Editing Medicare (United States) (section)

==Legislation and reform==
{{expand section| separate, more detailed descriptions of legislation and reforms|date=January 2012}}

* 1960: PL 86-778 [[Social Security Amendments of 1965#Previous administrations|Social Security Amendments of 1960]] (Kerr-Mills aid)
* 1965: PL 89-97 [[Social Security Act of 1965]], Establishing Medicare Benefits<ref name="test">{{cite web|url=http://www.americanheritage.com/people/articles/web/20100719-Johnson-Medicare-Congress-Democratic-Party-Wilbur-Mills-Harry-Byrd.shtml|first=Robert|last=Dallek|author-link=Robert Dallek|work=americanheritage.com|publisher=American Heritage|title=Medicare's Complicated Birth|date=Summer 2010|page=28|url-status=dead|archive-url=https://web.archive.org/web/20100822235458/http://www.americanheritage.com/people/articles/web/20100719-Johnson-Medicare-Congress-Democratic-Party-Wilbur-Mills-Harry-Byrd.shtml|archive-date=August 22, 2010}}</ref>
* 1980: Medicare Secondary Payer Act of 1980, prescription drugs coverage added
* 1988: PL 100-360 Medicare Catastrophic Coverage Act of 1988<ref name="Health Affairs-Rice-1990"/><ref name="NYT-Hulse-2013-11-18"/>
* 1989: Medicare Catastrophic Coverage Repeal Act of 1989<ref name="Health Affairs-Rice-1990">{{cite journal | title = The Medicare Catastrophic Coverage Act: a Post-mortem | first1 = Thomas | last1 = Rice | first2 = Katherine | last2 = Desmond | first3= Jon | last3 = Gabel | volume = 9| issue = 3 | date = Fall 1990 | pages = 75–87 | journal = Health Affairs | doi = 10.1377/hlthaff.9.3.75 | pmid = 2227787 | doi-access = free }}</ref><ref name="NYT-Hulse-2013-11-18">{{cite news | title = Lesson Is Seen in Failure of Law on Medicare in 1989 | url = https://www.nytimes.com/2013/11/18/us/politics/lesson-is-seen-in-failure-of-1989-law-on-medicare.html | date = November 17, 2013 | last = Hulse | first = Carl | work = The New York Times }}</ref>
* 1997: PL 105-33 [[Balanced Budget Act of 1997]]
* 2003: PL 108-173 [[Medicare Prescription Drug, Improvement, and Modernization Act]]
* 2010: [[Patient Protection and Affordable Care Act]] and [[Health Care and Education Reconciliation Act of 2010]]
* 2013: Sequestration effects on Medicare due to [[Budget Control Act of 2011]]
* 2015: Extensive changes to Medicare, primarily to the SGR provisions of the [[Balanced Budget Act of 1997]] as part of the [[Medicare Access and CHIP Reauthorization Act of 2015|Medicare Access and CHIP Reauthorization Act]] (MACRA)
* 2016: Changes to the Social Security "hold harmless" laws as they affect Part B premiums based on the Bipartisan Budget Act of 2015
* 2022: [[Inflation Reduction Act of 2022|Inflation Reduction Act]] included Medicare negotiation provisions, allowing negotiation of prescription drug prices beginning in 2026

In 1977, the [[Health Care Financing Administration]] (HCFA) was established as a federal agency responsible for the administration of Medicare and Medicaid. This would be renamed to [[Centers for Medicare & Medicaid Services]] (CMS) in 2001.<ref>{{Cite web |title=Agencies – Health Care Finance Administration |url=https://www.federalregister.gov/agencies/health-care-finance-administration |access-date=2019-12-18 |website=Federal Register}}</ref> By 1983, the [[diagnosis-related group]] (DRG) replaced pay for service reimbursements to hospitals for Medicare patients.<ref>{{Cite journal|last1=Cacace|first1=Mirella|last2=Schmid|first2=Achim|date=2009-11-05|title=The role of diagnosis related groups (DRGs) in healthcare system convergence|journal=BMC Health Services Research|volume=9|issue=Suppl 1|pages=A5|doi=10.1186/1472-6963-9-S1-A5|issn=1472-6963|pmc=2773580 |doi-access=free }}</ref>

