymmetry between doctors and patients and a necessity to 

trust the physician’s judgment. Few beneficiaries can distinguish 

between necessary and unnecessary care, and in the face of more 

cost-sharing, they may forego both. 

I would like to submit for the record a recent letter from the National Association of Insurance Commissioners in which they state 

that they were unable to find evidence that cost-sharing encourVerDate Sep 11 2014 11:14 Sep 06, 2016 Jkt 021107 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21107\21107.XXX 21107

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aged appropriate use of healthcare services. In fact, they found that 

cost-sharing would result in delayed treatments that could increase 

costs and result in negative health outcomes. 

As it is, Medicare households pay nearly 15 percent of their income on health care as compared to non-Medicare households, 

which pay 5 percent. As one of our witnesses, Joe Antos, points out 

in his testimony, higher income Medicare beneficiaries already pay 

more into the system, both through higher premiums and because 

they have paid more payroll taxes over the course of their working 

lives. 

As for the notion of home healthcare deductible, these beneficiaries are some of the frailest individuals in Medicare. Why do 

Republicans insist on using this Committee to go after them rather 

than building on the ACA’s tools to fight fraud in this section? 

It is fundamentally untrue that we have to cut Medicare in order 

to save it. If we are looking for offsets, we could focus on pharmaceutical companies’ windfall from the Republicans’ Part D drug 

benefit. Creating a drug rebate to capture that windfall would save 

$141 billion, the entire cost of the SGR fix. We could look to the 

providers with higher Medicare margins. MedPAC tells us that 

those margins mean payment rates are too high. Or we could look 

to the savings from winding down the wars in Afghanistan and 

Iraq. There are plenty of other savings to be found that don’t involve jeopardizing the health and security of some of our most vulnerable Americans. 

I look forward to this hearing and the witnesses’ testimony. I 

think that we are faced with a question that we are going to have 

to face at some point. That is, how do you control costs in the 

healthcare system? I yield back. 

Chairman BRADY. Thank you. 

And without objection, the document will be included in the 

record. 

Today we will hear from three witnesses, Joseph Antos, the William H. Taylor Scholar in Health Care and Retirement Policy at 

the American Enterprise Institute; Alice M. Rivlin, the Senior Fellow of Economic Studies at the Brookings Institution; and Joe 

Baker, President of the Medicare Rights Center. 

I want to thank you all on behalf of Mr. McDermott and myself, 

thank you all for being here today. I look forward to your testimony. You will all be recognized for 5 minutes for the purposes of 

providing your oral remarks. 

Mr. Antos, we will begin with you. 

STATEMENT OF JOSEPH R. ANTOS, PH.D., WILSON H. TAYLOR 

SCHOLAR IN HEALTH CARE AND RETIREMENT POLICY, 

AMERICAN ENTERPRISE INSTITUTE 

Mr. ANTOS. Thank you, Mr. Chairman. 

Medicare is on a fiscally unsustainable path. Seventy-six million 

members of the baby boom generation will turn 65 and enroll in 

Medicare over the next 2 decades. According to AARP, that is about 

8,000 baby boomers every day. The resulting costs will place a 

heavy strain on the Federal budget, crowding out other spending 

priorities and burdening younger generations, and for that matter 


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burdening older generations who will have to pay the rising costs 

of the Medicare program. 

Comprehensive reforms are needed to ensure that Medicare will 

be able to continue to meet the needs of its beneficiaries over the 

long term. Bipartisan commissions, including the Bowles-Simpson 

commission, the Bipartisan Policy Center, the Medicare Payment 

Advisory Commission, and the Engelberg Center’s Bending the 

Curve project concur on several principles that should form the 

basis of Medicare reform. One of those principles is addressed 

today, and that is the need to reform cost-sharing responsibilities 

to promote cost awareness and improve equity in the program. 

Today’s hearing focuses on three proposals advanced by the 

President: raising the Part B deductible, adding a copayment for 

some home health episodes, and increasing premiums for higher income beneficiaries. These proposals, as the Chairman said, these 

proposals yield $54 billion in budget savings over the next decade. 

That is less than 1 percent of the $7.9 trillion that Medicare will 

spend over the same period. 

These are modest changes, certainly financially, but they could 

lead to bipartisan discussions of broader reforms to protect Medicare for future generations. Medicare reform should create a benefit that is easy to understand and that protects seniors from catastrophic costs. That is a principle that I think is almost universally 

agreed, but the Medicare program is the way it is today for historical reasons. 

The bipartisan commissions support proposals to simplify traditional Medicare’s confusing benefit structure. If patients know 

what a health service will cost them, they will be more informed 

about their alternatives and will be better able to decide, with their 

physicians, about the best course of action. Replacing the multiple 

deductibles and complicated copayment structure in traditional 

Medicare with a simpler design typical of private insurance is one 

step in this reform. Limiting what Medigap plans cover so that 

beneficiaries pay some of the upfront costs themselves is another 

part of this reform. 

The President’s budget proposals are much narrower. The Part 

B deductible would be increased 75 years over 3 years. The new copayment would be levied on certain home health episodes that 

were not preceded by an inpatient stay. Both proposals would 

apply only to new Medicare enrollees as of 2017. Those proposals 

have been criticized as imposing a burden on beneficiaries. But in 

fact 90 percent of beneficiaries have supplementary coverage 

through Medigap, retiree plans, or Medicaid. Consequently, most 

beneficiaries have nearly complete coverage against out-of-pocket 

costs. 

That fosters inefficiency in Medicare and adds to the costs of the 

program, which are borne by beneficiaries and taxpayers. I might 

add that for those who buy Medigap policies, they are simply paying it through another mechanism. They are still paying the cost. 

So a more equitable phase-in than the President proposes would 

provide further protection for beneficiaries who do not already have 

supplementary coverage. The cost-sharing provision should be applied to all beneficiaries, not only to new enrollees, but exceptions 


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could be made based on a beneficiary’s ability to pay or health status, rather than the year of their enrollment. 

The third proposal increases income-related premiums under 

Part B and Part D. This extends the principle that those with 

greater means should provide more support for the program, a 

principle embraced by Republicans and Democrats alike. This principle was embodied in Medicare at its beginning in 1965. High 

earners pay more in payroll taxes, as Mr. McDermott pointed out, 

and income taxes throughout their work lives. That started in 

1966, and we still have this principle today. 

How much they should pay is an ethical judgment, but if the 

budget resources are not available to maintain an adequate level 

of Medicare benefits for every senior, then we should care first for 

those who cannot afford to cover the costs themselves. 

Increasing premiums reduces the fiscal pressure faced by Medicare, but it does not address the fundamental defects that drive up 

program costs. Higher premiums do not change the financial incentives of fee-for-service Medicare. They do not change the way beneficiaries use services, or the way services are delivered. More fundamental reforms that address Medicare’s cost drivers are needed. 

Any significant Medicare reform will take time to develop and 

implement. It is better to start that process now rather than delay 

until the fiscal crisis is upon us. Abrupt actions forced by crisis 

harm seniors and risk the long-term stability of the program. Proposals advanced by the President, as well as proposals from the 

independent commissions, potentially provide a basis for bipartisan 

agreement and the start of a process that can preserve and improve Medicare for future generations. Thank you. 

[The prepared statement of Mr. Antos follows:] 


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Chairman BRADY. Thank you, Mr. Antos. 

Ms. Rivlin. 

STATEMENT OF ALICE M. RIVLIN, PH.D., CO-LEADER, BIPARTISAN POLICY CENTER HEALTH CARE COST CONTAINMENT 

INITIATIVE, SENIOR FELLOW, ECONOMIC STUDIES, BROOKINGS INSTITUTION 

Ms. RIVLIN. Thank you, Chairman Brady and Ranking Member 

McDermott. 