President [[Bill Clinton]] attempted an overhaul of Medicare through his [[1993 Clinton health care plan|health care reform plan]] in 1993–1994 but was unable to get the legislation passed by Congress.<ref>{{Cite news|url=https://www.nytimes.com/1993/10/28/us/clinton-s-health-plan-overview-congress-given-clinton-proposal-for-health-care.html|title=Clinton's Health Plan: The Overview – Congress Is Given Clinton Proposal for Health Care|last=Pear|first=Robert|author-link=Robert Pear|date=1993-10-28|work=The New York Times|access-date=2019-12-18|language=en-US|issn=0362-4331}}</ref>

In 2003, [[United States Congress|Congress]] passed the [[Medicare Prescription Drug, Improvement, and Modernization Act]], which President [[George W. Bush]] signed into law on December 8, 2003.<ref>{{Cite web |last=Hastert |first=J. Dennis |date=2003-12-08 |title=H.R.1 – 108th Congress (2003–2004): Medicare Prescription Drug, Improvement, and Modernization Act of 2003 |url=https://www.congress.gov/bill/108th-congress/house-bill/1 |access-date=2019-12-18 |website=congress.gov}}</ref> Part of this legislation included filling gaps in prescription-drug coverage left by the Medicare Secondary Payer Act that was enacted in 1980. The 2003 bill strengthened the Workers' Compensation Medicare Set-Aside Program (WCMSA) that is monitored and administered by CMS.

On August 1, 2007, the US House of Representatives voted to reduce payments to Medicare Advantage providers in order to pay for expanded coverage of children's health under the [[State Children's Health Insurance Program|SCHIP]] program. As of 2008, Medicare Advantage plans cost, on average, 13 percent more per person insured for like beneficiaries than direct payment plans.<ref>{{cite news |first=Aliza |last=Marcus |url=https://www.bloomberg.com/apps/news?pid=20601070&sid=a8.4kZl7x03E&refer=home |title=Senate Vote on Doctor Fees Carries Risks for McCain |newspaper=Bloomberg News |date=July 9, 2008 }}</ref> Many health economists have concluded that payments to Medicare Advantage providers have been excessive.<ref>{{Cite web|url=https://homehealthcarenews.com/2019/12/medpac-pushes-for-7-medicare-payment-cut-for-home-health-agencies/|title=MedPAC Pushes for 7% Medicare Payment Cut for Home Health Agencies|last=Holly|first=Robert|date=2019-12-16|website=Home Health Care News|language=en-US|access-date=2019-12-18}}</ref><ref>{{Cite news|url=https://www.nytimes.com/2018/10/13/us/politics/medicare-claims-private-plans.html|title=Medicare Advantage Plans Found to Improperly Deny Many Claims|last=Pear|first=Robert|author-link=Robert Pear|date=2018-10-13|work=The New York Times|access-date=2019-12-18|language=en-US|issn=0362-4331}}</ref> The Senate, after heavy lobbying from the insurance industry, declined to agree to the cuts in Medicare Advantage proposed by the House. President Bush subsequently vetoed the SCHIP extension.<ref>{{cite news |url=https://www.nytimes.com/2007/08/02/health/policy/02health.html |title=House Passes Children's Health Plan 225–204 |newspaper=The New York Times |date=August 2, 2007 |last=Pear |first=Robert |author-link=Robert Pear}}</ref>

===Effects of the Patient Protection and Affordable Care Act===
The Patient Protection and [[Affordable Care Act]] (PPACA) of 2010 made a number of changes to the Medicare program. Several provisions of the law were designed to reduce the cost of Medicare. The most substantial provisions slowed the growth rate of payments to hospitals and skilled nursing facilities under Part A of Medicare, through a variety of methods (e.g., percentage cuts, penalties for readmissions).

Congress also attempted to reduce payments to public Part C Medicare health plans by aligning the rules that establish Part C plans' capitated fees more closely with the FFS paid for comparable care to "similar beneficiaries" under Parts A and B of Medicare. Primarily these reductions involved much discretion on the part of CMS. Examples of what CMS did included effectively ending a Part C program Congress had previously initiated to increase the use of Part C in rural areas (the so-called Part C PFFS plan) and reducing over time a program that encouraged employers and unions to create their own Part C plans not available to the general Medicare beneficiary base (so-called Part C EGWP plans) by providing higher reimbursement. These two types of Part C plans had been identified by MedPAC as the programs that most negatively affected parity between the cost of Medicare beneficiaries on Parts A/B/C and the costs of beneficiaries not on Parts A/B/C. These efforts to reach parity have been more than successful. As of 2015, all beneficiaries on A/B/C cost 4% less per person than all beneficiaries not on A/B/C. But whether that is because the cost of the former decreased or the cost of the latter increased is not known.

PPACA also slightly reduced annual increases in payments to physicians and to hospitals that serve a disproportionate share of low-income patients. Along with other minor adjustments, these changes reduced Medicare's projected cost over the next decade by $455 billion.<ref>{{cite report |title=Selected CBO Publications Related to Health Care Legislation, 2009–2010 |publisher=[[Congressional Budget Office]] of the [[United States|United States of America]] |date=December 2010 |url=http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12033/12-23-selectedhealthcarepublications.pdf |page=20}}</ref>

Additionally, the PPACA created the [[Independent Payment Advisory Board]] (IPAB), which was empowered to submit legislative proposals to reduce the cost of Medicare if the program's per-capita spending grows faster than per-capita GDP plus one percent. The IPAB was never formed and was formally repealed by the Balanced Budget Act of 2018.

The PPACA also made some changes to Medicare enrollees' benefits. By 2020, it "closed" the so-called "donut hole" between Part D plans' initial spend phase coverage limits and the catastrophic cap on out-of-pocket spending, reducing a Part D enrollee's' exposure to the cost of prescription drugs by an average of $2,000 a year.<ref>{{cite web|url=http://www.ratehospitals.com/blog/how-will-the-affordable-care-act-change-medicare/|title=How will the Affordable Care Act Change Medicare?|website=Ratehospitals.com|access-date=January 30, 2014|archive-url=https://web.archive.org/web/20140202095800/http://www.ratehospitals.com/blog/how-will-the-affordable-care-act-change-medicare/ |archive-date=February 2, 2014|url-status=dead}}</ref> That is, the template co-pay in the gap (which legally still exists) will be the same as the template co-pay in the initial spend phase, 25%. This lowered costs for about 5% of the people on Medicare. Limits were also placed on out-of-pocket costs for in-network care for public Part C health plan enrollees.<ref>{{cite web |title=Shining a Light on Health Insurance Rate Increases – Centers for Medicare & Medicaid Services|work=Healthcare.gov |url=http://www.healthcare.gov/news/factsheets/2011/02/medicare02102011a.html |access-date=July 17, 2013}}</ref> Most of these plans had such a limit but ACA formalized the annual out of pocket spend limit. Beneficiaries on traditional Medicare do not get such a limit but can effectively arrange for one through private insurance.