Let me start with a basic question: Why reform Medicare? The 

main reason for reforming Medicare is not that the program is the 

principal driver of future Federal spending increases, although it 

is. The main reason is not that Medicare beneficiaries could be receiving much better coordinated and more effective care, although 

they could. The most important reason is that Medicare is big 

enough to move the whole American health delivery system away 

from fee-for-service reimbursement, which rewards the volume of 

services, and toward new delivery structures which reward quality 

and value. Medicare can lead a revolution in healthcare delivery 

that will give all Americans better health care at sustainable cost. 

This Committee knows very well that health care in the United 

States is expensive and getting more so. Moreover, quality is uneven, and much care is duplicative, wasteful, and uncoordinated. 

For decades, however, reformers have focused less on cost containment and quality improvement than on closing the gaps by widening healthcare insurance coverage. But now that the near universal coverage has been ensured by the Affordable Care Act, attention should shift to improving quality and value of healthcare 

delivery for all and containing cost growth. 

I recently had the privilege of co-leading with former Senators 

Daschle, Domenici and Frist the Bipartisan Policy Center’s report 

on the future—on cost containment in health care. We reached a 

consensus on a comprehensive package of reforms that span the entire healthcare system with a particular focus on Medicare and 

Federal health-related tax policy. We believe that if enacted together, and that is important, these reforms will improve healthcare quality for patients and families and lower overall spending 

throughout the healthcare system. 

Budget savings were not our primary objective, but we believe 

that these reforms would achieve approximately $300 billion in net 

savings over the next 10 years and about a trillion in the following 

10 years. These saving estimates are net of the cost of fixing the 

dysfunctional sustainable growth rate physician payment formula. 

Now, as has been noted, our bipartisan foursome were not mavericks working in isolation. The Simpson-Bowles commission, the 

Bending the Curve project at Brookings, and indeed the President’s 

budget have endorsed many of the same proposals. It seems that 

a bipartisan consensus is emerging on using Medicare and tax reform to lead the transition of the health system away from fee-forservice and toward quality and value-based care. 

Briefly, our recommendations included preserving the guaranteed health coverage promised in traditional Medicare; modernizing 

the benefit package for Medicare to create a cap on beneficiary 

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bining the Part A and B deductibles; and exempting physician visits from the deductible and preventive care from all cost-sharing. 

We would limit Medicare supplemental coverage, and we would 

protect low-income beneficiaries by helping them with cost-sharing 

up to 150 percent of the poverty line. We would raise Part B premiums for higher-income beneficiaries in a slightly different way 

than the President does. 

Most importantly, we would create Medicare networks, an improved version of the affordable care organization demonstrations 

in the Affordable Care Act. Medicare networks would be providerled and enrollment-based, and would better provide coordinated 

care. Beneficiaries and providers would have incentives to join 

them, and reimbursement would be increasingly reflective of measures of quality and value. 

We would replace the SGR with a better structure, and we would 

increase competition among health plans in Medicare Advantage by 

implementing a new competitive bidding structure that would result in lower payments and helping beneficiaries navigate plan 

choice on a user-friendly website. 

We would also limit the tax-favored treatment of expensive 

health insurance products by capping the exclusion of employerpaid benefits. And we would have a cumulative limit on the increase in Medicare spending for each of the three categories that 

we propose. 

This would not be an easy set of reforms to enact or implement, 

Mr. Chairman, but we believe it would improve the care delivery 

under Medicare and save money at the same time. 

[The prepared statement of Ms. Rivlin follows:] 


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Chairman BRADY. Thank you, Ms. Rivlin. 

Mr. Baker. 

STATEMENT OF JOE BAKER, 

PRESIDENT, MEDICARE RIGHTS CENTER 

Mr. BAKER. Thank you, Chairman Brady, Ranking Member 

McDermott, and distinguished Members of the Subcommittee on 

Health, for the opportunity to testify this morning about proposals 

to modify Medicare cost-sharing. Medicare Rights Center is a national nonprofit organization dedicated to making sure that people 

with Medicare get access to affordable health care. We counsel 

about 15,000 people a year and their families and through our education initiatives help about 700,000 others. 

Proposals to increase the Medicare Part B deductible, introduce 

a home health copayment, and further income-relate Medicare premiums share a common pernicious theme: Each plan achieves savings by shifting cost to the very people Medicare was designed to 

protect. 

Cost shifting to Medicare beneficiaries doesn’t solve the underlying problem with our healthcare system: the long-term challenge 

of systemic healthcare inflation and costs, which threatens both the 

public and the private spheres. We believe that Congress should 

focus its attention on reforms that diminish wasteful Medicare 

spending and encourage the transformation of our healthcare system from one that rewards high-volume care to one that rewards 

high-value care. 

To this extent, we support the proposals that would shift no 

costs, like advancing some of the delivery system reforms in the Affordable Care Act, restoring Medicare drug rebates, equalizing reimbursements to Medicare Advantage plans, and other proposals. 

Today, as Ranking Member McDermott said, half of all people 

with Medicare, 25 million older adults and people with disabilities, 

are living on annual incomes of $22,500 or less and spending about 

15 percent of their household income on healthcare costs as opposed to 5 percent for those under age 65 who are not on Medicare. 

These people with Medicare cannot afford to pay more for health 

care. Indeed, the most common call to our help line comes from a 

Medicare beneficiary having difficulty affording a treatment or a 

medicine. Further, forcing so-called wealthy beneficiaries to pay 

more for Medicare translates into a premium hike on middle-class 

retirees and people with disabilities while also fracturing one of our 

Nation’s most successful social insurance programs. 

Added cost-sharing leaves many beneficiaries with no choice but 

to self-ration care. Faced with higher upfront costs, beneficiaries 

living on fixed incomes are likely to forego doctor’s visits, a decision 

made on affordability, not on healthcare needs. Almost 40 years of 

data consistently demonstrates that while higher out-of-pocket 

costs certainly deter healthcare utilization, it deters utilization of 

needed care as well as unneeded care indiscriminately. The equation is simple: Higher out-of-pocket costs will require many Medicare beneficiaries to go without, either going without heating or 

rent payments, or going without needed medical care. And in the 

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crease healthcare spending through the increased likelihood of 

emergency room visits, ambulance rides, and hospital stays. 

Increasing the Medicare Part B deductible, either alone or by 

combining the Part A and Part B deductible, is one of several proposals that adhere to the faulty logic that added cost-sharing is an 

appropriate tool to limit healthcare service use. Most alarming 

about this proposal is that these added costs would impose greater 

hardship on beneficiaries with low fixed income. And with regard 

to the point about supplemental insurance covering this, many who 

would also increase the deductible would also decrease the level of 

coverage in Medigap or other Medicare supplemental plans. 

Similarly, introducing a home health copayment would be most 

damaging to the most vulnerable—the poorest, the oldest and the 

sickest. The typical home health user is an older, lower-income 

woman with one or more common or chronic conditions. Beneficiaries who need ongoing care to remain in their homes and not 

be institutionalized in nursing homes or other types of care are 

most at risk of skipping needed care if forced to pay this copayment. 

Many policymakers suggest that wealthier beneficiaries can contribute more in Medicare costs, specifically through higher premiums. Yet higher-income beneficiaries already pay higher premiums, as we have heard. Achieving savings of any scope under 

these proposals requires reaching down the income spectrum. Recent analysis shows that individuals making $47,000 per year 

would pay more under current proposals. And that is a slippery 

slope. It could get lower and lower as this is looked at. 

So we implore you to reject proposals that fail to build a better 

healthcare system, instead only achieve ephemeral savings by 

shifting costs to people with Medicare. Thank you for this opportunity to testify. 

[The prepared statement of Mr. Baker follows:] 


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Chairman BRADY. Thank you, Mr. Baker. 

First to Mr. Antos, Ms. Rivlin. Medicare is so important. It is in 

deep trouble. Lawmakers like to bury their heads in the sand on 

these tough issues. How important is it that we act this year to either save Medicare for the long-term or to take meaningful steps 

to extending its life, for example, another 20 years or more? Mr. 

Antos. Ms. Rivlin. 

Mr. ANTOS. Well—— 

Chairman BRADY. Act now. 