Meanwhile, Medicare Part B and D premiums were restructured in ways that reduced costs for most people while raising contributions from the wealthiest people with Medicare.<ref>{{cite web|url=http://www.kff.org/medicare/upload/8126.pdf|title=Income-Relating Medicare Part B and Part D Premiums: How Many Medicare Beneficiaries Will Be Affected? | publisher=The Henry J. Kaiser Family Foundation|work=Kff.org|date=November 30, 2010 |access-date=July 17, 2013}}</ref> The law also expanded coverage of or eliminated co-pays for some preventive services.<ref>{{cite web |url=http://www.healthcare.gov/law/features/rights/preventive-care/index.html |title=Health care law rights and protections; 10 benefits for you |work=HealthCare.gov |date=March 23, 2010 |access-date=July 17, 2013 |url-status=dead |archive-url=https://web.archive.org/web/20130619173358/http://www.healthcare.gov/law/features/rights/preventive-care/index.html |archive-date=June 19, 2013 }}</ref>

The PPACA instituted a number of measures to control Medicare fraud and abuse, such as longer oversight periods, provider screenings, stronger standards for certain providers, the creation of databases to share data between federal and state agencies, and stiffer penalties for violators. The law also created mechanisms, such as the [[Center for Medicare and Medicaid Innovation]] to fund experiments to identify new payment and delivery models that could conceivably be expanded to reduce the cost of health care while improving quality.<ref name="ReferenceA"/>

===Proposals for reforming Medicare===
As legislators continue to seek new ways to control the cost of Medicare, a number of new proposals to reform Medicare have been introduced in recent years.

==== Premium support ====
Since the mid-1990s, there have been a number of proposals to change Medicare from a publicly run social insurance program with a defined benefit, for which there is no limit to the government's expenses, into a publicly run health plan program that offers "premium support" for enrollees.<ref name="Aaron">Henry Aaron and Robert Reischauer, "The Medicare reform debate: what is the next step?", Health Affairs 1995; 14: 8–30.</ref><ref name="AaronFrakt">{{cite journal |last1=Aaron |first1=Henry |last2=Frakt |first2=Austin |year=2012 |title=Why Now Is Not the Time for Premium Support |journal=The New England Journal of Medicine |volume=366|issue=10|pages=877–79|doi=10.1056/NEJMp1200448 |pmid=22276779|doi-access=free }}</ref> The basic concept behind the proposals is that the government would make a defined contribution, that is a premium support, to the health plan of a Medicare enrollee's choice. Sponsors would compete to provide Medicare benefits and this competition would set the level of fixed contribution. Additionally, enrollees would be able to purchase greater coverage by paying more in addition to the fixed government contribution. Conversely, enrollees could choose lower cost coverage and keep the difference between their coverage costs and the fixed government contribution.<ref name="Moffit">{{cite web |url=http://www.heritage.org/research/lecture/2012/08/premium-support-medicares-future-and-its-critics#_ftn8 |archive-url=https://archive.today/20130414235834/http://www.heritage.org/research/lecture/2012/08/premium-support-medicares-future-and-its-critics%23_ftn8 |url-status=unfit |archive-date=April 14, 2013 |title=Premium Support: Medicare's Future and its Critics |last=Moffit |first=Robert |date=August 7, 2012 |work=heritage.org |publisher=The Heritage Foundation |access-date=September 7, 2012}}</ref><ref name="Moon">{{cite web |url=http://www.urban.org/uploadedpdf/309232_medicare_comp.pdf |title=Can Competition Improve Medicare? A Look at Premium Support |last=Moon |first=Marilyn |date=September 1999 |work=urban.org |publisher=Urban Institute |access-date=September 10, 2012 |archive-date=October 18, 2012 |archive-url=https://web.archive.org/web/20121018133026/http://www.urban.org/uploadedpdf/309232_medicare_comp.pdf |url-status=dead }}</ref> The goal of premium Medicare plans is for greater cost-effectiveness; if such a proposal worked as planned, the financial incentive would be greatest for Medicare plans that offer the best care at the lowest cost.<ref name=Aaron/><ref name=Moon/>

This concept is basically how public Medicare Part C already works (but with a much more complicated competitive bidding process that drives up costs for the Trustees, but is advantageous to the beneficiaries). Given that only about 1% of people on Medicare got premium support when Aaron and Reischauer first wrote their proposal in 1995 and the percentage is now 35%, on the way to 50% by 2040 according to the Trustees, perhaps no further reform is needed.