Mr. ANTOS. Acting now is a critical matter. Congress has had 

plenty of opportunity to take appropriate actions over many, many 

years. But in fact we still face the fiscal problems and the risk to 

the Medicare program. 

Chairman BRADY. I have a couple more questions for you, so 

your point is act now? 

Mr. ANTOS. Act now, but act responsibly. 

Chairman BRADY. Got it. 

Ms. Rivlin. 

Ms. RIVLIN. I would say act now, but for the principal reason 

that you can use Medicare to reform the whole system. 

Chairman BRADY. Yeah. Yeah. Do you see, as you look at these 

issues and the President’s policies in his budget, income-related 

premiums for Medicare Parts B and D, the Part D deductible establishing a home health copay? The President has suggested this 

begin 4 years from now, 2017. Ms. Rivlin, do you see any reason 

we should wait that long? 

Ms. RIVLIN. I don’t think you need to wait until 2017. You need 

a little time to get them in place and—— 

Chairman BRADY. Yeah. Set them up. 

Ms. RIVLIN. Set them up. So it can’t be 2014. I think we suggested 2016 as a reasonable year. But again, I wouldn’t do these 

in isolation. Do them as a package. 

Chairman BRADY. Got it, makes sense. 

Mr. Antos, you emphasized broad reforms of combining Medicare 

Parts A and B. This important topic, the Subcommittee has been 

looking at and will continue to explore. Would you consider the 

policies we are discussing today to be smaller reforms on the pathway to perhaps bigger ones? 

Mr. ANTOS. Well, they could be on the pathway to a discussion 

about combining A and B and more sensible reforms of Medicare. 

But these specific proposals I don’t think take us in that direction. 

They are simply budget cuts. 

Chairman BRADY. Got it. 

Ms. Rivlin, you—and Mr. Antos, you both recommended establishing a home health copay so that patients determine the value 

of those services that are being provided to them. Some critics have 

warned it would deter many vulnerable Medicare beneficiaries 

from accessing needed care, maybe increase returning to hospitals. 

Can you respond to those criticisms? 

Mr. ANTOS. Well, certainly, the President’s proposal follows the 

Medicare Payment Advisory Commission’s precaution and restricts 

this to episodes that have at least five visits and are not preceded 

by an inpatient stay. 

Chairman BRADY. So you are not coming from the hospital. 


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Mr. ANTOS. You are not coming from the hospital. Nonetheless, 

this is a serious matter. And the problem with a lot of Medicare 

policy is that it is very heavy-handed. We need to have a more subtle policy or we need to have a better management of patient care. 

Chairman BRADY. Should we adjust it to the income of the 

Medicare senior? 

Mr. ANTOS. We certainly should recognize the extra burden that 

this is going to cause on the minority of patients who don’t have 

the money. 

Chairman BRADY. Ms. Rivlin, your thoughts? 

Ms. RIVLIN. Home health care is liable to abuse, and I think 

that some cost-sharing is appropriate. In our plan, we actually help 

the lower-income beneficiaries cope with total cost-sharing, including any new cost-sharing, so it wouldn’t be subject to that criticism. 

Chairman BRADY. Yeah. And your belief is we are looking at 

value over volume. Is Washington the best one to determine what 

that value of service is, or are patients actually using them, you 

know, who have some role in some cost-sharing, small or large, according to ability to pay? Is that where we see value more likely 

to be determined? 

Ms. RIVLIN. Well, when we talk about value and quality, we envision a set of measures that will eventually govern the reimbursement as we get more experience with them. I don’t think you entirely rely on patients, as Dr. McDermott has suggested, to sort out 

what is quality. The point of cost-sharing is to give patients some 

reason to stop and think, unless they are very low income, about 

whether they need to go. 

Chairman BRADY. That makes sense. 

Mr. Baker, I just want to understand: You absolutely reject the 

President’s proposals to begin some of these reforms in Medicare? 

Mr. BAKER. Yes, we think that the cost-sharing as set is a blunt 

instrument and one that would visit some harm on beneficiaries. 

Chairman BRADY. Okay. Thank you. 

Mr. McDermott. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

I didn’t take economics and so I am always pleased with the 

chance to learn from economists how they think. You take the average person is 78 years old, and he or she is living on $22,000 and 

spending about $3,000 on average, 15 percent, on their medical expenses, okay. So they are already spending a big chunk out of it. 

Now, we are going to impose a tax on them. We are going to tax 

them—we are going to call it a premium increase, but it is a tax. 

It is a tax on the seniors that we are putting on here. And I want 

to understand from the economist’s point of view how imposing 

that tax on a 78-year-old senior who is living on $22,000 and 

spending $3,000 already on health care, how is that going to 

change the delivery of the healthcare system to deliver quality instead of quantity? 

I mean, I am trying to think of Mr. Johnson sitting there and 

saying, well, the doctor said I should come back and have my blood 

pressure checked, and it is going to cost me X number of dollars 

and so forth, and so I am not going to go. Or I am going to go because the doctor told me to. How does this change the cost of overVerDate Sep 11 2014 11:14 Sep 06, 2016 Jkt 021107 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21107\21107.XXX 21107

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all Medicare by putting a tax on seniors of another 50 bucks a 

month? 

Ms. RIVLIN. That proposal is not what I—tax on seniors of 50 

bucks a month is not what I am advocating. 

Mr. MCDERMOTT. You are not talking about the melding of the 

Part A and Part B? 

Ms. RIVLIN. We are. 

Mr. MCDERMOTT. You are. So that means that the money that 

they pay will be more per month, right? 

Ms. RIVLIN. Let me finish. We do not propose a net increase in 

beneficiary cost-sharing. The package that we would have, and it 

is a package, would reduce the cost-sharing for low-income beneficiaries, increase it at the top. It would also make some very important changes in the benefit package that would say no deductible for going to the doctor ever, and no cost-sharing at all for preventive care, and a cap on out-of-pocket spending. All of that is 

helpful to your average and below beneficiary. 

Mr. MCDERMOTT. So then you are going to put it all on the 

richer people, that is the idea. Since it is not going to cost the poor 

people more, it has to cost the richer people more, is that it? So 

you are putting the tax on the people above—— 

Ms. RIVLIN. Well, we are increasing the Part B premium, yes, 

for higher-income people. There is already an income relation, and 

we would lower the thresholds for that, but not to levels where people are in need. 

Mr. MCDERMOTT. When does it tip over into being a welfare 

system? If you are poor you get it for free; if you are rich, you have 

to pay for it. I mean, that is what we have now in the healthcare 

system in this country. If you are poor, you go to Medicaid, right? 

Or you just walk into the emergency room and get taken care of. 

The rest of us pay for it, and we are paying 1,000 bucks a year for 

the cost of the uncompensated care, presently. What you are doing 

is just shifting it to the top, is that what you are saying? 

Ms. RIVLIN. That is part of what I am saying, but remember, 

we don’t pay for Part B. Right now the premiums cover only 25 

percent of the cost of Part B. We would like the premiums to cover 

a somewhat higher share, and we would do that by raising the premiums for people like me. I am a beneficiary of Medicare who can 

afford to pay it. 

Mr. MCDERMOTT. Mr. Baker, your view of this whole process? 

Mr. BAKER. Well, I think whenever you are talking about shifting the benefit, especially in the context of deficit reduction or for 

paying for other things, you are looking for savings. And in that 

context, even if you are protecting lower-income people—— 

Mr. MCDERMOTT. You are looking for savings or you are looking for more revenue? 

Mr. BAKER. Well, you are looking for revenue for the Federal 

budget, of course. 

Mr. MCDERMOTT. So it is basically a tax. 

Mr. BAKER. It is a tax. 

Mr. MCDERMOTT. You are taxing somebody to get more revenue into the system. 

Mr. BAKER. It gets more revenue into the system, and I think 

that the problem is, it doesn’t solve the underlying problem, as I 


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said, which is the healthcare costs themselves and inflation in that 

market, and it is kind of a slippery slope. So once you start charging, say, people at $60,000 or $85,000 a year or more, and you can 

argue whether that is a wealthy individual when you look at our 

Tax Code, not necessarily as wealthy, of course, as someone at 450 

or a million dollars where tax rates start to go up. But even for 

folks that are in that middle-income range, they do not qualify for 

low-income protection. They are strapped. 

So, you know, you are looking at folks that are the most vulnerable, that have the least control over their utilization of health 

care, because as you had mentioned, once they get to the doctor 

and they are in the healthcare system, they are moving through 

that system. They are following doctor’s orders. And I think that 

is where the incentives need to be placed on controlling care, 

through accountable care organizations, some other mechanisms I 

think we all see as appropriate. 

Mr. MCDERMOTT. Thank you. 

Chairman BRADY. Thank you. 

Mr. Roskam is recognized for 5 minutes. 

Mr. ROSKAM. Thank you, Mr. Chairman. 

You know, it is interesting to take a step back and look at the 

trend and the history of this discussion. So the trend would suggest 

that income-related premiums and the discussion around them are 

here to stay. If you look at 2003, the decision by House GOP at 

that point to move forward on Part D and Part B; the decision by 

the Democrat majority in 2010 to move forward with similar 

themes as it relates to Medicaid and health exchanges in Part D; 

the decision of the Obama Administration, even if it is de minimis, 

they are acknowledging in their budget that it is here to stay. 

So, Mr. Baker, I think that you are making yesterday’s argument. Yesterday’s arguments, they are nostalgic, but I think that 

the entire question, these numbers are so big, they have really 

eclipsed. Mr. McDermott raised this question about the economics 

of this, and that is sort of the wonder of it all, isn’t it? That if you 

give patients choices, and not cutting out the legs from underneath 

the vulnerable that he is defending today, as well he should, but 

you look at the success of Part D, for example, a lot of the themes 

that we have heard in terms of criticisms of income-related premiums, we have heard those echoes in the past, and that was the 

claim that Part B was going to sort of lead to a very difficult situation, when as we all know, the data suggests just the opposite. Incredibly high satisfaction rate among seniors, you know, savings 

that have come in well under, you know, by 45 percent under the 

expectations. So that is part of the power of giving people choices 

and the ability to move forward. 

Mr. McDermott mentioned a minute ago the idea of a senior 

being told, well, chase this down, you know what I mean, and come 

back and double-check with your physician. Part of the other story, 

though, to complete the picture is, many times if you are told by 

a physician to get an MRI, or whatever it happens to be, right now 

the system doesn’t create an environment where you have much interest in trying to figure out who is doing the most efficient MRI. 

Where is the best, cheapest, and easiest, as opposed to the one that 

you just end up in? 


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Dr. Rivlin, can I ask you a question? With that sort of predicate, 

you made an interesting statement, and you said that the driving 

opportunity right now take the debt—and it is a pretty provocative 

thing. You said the debt is a big question; set it aside. A more effective healthcare system is interesting; sort of set it aside. But you 

are telling this Committee and this Congress that you have such 

a big opportunity right now that you can have a transformational 

moment as it relates to Medicare. What did you mean by that? 

Ms. RIVLIN. The rising costs are not just in Medicare. They are 

in the whole system. And one of the culprits is the fee-for-service 

reimbursement system, which does, not surprisingly, reward more 

services, more volume, rather than coordinating care and rewarding value and quality. 

We think that the accountable care organizations, we all think 

that accountable care organizations should be strengthened, provider-led networks that will take care of the whole patient, coordinates the care, and we think do it on a better, a higher quality 

basis, and at a lower cost. 

Now, time will tell whether that is right, but there is a strong 

feeling among health policy analysts that it is time to use Medicare 

to move the whole system off of fee-for-service. 

Mr. ROSKAM. Thank you. I yield back. 

Chairman BRADY. Thank you. 

Mr. Pascrell is recognized for 5 minutes. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

Ms. Rivlin, I think you have hit the nail on the head when you 

talk about Medicare and the whole system. Because I think one of 

the major problems we had in putting the ObamaCare together, in 

writing out the law, and it is voluminous pages, we have all heard, 

was that we often lose track that the person who is over 65 years 

of age many times has the same kinds of problems that a couple 

of 45 years of age have. And we have missed the point on this 

thing. When you shift costs, when you are shifting costs, as you 

laid out, you are not changing the cost, you are not lowering the 

cost. It is like the person who doesn’t look at his hospital bill because it is covered, because I have insurance. 

This moves the cost higher as well. I mean, many medical people 

don’t want us to be knowledgeable of what is in the bill. And let’s 

face it and let’s say it like it is. I understand my colleagues on the 

other side continue to say that these proposed additional costs to 

beneficiaries are bipartisan proposals, I will have you know. But 

we must remember that the President offered the proposal in the 

context of a broad, large deficit-reduction package that requires 

both spending cuts and increased revenues. 

We also need to remember that reform to the Medicare program 

is already underway. Why we will not admit to that, some on my 

side, and some on the other side, is beyond me. When we put the 

Affordable Care Act together, the purpose of that was to look at, 

one of the specifics was Medicare and to reduce the cost. 

And already, already, what we have done is the following: We 

have had entitlement change. We won’t admit it. If you have Medicare, you qualify for an annual wellness visit, mammograms, other 

screenings for cancer and diabetes, important preventive care. 

Medicare Advantage plans that give better quality care receive adVerDate Sep 11 2014 11:14 Sep 06, 2016 Jkt 021107 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\21107\21107.XXX 21107

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ditional bonus payments. Plans must use some of the bonus money 

to offer you added health benefits. Medicare Advantage plans cannot change—or charge people more than the original Medicare pays 

for certain services. These services include chemotherapy administration, renal dialysis, and skilled nursing care. The law cracks 

down on waste, on fraud and abuse, a major part of that 

ObamaCare. Nobody refers to this. We have selective memory 

about what we want to think about or talk about in this legislation. 

And we guard against medical identity theft, et cetera, et cetera. 

It improves long-term care services. 

Why not target when you say that we have to move away from 

fee-for-service, not just for seniors, for everybody? For everybody? 

Can we say it enough times, Ms. Rivlin, for everybody? Because the 

costs are too high. And if we don’t change those costs and find a 

way to do it without cost controls, then we are not going to have 

any system at all, not just we will reduce the propensity of Medicare and the strength of Medicare. 

Overall health spending has been constrained. Per capita Medicare spending was 0.4 percent of GDP in 2012, last year. And CBO 

projects Medicare cost growth will remain low throughout the decade. There is a reason for this. Are there less people going into 

Medicare? Heck no. And overall health inflation has been at historic lows for 3 years in a row. 

There is a report that came out this morning, I don’t know if you 

saw it. Senior poverty is much worse than you think due in part 

to such burdens. The new Kaiser Family Foundation report finds 

that the SPM poverty rate for seniors is actually higher than the 

official rate, 15 percent versus 9 percent. And here we are talking 

about shifting costs, even if it is to the higher income. We better 

be darn careful about this, because if we don’t understand the situation that seniors are in, we are in big trouble. 

Mr. Baker, if I can get a quick question in. I think we are trying 

to go in a new direction here. I agree we should always be open 

to new ideas. I think my colleagues need to take a look at the work 

happening today that is moving Medicare; more important the 

quality than the quantity. Can you discuss the ways in which affordable health care has helped the solvency of the Medicare program directly? Can you answer the question? 

Chairman BRADY. If I may, because time has expired, Mr. 

Baker, could you perhaps answer in another question or provide 

Mr. Pascrell an answer in writing. Thank you. 

Mr. PASCRELL. Thank you for your consideration. 

Chairman BRADY. Thank you, Mr. Pascrell. 

Mr. Gerlach is recognized for 5 minutes. 

Mr. GERLACH. Thank you, Mr. Chairman. Thank you for having this hearing today. 

Today’s hearing is focused on the reform of Medicare’s benefit 

structure, so your suggestions are very welcome and very helpful. 