There have been a number of criticisms of the premium support model. Some have raised concern about risk selection, where insurers find ways to avoid covering people expected to have high health care costs.<ref>{{cite web|last=Frakt|first=Austin|title=Premium support proposal and critique: Objection 1, risk selection|url=http://theincidentaleconomist.com/wordpress/premium-support-proposal-and-critique-objection-1-risk-selection/|work=[[The Incidental Economist]]|access-date=October 20, 2013|date=December 13, 2011|quote=[...] The concern is that these public health plans will find ways to attract relatively healthier and cheaper-to-cover beneficiaries (the 'good' risks), leaving the sicker and more costly ones (the 'bad' risks) in fee for service Medicare. Attracting good risks is known as 'favorable selection' and attracting 'bad' ones is 'adverse selection'. [...]}}</ref> Premium support proposals, such as the 2011 plan proposed by Senator [[Ron Wyden]] and Rep. [[Paul Ryan]] ([[Republican Party (United States)|R]]–[[Wis.]]), have aimed to avoid risk selection by including protection language mandating that plans participating in such coverage must provide insurance to all beneficiaries and are not able to avoid covering higher risk beneficiaries.<ref name="PolitiFact">{{cite news |title=Debbie Wasserman Schultz says Ryan Medicare plan would allow insurers to use pre-existing conditions as barrier to coverage |url=http://www.politifact.com/truth-o-meter/statements/2011/jun/01/debbie-wasserman-schultz/debbie-wasserman-schultz-says-ryan-medicare-plan-w/ |work=PolitiFact |date=June 1, 2011 |access-date=September 10, 2012}}</ref> Some critics are concerned that the Medicare population, which has particularly high rates of cognitive impairment and dementia, would have a hard time choosing between competing health plans.<ref>{{cite web|last=Frakt|first=Austin|title=Premium support proposal and critique: Objection 4, complexity|url=http://theincidentaleconomist.com/wordpress/premium-support-proposal-and-critique-objection-4-complexity/|work=[[The Incidental Economist]]|access-date=October 20, 2013|date=December 16, 2011|quote=[...] Medicare is already very complex, some say too complex. There is research that suggests beneficiaries have difficulty making good choices among the myriad of available plans. [...]}}</ref> Robert Moffit, a senior fellow of [[The Heritage Foundation]] responded to this concern, stating that while there may be research indicating that individuals have difficulty making the correct choice of health care plan, there is no evidence to show that government officials can make better choices.<ref name=Moffit/> Henry Aaron, one of the original proponents of premium supports, has since argued that the idea should not be implemented, given that [[Medicare Advantage]] plans have not successfully contained costs more effectively than traditional Medicare and because the political climate is hostile to the kinds of regulations that would be needed to make the idea workable.<ref name=AaronFrakt/>

Currently, public Part C Medicare health plans avoid this issue with an indexed risk formula that provides lower per capita payments to sponsors for relatively (remember all these people are over 65 years old) healthy plan members and higher per capita payments for less healthy members.