Thank you very much. But in addition to the benefit structure 

itself, success and cost-effectiveness of the program is also based on 

how it is administered every single day. Currently, the Medicare 

program has a pay-and-catch system for improper payments. A few 

years ago, the GAO put out a report that concluded that there is 

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care program, both unintentional payments, erroneous, mistaken, 

or intentional fraudulent-based payments due to stealing the identification numbers of physicians and other fraudulent activities. 

So based on the fact that that $50 billion a year in improper payments in the Medicare program over 10 years would be half a trillion dollars, and based on the fact that that is about 10 percent of 

the total expenditure in the program each year, what do you each 

believe would be the single-most important step that Congress 

could take now to reduce and ultimately eliminate $50 billion a 

year in improper payments in the program in addition to all of the 

other suggestions you have given us about benefits restructuring? 

But specifically what could be done today to reduce and eliminate 

$50 billion in improper payments just because of the way the program is administered on a daily basis? 

Start with Mr. Antos. 

Mr. ANTOS. Well, certainly, the idea about Medicare verifying 

who the providers are would be the first step. Don’t pay unless the 

provider is a legitimate provider. Don’t pay unless the provider is 

providing appropriate services. The idea of having information 

about the quality of care should extend also to traditional Medicare. It doesn’t exist there right now. 

Mr. GERLACH. Thank you. Is there a specific kind of technology 

or system, programming that could be utilized to make that happen? 

Mr. ANTOS. Well, so in terms of measuring quality, there are literally scores of different measures that measure very specific results or very specific activities in health care. They don’t necessarily represent quality. They represent things we can measure. 

And so I think the first step is to do a better job of developing the 

kinds of measures that really reflect not what goes into the patient, 

but what comes out. In other words, patient outcomes. 

Mr. GERLACH. Ms. Rivlin. 

Ms. RIVLIN. I agree with that, and I think more money for more 

vigorous prosecution of fraud would actually help. That is happening, but probably not enough. And better information for the 

patient to enable a patient to say, wait a minute, I never saw that 

doctor. It is hard now for a patient to monitor that kind of thing. 

Mr. GERLACH. Mr. Baker. 

Mr. BAKER. I would agree with all that has been said. We get 

a lot of complaints on our help line saying I didn’t see this particular doctor, and we do refer them to the fraud tip lines, et 

cetera, but sometimes it is the pathologist in the hospital that no 

one ever sees. That kind of education is important. 

I think one of the things that we do have to guard against is one 

of the justifications for home health copayments is, oh, it will help 

combat fraud efforts. And I think putting financial cost-sharing on 

consumers to have them help identify fraud is not necessarily the 

best way to go, but rather, some of the ideas that we have been 

talking about here, and really providing administrative resources 

to not only our law enforcement personnel, but also to the Center 

for Medicare and Medicaid Services to really oversee this program. 

We always brag about Medicare having a low administrative cost, 

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tive cost so that it can pursue some of these initiatives against 

fraud. 

Mr. GERLACH. Do either of you have a debit card on you today? 

Mr. BAKER. Yeah. 

Mr. GERLACH. And you pull that card out, is there an identification number on that? 

Mr. BAKER. Yes, there is. 

Mr. GERLACH. And if you took it downstairs to the credit union 

and you want to get money, you would type in a few numbers, 

would you not, that are unique to you and unique to that identification number, is that correct? 

Mr. BAKER. Yes. 

Mr. GERLACH. And so why don’t we have that system in Medicare right now? Why don’t we have a smart card technology in our 

system that identifies that provider and that patient at the same 

time before the service is undertaken? Has anybody considered that 

as part of your review of the program? 

Ms. RIVLIN. Sounds like a good idea. 

Mr. GERLACH. Okay. 

Mr. BAKER. We certainly could consider that. 

Mr. GERLACH. I know when to end my questioning. Thank you, 

Mr. Chairman. I yield back. 

Chairman BRADY. Stop when you get the answer you want. 

Mr. Price is recognized for 5 minutes. 

Mr. PRICE. Sounds like a bill is coming, Mr. Chairman. Thank 

you. Thank you so much. And I want to thank the panel members. 

This is a remarkably important topic, but it is also just part of 

a hugely complex system. And I am struck most often when we 

have the topic of health care come up in this Committee, and appropriately so, we are talking about money, not about patients. And 

when you talk just about money and not about patients, then I 

think that we miss really the focus of where we ought to be. We 

ought to be talking about patients. 

And as a physician taking care of patients for over 20 years, I 

know that the patients of this country, especially the Medicare patients of this country, are extremely frustrated with the current 

system. Access is being diminished to care. I have said this before, 

if you are a new Medicare patient, you turn 65, your physician that 

has been taking care of you isn’t seeing Medicare patients, which 

is more and more frequent. 

Even in large metropolitan areas, the opportunity or the ability 

that you have to find a doctor who is taking new Medicare patients 

is minimal. One in three physicians in this country has limited the 

number of Medicare patients that they are seeing. One in eight 

physicians who would normally see patients of Medicare age is not 

seeing any Medicare patients. And that is only getting worse. And 

the ACA is making that worse, not Dr. Price’s, Tom Price’s opinion. 

That is the opinion of the Medicare trustees, that access to care 

will be diminished because of the laws that we have already 

passed. 

Mr. Antos, you talked about Medicare oftentimes instituting policies in a heavy-handed way, and it is that heavy-handedness that 

I believe harms patients. 


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So there is huge pressure within the system, and I want to touch 

on a couple specific areas. And I know that the fee-for-service system has been bashed, and, you know, it isn’t worth a doggone 

thing, according to some folks. But one of the antiquated notions 

of the fee-for-service system is that a patient can choose a physician that he or she desires to take care of them and that that care 

can be delivered. 

So I would ask you, Mr. Antos and Ms. Rivlin, do you believe 

that whatever system we come up with, should patients and doctors be able to practice outside of that system? Should they be free 

to take—the doctor take care of a patient outside of that system if 

voluntarily the patient and the doctor desire to do so? 

Mr. ANTOS. Well, under the Medicare program right now physicians are allowed to opt out, in essence. There are potentially substantial financial losses associated with that. 

Mr. PRICE. How about for an incident of care right now? 

Mr. ANTOS. For an incident of care, that is not possible. You are 

either in—— 

Mr. PRICE. Should it be? 

Mr. ANTOS. It runs certain risk. I believe that this—— 

Mr. PRICE. The freedom runs the risk. 

Mr. ANTOS. Freedom runs the risk. That is right. The question 

is, will the physician have the patient’s best interest at heart or 

will the physician—— 

Mr. PRICE. Have you ever read the Hippocratic Oath? 

Mr. ANTOS. I have read it, but there are plenty of ways to interpret it. And the question is—— 

Mr. PRICE. Can one interpret the Hippocratic Oath to not be in 

the interest of the patient? 

Mr. ANTOS. It needs to be in the interest of the patient, but the 

financial system that the physician is under in Medicare works 

across purposes oftentimes to the patient’s—— 

Mr. PRICE. But coercion to the physician is not to provide the 

best care to the patient. 

Mr. ANTOS. The financial system promotes oftentimes services 

that are not useful or not very useful to the patient. 

Mr. PRICE. That is not the physician’s design, that is the system’s design. 

Mr. ANTOS. That is the system’s design, and so we need to reform the system in order to make that relationship between the 

doctor and patient much more productive. 

Mr. PRICE. And maybe a little freer. 

This is going in an interesting direction. So my time is about to 

run out and I want to get to this other issue. We seem to be having 

contradictory themes. We say that the government control will 

produce value, push value—that is what we want, we want value— 

yet some of the things like home health care that provide some of 

the highest value for patients or care in ambulatory surgery centers that provides some of the highest value for patients, this proposal and others dis-incentivizes the use of those. So you have to 

ask the question, whose value? Is it the patient’s value or the government’s value? 

Ms. Rivlin, whose value should we be talking about here, is it the 

government’s value or the patient’s value? 


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Ms. RIVLIN. We should be trying to measure the value to the 

patient and rewarding that. It is not easy. And the question of 

home health care I think is a good example. Clearly it is valuable 

to many, many patients and you don’t want to discourage it, but 

you don’t want abuse either, and you have to weigh the advantages 

and disadvantages of a copay. 