==== Changing the age of eligibility ====
A number of different plans have been introduced that would raise the age of Medicare eligibility.<ref name="budget.house.gov">{{cite web |url=http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf |title=The Path to Prosperity: Fiscal Year 2012 Budget Resolution |access-date=January 14, 2019 |archive-url=https://web.archive.org/web/20110413020014/http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf |archive-date=April 13, 2011 |url-status=dead }}</ref><ref>{{cite news| url=http://blogs-images.forbes.com/aroy/files/2012/02/Seniors-Choice-Act-Summary.pdf |archive-url=https://web.archive.org/web/20120713023317/http://blogs-images.forbes.com/aroy/files/2012/02/Seniors-Choice-Act-Summary.pdf|title=Seniors Choice Act Summary|date=February 2012|archive-date=July 13, 2012}}</ref><ref>{{cite web |url=http://paulryan.house.gov/UploadedFiles/rivlinryan.pdf |title=A Long-Term Plan for Medicare and Medicaid |access-date=January 14, 2019 |archive-url=https://web.archive.org/web/20181107124033/https://paulryan.house.gov/uploadedfiles/rivlinryan.pdf |archive-date=November 7, 2018 |url-status=dead }}</ref><ref>{{cite web |title=Co-chairs' Proposal |url=http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf |url-status=dead |archive-url=https://web.archive.org/web/20101111182901/http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf |archive-date=11 November 2010 |access-date=13 January 2022 |website=www.fiscalcommission.gov}}</ref> Some have argued that, as the population ages and the ratio of workers to retirees increases, programs for the elderly need to be reduced. Since the age at which Americans can retire with full Social Security benefits has risen from 65 to 67, it is argued that the age of eligibility for Medicare should rise with it (though people can begin receiving reduced Social Security benefits as early as age 62).

The CBO projected that raising the age of Medicare eligibility would save $113 billion over 10 years after accounting for the necessary expansion of Medicaid and state health insurance exchange subsidies under health care reform, which are needed to help those who could not afford insurance purchase it.<ref>{{cite web|url=http://www.cbo.gov/sites/default/files/cbofiles/attachments/01-10-2012-Medicare_SS_EligibilityAgesBrief.pdf |title=Medicare eligibility |date=2012 |website=Cbo.gov |access-date=2019-06-14}}</ref> The [[Kaiser Family Foundation]] found that raising the age of eligibility would save the federal government $5.7 billion a year, while raising costs for other payers. According to Kaiser, raising the age would cost $3.7 billion to 65- and 66-year-olds, $2.8 billion to other consumers whose premiums would rise as insurance pools absorbed more risk, $4.5 billion to employers offering insurance, and $0.7 billion to states expanding their Medicaid rolls. Ultimately Kaiser found that the plan would raise total social costs by more than twice the savings to the federal government.<ref>{{Cite web|date=2011-07-18|title=Raising the Age of Medicare Eligibility: A Fresh Look Following Implementation of Health Reform|url=https://www.kff.org/medicare/report/raising-the-age-of-medicare-eligibility/|access-date=2023-01-06|website=KFF|language=en-US}}</ref>

During the 2020 presidential campaign, Joe Biden proposed lowering the age of Medicare eligibility to 60 years old.<ref>{{Cite web|date=2021-05-21|title=Coverage Implications of Policies to Lower the Age of Medicare Eligibility|url=https://www.kff.org/health-reform/issue-brief/coverage-implications-of-policies-to-lower-the-age-of-medicare-eligibility/|access-date=2021-06-28|website=KFF|language=en-US}}</ref> A Kaiser Family Foundation study found that lowering the age to 60 could reduce costs for employer health plans by up to 15% if all eligible employees shifted to Medicare.<ref>{{Cite web|title=How Lowering the Medicare Eligibility Age Might Affect Employer-Sponsored Insurance Costs|url=https://www.healthsystemtracker.org/brief/how-lowering-the-medicare-eligibility-age-might-affect-employer-sponsored-insurance-costs/|access-date=2021-06-28|website=Peterson-KFF Health System Tracker|language=en-US}}</ref>

==== Negotiating the prices of prescription drugs ====
Currently, people with Medicare can get prescription drug coverage through a public Medicare Part C plan or through the standalone Part D prescription drug plans (PDPs) program. Each plan sponsor establishes its own coverage policies and could, if desired, independently negotiate the prices it pays to drug manufacturers. But because each plan has a much smaller coverage pool than the entire Medicare program, many argue that this system of paying for prescription drugs undermines the government's bargaining power and artificially raises the cost of drug coverage. Conversely, negotiating for the sponsors is almost always done by one of three or four companies typically tied to pharmacy retailers each of whom alone has much more buying power than the entire Medicare program. That pharmacy-centric versus government-centric approach appears to have worked given that Part D has cost 50% or more under original projected spending and has held average annual drug spending by seniors in absolute dollars fairly constant for over 10 years.

Many look to the [[Veterans Health Administration]] (VHA) as a model of lower cost prescription drug coverage. Since the VHA provides healthcare directly, it maintains its own formulary and negotiates prices with manufacturers. Studies show that the VHA pays substantially less for drugs than the PDP plans Medicare Part D subsidizes.<ref>Families USA, No Bargain: Medicare Drug Plans Deliver High Prices (Washington, DC: January 2007).</ref><ref name="law.umaryland.edu">{{cite web|url=http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RS2205902182005.pdf|title=The Pros and Cons of Allowing the Federal Government to Negotiate Prescription Drug Prices|work=law.umaryland.edu|access-date=March 6, 2012|archive-date=June 5, 2008|archive-url=https://swap.stanford.edu/20080605213812/http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RS2205902182005.pdf|url-status=dead}}</ref> One analysis found that adopting a formulary similar to the VHA's would save Medicare $14 billion a year.<ref>Austin B. Frakt, Steven D. Pizer, and Roger Feldman. "Should Medicare Adopt the Veterans Health Administration Formulary?" Health Economics (April 19, 2011).</ref>

There are other proposals for savings on prescription drugs that do not require such fundamental changes to Medicare Part D's payment and coverage policies. Manufacturers who supply drugs to Medicaid are required to offer a 15 percent rebate on the average manufacturer's price. Low-income elderly individuals who qualify for both Medicare and Medicaid receive drug coverage through Medicare Part D, and no reimbursement is paid for the drugs the government purchases for them. Reinstating that rebate would yield savings of $112 billion, according to a recent CBO estimate.<ref>{{cite web|url=http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12085/03-10-reducingthedeficit.pdf |title=Reducing the deficit |website=Cbo.gov |access-date=2019-06-14}}</ref> Some have questioned the ability of the federal government to achieve greater savings than the largest PDPs, since some of the larger plans have coverage pools comparable to Medicare's, though the evidence from the VHA is promising. Some also worry that controlling the prices of prescription drugs would reduce incentives for manufacturers to invest in research and development, though the same could be said of anything that would reduce costs.<ref name="law.umaryland.edu"/> However, the comparisons with the VHA point out that the VHA covers about half the drugs as Part D.

==== Reforming care for the "dual-eligibles" ====
Roughly nine million Americans—mostly older adults with low incomes—are [[Medicare dual eligible|eligible for both Medicare and Medicaid]]. These men and women tend to have particularly poor health—more than half are being treated for five or more chronic conditions<ref name="ahipcoverage.com">{{cite web|last=Thorpe |first=Kenneth E.|title=Estimated Federal Savings Associated with Care Coordination Models for Medicare-Medicaid Dual Eligibles |url=http://www.ahipcoverage.com/wp-content/uploads/2011/09/Dual-Eligible-Study-September-2011.pdf|archive-url=https://web.archive.org/web/20111013072459/http://www.ahipcoverage.com/wp-content/uploads/2011/09/Dual-Eligible-Study-September-2011.pdf|url-status=dead|archive-date=October 13, 2011|date=October 13, 2011|access-date=June 15, 2019}}</ref>—and high costs. Average annual per-capita spending for "dual-eligibles" is $20,000,<ref>{{cite web|title=Dual Eligible: Medicaid's Role for Low-Income Beneficiaries|publisher=Kaiser Family Foundation, Fact Sheet #4091-07|date=December 2010|url=http://www.kff.org/medicaid/upload/4091-07.pdf}}</ref> compared to $10,900 for the Medicare population as a whole.<ref name=NationalHealthExpendData/>