Mr. PRICE. Complex issue, Mr. Chairman. Thank you. 

Chairman BRADY. Thank you. 

Mr. Buchanan is recognized for 5 minutes. 

Mr. BUCHANAN. Thank you, Mr. Chairman. I want to also 

thank our panelists today for taking your time to be with us. 

I represent a community in Florida, Sarasota, but it is pretty 

much the demographics of Florida when you look across it, 700,000 

people we all represent, 300,000 55 and older. But I went to, probably a month back, went to an assisted-living facility in our area, 

these were seniors, very capable, active and engaged, and I usually 

go there once a year to talk to this group, 300 residents. So on the 

way in they mentioned to me, Vern, I would like to have you come 

meet a few of the residents, and very coherent. But I would say of 

the four I met, one was 108, there were three or four others in the 

assisted-living facility over 100. Another assisted-living facility in 

Venice, Florida, the average age, the guy had been there 40 years, 

it is a Lutheran organization that runs that out of Wisconsin, I 

think Wisconsin or Minnesota. He said the average age there today 

is 90, and he said 20 years ago it was 72. 

So maybe it is just the sunshine in the State of Florida, I don’t 

know, but I can tell you I am very concerned just looking forward 

from the viability as people are living longer. I think the statistics, 

the numbers used to be, people lived, when they put the program 

in place, I think it was 5 years. Today they claim 13.4 years. Have 

we looked down the road the next 10 years or so at what the age 

is that people are expected to live to or how many more years that 

is and are we factoring in the idea that the program, Medicare, is 

going to go broke in 10 years, Mr. Antos? 

Mr. ANTOS. Well, certainly, the Medicare actuaries take longevity into account. But longevity isn’t the principal issue here, I 

don’t think, it is the rising cost of health care, it is the rising use 

of services. 

Mr. BUCHANAN. Well, you mentioned this, just real quick, how 

many people did you say come a day, are coming into the program 

at 65? 

Mr. ANTOS. According to AARP it is about 8,000 a day. 

Mr. BUCHANAN. Yeah, I have heard 8,000, 10,000, 12,000, 

somewhere in that range, every day for the next 30 years. 

Mr. ANTOS. Well, for the next 20 anyway. 

Mr. BUCHANAN. Yeah, for the next 20. But go ahead, continue, 

what were you going to say? 

Mr. ANTOS. They are youngsters. When you turn 65 you are basically a healthy person. It is at the other end of life where the 

money is being spent. And I think the issue here is not so much, 

we are not going to have people stop turning 65 and joining the 

Medicare program. The issue is how do we get unnecessary spending under control? How do we get better treatment for these patients? 


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Mr. BUCHANAN. Ms. Rivlin, did you have any comments on 

those about longevity? 

Ms. RIVLIN. No, I agree with that. It is certainly increasing. But 

as Mr. Antos said, it is the rising cost per patient combined with 

the longevity, but the rising cost per patient is really the driving 

force. 

Mr. BUCHANAN. The other thing I think that a lot of seniors 

are concerned about is the fact that we are not doing much about 

it. There is a 10-year window ideally. What is your opinion of waiting and not dealing with this in a real way? I mean, we are talking 

about some adjustments and things that we might be able to do 

today, but in the scheme of things long term it doesn’t seem like 

it is going to have a huge impact in terms of the overall dollars. 

By waiting, what happens from that standpoint? How long can we 

wait and not deal with it in a big way? Ms. Rivlin. 

Ms. RIVLIN. Every year you wait makes it more difficult. We 

have waited too long already on many of these things and I would 

include Social Security. We need to put all of these programs on 

a firmer basis. 

But with respect to the healthcare programs it is a question of 

moving to better, more effective, more cost-effective delivery systems that is the most important. And the faster we can do that the 

better, although it is going to take time to transition. 

Mr. BUCHANAN. Thank you, Mr. Chairman. I yield back. 

Chairman BRADY. Thank you. 

Mr. Smith, you are recognized for 5 minutes. 

Mr. SMITH. Thank you, Mr. Chairman. And thanks to our witnesses for sharing your time today. I appreciate the testimony and 

your insight. And I think the urgency cannot be overstated. And 

yet we want to build on what we know works, and we want to do 

what we can to eliminate that which we know does not work. 

I get a little concerned when the term ‘‘fraud’’ that we should all 

be concerned about is often used to describe what might have been 

an innocent mistake amidst a bureaucracy in piles and piles of paperwork, and we don’t want the heavy hand of government to overreact. But I am curious to know what you might have to suggest 

about States coming up with innovative solutions. One thing we do 

know is that with our 50 States they are different among themselves. I know that, representing rural Nebraska, the definition of 

rural has a different application in different parts of the country. 

And so if you might, any of you, elaborate on perhaps how we could 

maybe rely on the States for innovation and incentives to increase 

the effectiveness of care and access. Not all at once, but go ahead. 

Mr. ANTOS. States obviously have a very strong fiscal interest 

in this question because of course they are responsible for about 42 

percent of the cost of the Medicaid program. The Medicaid program, many Medicaid people are essentially young, relatively 

healthy people. But the older Medicaid beneficiaries are among the 

sickest and among the most expensive patients that we have. Many 

of them are dual eligibles in Medicare. 

So States are very concerned about improving delivery of health 

care. I think in terms of rural America the idea of being able to 

bring modern electronics out there where you if can’t get a doctor, 


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let’s get somebody who is trained at the local level and have communications back with a medical center. 

In addition, States, I don’t think States are rushing to do this, 

but increasingly we are going to need to look at the personnel who 

provide healthcare services. We are going to have a doctor shortage, there is no question about that. We are going to have a lot 

more people who will be demanding care, we are not going to be 

producing that many more physicians, because it takes so long to 

produce a physician, a good physician. So we are going to have to 

look at expanding the scope of practice for nurse practitioners, for 

example, physician’s assistants. States control that, they need to 

take a look at that issue. 

Mr. SMITH. Okay. 

Ms. Rivlin. 

Ms. RIVLIN. I would agree with that. It is the Medicaid program 

which you ought to look to for giving States the most flexibility. 

And the potential is there. The situation now with waivers is much 

too complex, and it would be important, I think, to provide a more 

uniform system where States can take the measures that they 

think are most cost effective and are rewarded for that, but don’t 

have to go through a very complicated waiver process. 

Mr. SMITH. Mr. Baker. 

Mr. BAKER. I would agree. I think some of the experimentation 

that is happening under the ACA but also outside of it with regard 

to dual eligibles, people that are eligible for both Medicare and 

Medicaid, and there the States really are pushing the envelope in 

many instances in combining those funding streams and coming up 

with creative ways to manage their care. The typical statistic is 

these are the 20 percent of people that generate 80 percent of the 

costs. If we can control those costs better, much of it through better 

coordinated care, managing that care better, breaking down those 

silos. And States have been doing that. And I think we need to continue to encourage that. 

It is less possible in true rural areas that are sparsely populated, 

but some of the other ideas around allied professionals getting involved with physicians and others to kind of bring that care to the 

areas. Many times folks don’t need that intensive medical care, 

they need kind of social supports or other supports, kind of to live 

in their communities and stay healthy. And I think those are important initiatives that States are engaged in right now. 

Mr. SMITH. And, Mr. Baker, I think you touched briefly on perhaps cost-sharing with emergency room or other areas. Could you 

elaborate on that? 

Mr. BAKER. Well, my point there was that if we increase costsharing up front, many times people don’t access the kind of primary care or preventative care that they need. In many of the proposals preventive care would be covered first dollar up front, but 

other primary care would still need a copayment or a deductible to 

get through. So what happens is people put off care, end up in 

emergency rooms, or higher, more expensive care settings. 

Mr. SMITH. Okay. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. 

Mr. Kind is recognized for 5 minutes. 


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Mr. KIND. Thank you, Mr. Chairman. I want to thank our panelists for your testimony today. Mr. Chairman, I hope this is the first 

of many more hearings that we can do to explore avenues of bipartisan cooperation on reforming a healthcare system that is in desperate need of reform. And I guess one of the frustrating things sitting here and listening even to today’s conversation, is that there 

are so many of those tools that are currently a part of the Affordable Care Act right now. 

Ms. Rivlin, delivery system reform, getting to a more integrated, 

coordinated, patient-centered healthcare delivery system. There are 

tools in the Affordable Care Act right now to drive the system in 

that direction, including payment reform. Demanding value-based 

payments, quality reimbursements, as opposed to volume is already 

in the Affordable Care Act right now and vast experimentation taking place. Would you agree with that assessment? 

Ms. RIVLIN. I agree with that, and I said that actually. And we 

want to strengthen and build on what is already going on and accelerate it. 

Mr. KIND. And I applaud the work the Bipartisan Policy Center 

has come up with additional recommendations on reform. In fact, 

the New Democrat Coalition just had Bill Hoagland and Chris Jennings before us to walk us through a lot of the recommendations, 

and many of which we embrace. 

If there is one concern or one criticism I might have about the 

Bipartisan Center is you do maintain fee-for-service in a hybrid 

type of form, but nevertheless it is still there out in future years. 

And I happen to believe that we are going to have to kill this thing, 

we are going to have to have a date certain on fee-for-service so 

there will be institutional pressure from all over to maintain a feefor-service or volume-based payment system that we are never 

going to be able to slay and get rid of. 

Ms. RIVLIN. I think we kill it with incentives to move away from 

it, but we do preserve a choice so that no one can say we are destroying Medicare as we know it. 

Mr. KIND. Well, and again on the whole topic of Medicare fraud, 

and I look forward to working with my good friend from Pennsylvania because I think he has some good ideas to bring to the table 

how we can do a better job. But, Mr. Antos, I don’t know if you 

are sure, if you looked at the Affordable Care Act, but pay-andcatch is no longer the law of the land, it is a system of verification. 

And regional offices now have stepped up enforcement and funding 

to crack down or Medicare fraud. In the first 2 years we were able 

to recapture over $15 billion in fraudulent payments made in the 

Medicare system because of what is in the Affordable Care Act already. And that is moving forward. And maybe we need more personnel on the ground and more resources to do it, but again, as 

part of the Affordable Care Act, there has been a stepped-up measure to crack down on Medicare fraud. And I don’t know, your testimony made me believe that you weren’t aware that pay-and-catch 

is no longer allowed under Medicare. 

Mr. ANTOS. Oh, I didn’t address it in my written statement. It 

is not allowed but it still happens. It is great that CMS has been 

able to take actions, but obviously the problem isn’t solved. The 

problem will never be solved. 


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Mr. KIND. Well, again, I think we can continue working in a bipartisan fashion on what stepped-up enforcement are needed. 

There would be wide bipartisan support because no one is going to 

be here defending fraudulent practices, especially in the Medicare 

program. 

But, Mr. Baker, I also notice that you have been one of the panelists on the second Institute of Medicine panel trying to change 

volume to value-based payments. My only encouragement to you 

and the panel, I know it is hard with peer review with IOM, you 

have high standards, but you have to go bold and you have to go 

courageous. And if you guys can’t come up with a path to get to 

a fee-for-value-based reimbursement system it is going to be very 

hard for this institution to embrace something as well. So I don’t 

know if you want to give us a quick update where IOM 2 is going 

right now, but soon you are going to be reporting out. 

Mr. BAKER. Well, we are in the peer review process so I can’t 

really talk specifically about it. But I think that, as you saw from 

our interim report, we are very concerned about the present system. And I think you will be seeing some ideas about moving forward some of the value-based reforms that are already in the ACA. 

I think we are all agreed that those kinds of things and the kind 

of delivery system reform that we have all been talking about is 

key. 

I would point out that, and I do believe that we need to move 

away from fee-for-service, as we have been talking about, but we 

also have to recognize that within some of these hybrid or some of 

these even in classic managed care fee-for-service is still used and 

still might be appropriate to encourage the provision of some services. So I think it is a hybrid system and one that definitely needs 

to move away—— 

Mr. KIND. I will need to be educated on the value of doing that, 

but I also agree with Mr. McDermott, if at the end of the day all 

we are doing is talking about cost shifting, that is not the path forward because that is not the reform that we need to create the 

right incentives to get better value at a better price within the 

healthcare system. I think we are all in agreement on that. And 

my concern is with SGR fix and everything else that this cost—and 

time is of the essence. The Ryan bill does nothing to reform Medicare for 10 years because they exempt the first 10 years of entrants 

into the program. So if time is of the essence, I don’t know why we 

are repealing the Affordable Care Act 37 times and then trying to 

move forward on a plan that does nothing for the next 10 years 

when 10,000 seniors are joining Medicare every single day in this 

country. 

My time has expired, Mr. Chairman, thanks for your indulgence. 

Chairman BRADY. Thank you. 

Mr. Thompson is recognized for 5 minutes. 

Mr. THOMPSON. Thank you, Mr. Chairman. I want to thank all 

the witnesses for being here today and for your longstanding commitment to making health care work in this country. 

I want to pick up where Mr. Kind left off, where Mr. McDermott 

started, and that is with the whole issue of cost shifting. And one 

provision I would like to explore a little bit is found in the President’s budget as it relates to a copay for home health care. And I, 


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too, am worried about the idea that we would be cost shifting. And 

while the President’s program saves close to $800 million—I don’t 

know if it does save that, but it is scored at saving $800 million— 

and I just want to be very, very careful that we do the scoring correctly, because my concern is if this copay discourages folks from 

doing what they should be doing in regard to health care, it could 

end up costing us a lot more. 

Specifically, if people don’t get the care and they become more ill 

or they become injured and have to go into the hospital, that is a 

direct cost to Medicare and the Federal Government, or it could 

even turn out to be a cost shift to the specific States. 

And on that note I would like to ask unanimous consent that we 

put in the record two letters from two different States who share 

the same concern, one from Governor O’Malley, a Democrat from 

Maryland, and the other from Governor Deal, a Republican and 

former colleague of ours from Georgia. 

Mr. Chairman. 

Chairman BRADY. Without objection. 

Mr. THOMPSON. And I think that is important to note that, and 

I would like to know what your thoughts are on that, and we can 

start with whomever. Mr. Baker. 

Mr. BAKER. Okay. Yes, I think that is a potential. I mean, in 

1972 Congress actually took out copayment amount for the home 

health benefit after finding that it had led to increased hospital 

usage and institutionalization in other kind of more expensive and 

restrictive care settings. And I do believe that most of the savings 

that are scored there in the President’s proposal don’t come from 

collecting the actual copayments, but come in from analysis about 

the utilization being tamped down and folks just not accessing the 

benefit at all. 

And particularly the way this copayment is structured, as has 

been mentioned, is for people that have not had a hospitalization 

that need extended or longer-term care, even though Medicare 

doesn’t cover long-term care per se. Some folks can get ongoing 

home health care needed in order to stay in their homes through 

the Medicare benefit. And those are the folks that are at risk of either hospitalization or of deterioration of their condition either 

leading to hospitalization or nursing home care. 

So I think it is misguided, I think it is penny wise and pound 

foolish, as they say, and certainly to the extent it has the potential 

to lead to higher health costs, that was recognized in the early 

1970s and I think that lesson should be relearned. 

Mr. THOMPSON. Anyone else? 

Ms. RIVLIN. I think it is a difficult balancing act to the extent 

that there are people using home health care that don’t really need 

it because there is no copay and you might as well. We need to discourage that and be careful that it doesn’t hurt people who have 

very low income or who really need the care. 

Mr. THOMPSON. Ms. Rivlin, I am glad that you raised that 

issue, because I suspect a lot of that savings is directed at detecting fraud abuse and getting away from that. But MedPAC has 

noted that there are patterns of abuse in home health care, primarily found in 25 different counties in Texas and Florida. So it 


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seems to be a pretty focused issue or for the most part focused, and 

a pretty wide, sweeping way to deal with it. Is there a better way? 

And I am glad that Mr. Gerlach raised the issue of going after 

the fraud because I am one who believes that we can accomplish 

a lot in fixing the system if we are able to nail the fraud stuff. Is 

there a better way to go after the fraud than the copay? 

Ms. RIVLIN. Well, there may be, but I think the copay would 

probably help. 

Chairman BRADY. Thank you, Mr. Thompson. 

Mr. Blumenauer is recognized for 5 minutes. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. And I do appreciate an opportunity for a conversation like this, zeroing in on what 

actually can happen. And I want to follow up on comments from 

both my colleagues Mr. Thompson and Mr. Kind because I think 

we have embedded in the Affordable Care Act some opportunity to 

change the delivery mechanism. We are doing some experimentation in Oregon, and we are optimistic globally that it can have 

some significant effects. What Mr. Thompson said about being able 

to identify outliers, counties in a couple of States that are clearly 

having a pattern that screams abuse, the same way that we have 

had some pill mills where there are a handful of pharmacies that 

are responsible for certain narcotic drugs that find their way into 

the system. And I am a proud cosponsor of Mr. Gerlach’s legislation 

for the secure card, which I think could help us get at that. 

I am open to other systematic adjustments, some of which have 

been proposed, Mr. Chairman, by some of your colleagues, some 

from the Administration. But I am hopeful that we are able to 

focus on the big picture, things that we can do now that clearly attack problems of abuse and mismanagement that should share 

broad bipartisan support. And I am hopeful, Mr. Chairman, that 

our Subcommittee could zero in on a few of these proposals that 

have bipartisan support on the Committee, that aren’t going to 

solve everything overnight, but will make a significant difference 

improving the system. 

I am of the opinion that the more we can do on some of these 

smaller things that will make a difference, that are bipartisan, that 

are not particularly controversial except for some people who are 

taking advantage of the system, will help us establish a foundation 

for what we are going to have to do for the next half dozen years 

as the nature of healthcare changes in this country. 

And I will wrap up, we have things to do. I don’t want to debate 

particularly some of these modest points, although I would put on 

the table one other bipartisan proposal that will give people better 

health care, what they want, and will actually save money. And 

that deals with letting people know what they face at the end of 

life, that Medicare will pay untold billions to give hip replacements 

to 92-year-old people in the last months of life, it will hook them 

up to machines, it will do anything, but it won’t pay to have a conversation with the medical professional of their choice about what 

they face. 

There is a reason why doctors actually consume less health care 

in their final months of life, because they know what they are facing, they know what works, they know what doesn’t, and they have 


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a way of making those decisions and making sure whatever the decisions are that they are respected. 

And I would hope that there would be an opportunity for us to 

deal with legislation like that, that is bipartisan, that will make a 

difference, that surveys tell us over 90 percent of the American 

public wants, that will not just save money but will give people a 

better quality of care. 

I appreciate your commitment to make the Subcommittee zero in 

on some of the big picture, some controversial, some not. But I 

hope that we can circle around to some of the stuff that doesn’t 

have to be controversial which will save money and bring the Committee together while, above our pay grade, certain things are battled out. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Blumenauer. 

Ms. Black for the final question. 

Mrs. BLACK. Thank you, Mr. Chairman. And I appreciate being 

able to sit here on the Committee and for being given an opportunity to ask a question. 

My question is going to go to two pieces here. One is the solvency 

and the other is the quality. And being a healthcare provider, as 

Dr. Price talked about, the quality is very important to me as well, 

but making sure that we have a system at the end of the day that 

is solvent, that we can actually have a system. 

So the current Medicare spending trajectory is unsustainable and 

we know that. It has actually led the Medicare trustees to estimate 

the Part A trust fund will go bankrupt in 2023 and insolvent in 

2024. So that has already been established. But recent data has 

showed that Medicare spending is actually lower and some have 

suggested that this means that we don’t need to make any changes 

to the program. And so I ask the panelists, and starting with you 

particularly, Mr. Antos, and then working down the line, wouldn’t 

you agree that this is the wrong way to look at this? 

And then, second to that, instead of waiting should we be acting 

now to extend the solvency of this program? And if we make those 

changes now would you agree that the changes would be smaller 

now rather than waiting? And then the end piece of that, can you 

discuss how you think a well-designed Medicare program would 

benefit the outcomes for our beneficiaries? So, Mr. Antos, can you 

go to that? 

Mr. ANTOS. Thank you. What is lower now is not Medicare 

spending, what is lower is the last 2 or 3 years of growth per beneficiary. But of course the number of beneficiaries is growing every 

year. So in fact Medicare spending is continuing to grow, just at 

a somewhat slower rate than in the past. But we only have evidence for the last 3 years of slower Medicare spending. So I think 

it is way premature to announce victory and to hang up our hats. 

Clearly, the sooner we take responsible actions to shore up Medicare financing and to improve the program so that it actually does 

a good job for patients, the easier the transition will be to whatever 

the new Medicare program will be. I tend to agree with many of 

the suggestions of the Bipartisan Policy Center and the other 

groups, certainly in general terms, and they all imply changes in 

the way patients act, physicians act, health plans act, and the traditional Medicare program acts. That is a lot of change, and that 


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takes a lot of time. The sooner we start on that the more successful 

we will be without having what could be a disastrous experience 

for vulnerable people. 

Mrs. BLACK. Thank you. 

Ms. Rivlin. 

Ms. RIVLIN. I agree with all of that. I don’t think it is the bankruptcy of the Part A trust fund that should drive this primarily. 

You can always put more general revenues in the trust fund and 

you are doing that already in Part B. But the opportunity that you 

have now to change the way Medicare reimburses organizations 

and to incent more cost-effective delivery systems seems to me just 

major, and you ought to take it right away and push on that continuously. 

There is no one thing you can do to fix the whole thing, we will 

all be back here again. But there is a big opportunity now to accelerate the reforms, many of which are already in the Affordable 

Care Act, to improve the delivery system for Medicare and the rest 

of the health system. 

Mrs. BLACK. And might I add to that, because I think I heard 

you say earlier that one of the things you think is a benefit of this 

is that the quality of care is actually going to increase. 

Ms. RIVLIN. Yes, absolutely. 

Mrs. BLACK. Mr. Baker, in my little bit of time I have left. 

Mr. BAKER. Of course. I think I agree with a lot of what has 

been said. I think the crisis isn’t as acute a crisis as it has been 

because of the slowdown in growth in Medicare costs. And if you 

are looking 10 years ahead we do have this window now where, if 

this projection keeps up—and projections are projections, right— 

but we feel that there is some breathing room. That doesn’t mean 

we should be complacent. Definitely, as we have all discussed, not 

only in our Medicare program, but also in our private health insurance and private coverage schemes we need to be looking at how 

to save money and, as you are saying, increase the level of quality 

of care and get higher value. 

And so we think once again that some of the reforms in the Affordable Care Act, some of the things that are happening in the 

private sector that mirror that, and I agree with Ms. Rivlin that 

those things coming together and Medicare working shoulder to 

shoulder can drive a lot of good change. I mean, Medicare has had 

that role in the past and can have it now. I think my concern is 

that some of the cost-sharing that we see here isn’t driving in that 

direction. 

Mrs. BLACK. Thank you, Mr. Baker. 

Yield back. 

Chairman BRADY. Thank you. On behalf of Mr. McDermott and 

myself, I would like to thank all three of our witnesses for their 

testimony today on the President’s budget proposals. Your experience and ideas on how to reform Medicare to keep it solvent for our 

Nation’s seniors are constructive, and your continued thoughts and 

feedback will be very helpful as we move forward with these efforts 

in the coming months. 

As a reminder, any Member wishing to submit a question for the 

record will have 14 days to do so. If any questions are submitted, 


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I ask the witnesses respond in a timely manner, as I know you 

will. 

With that, the Subcommittee is adjourned. 

[Whereupon, at 11:35 a.m., the Subcommittee was adjourned.] 

[Submissions for the Record follow:] 


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