The dual-eligible population comprises roughly 20 percent of Medicare's enrollees but accounts for 36 percent of its costs.<ref>Medicare Chartbook, Kaiser Family Foundation, November 2010, p. 55.</ref> There is substantial evidence that these individuals receive highly inefficient care because responsibility for their care is split between the Medicare and Medicaid programs<ref>{{cite web |first1=John |last1=Holahan |first2=Linda J. |last2=Blumberg |first3=Stacey |last3=McMorrow |first4=Stephen |last4=Zuckerman |first5=Timothy |last5=Waidmann |first6=Karen |last6=Stockley |title=Containing the Growth of Spending in the U.S. Health System |publisher=The Urban Institute |date=October 2011 |url=http://www.urban.org/uploadedpdf/412419-Containing-the-Growth-of-Spending-in-the-US-Health-System.pdf |access-date=March 13, 2012 |archive-date=June 14, 2013|archive-url=https://web.archive.org/web/20130614084117/http://urban.org/UploadedPDF/412419-Containing-the-Growth-of-Spending-in-the-US-Health-System.pdf|url-status=dead}}</ref>—most see a number of different providers without any kind of mechanism to coordinate their care, and they face high rates of potentially preventable hospitalizations.<ref>Jiang HJ, Wier LM, Potter DEB, Burgess J. Hospitalizations for Potentially Preventable Conditions among Medicare-Medicaid Dual Eligibles, 2008. Statistical Brief #96. Rockville, MD: Agency for Healthcare Research and Quality, Healthcare Cost and Utilization Project, September 2010.</ref> Because Medicaid and Medicare cover different aspects of health care, both have a financial incentive to shunt patients into care the other program pays for.

Many experts have suggested that establishing mechanisms to coordinate care for the dual-eligibles could yield substantial savings in the Medicare program, mostly by reducing hospitalizations. Such programs would connect patients with primary care, create an individualized health plan, assist enrollees in receiving social and human services as well as medical care, reconcile medications prescribed by different doctors to ensure they do not undermine one another, and oversee behavior to improve health.<ref>{{cite report |publisher=Medicare Payment Advisory Commission |title=Report to the Congress: Medicare and the Health Care Delivery System |date=June 2011 |chapter=Chapter 5. Coordinating care for dual-eligible beneficiaries |chapter-url=http://www.medpac.gov/chapters/Jun11_Ch05.pdf |archive-url=https://web.archive.org/web/20111113143043/http://www.medpac.gov/chapters/Jun11_Ch05.pdf |archive-date=November 13, 2011 |access-date=March 13, 2012}}</ref> The general ethos of these proposals is to "treat the patient, not the condition,"<ref name="ahipcoverage.com"/> and maintain health while avoiding costly treatments.

There is some controversy over who exactly should take responsibility for coordinating the care of the dual-eligibles. There have been some proposals to transfer dual-eligibles into existing Medicaid managed care plans, which are controlled by individual states.<ref name=jointcommitteereport/> But many states facing severe budget shortfalls might have some incentive to stint on necessary care or otherwise shift costs to enrollees and their families to capture some Medicaid savings. Medicare has more experience managing the care of older adults, and is already expanding coordinated care programs under the ACA,<ref>{{cite web |first1=Judy |last1=Feder |first2=Lisa |last2=Clemans-Cope |first3=Teresa |last3=Coughlin |first4=John |last4=Holahan |first5=Timothy |last5=Waidmann |title=Refocusing Responsibility For Dual Eligibles: Why Medicare Should Take The Lead |publisher=Robert Wood Johnson Foundation |date=October 2011 |url=http://www.rwjf.org/files/research/72868qs68dualeligiblesfull20110930.pdf |access-date=March 13, 2012 |archive-url=https://web.archive.org/web/20120813045358/http://www.rwjf.org/files/research/72868qs68dualeligiblesfull20110930.pdf|archive-date=August 13, 2012 |url-status=dead}}</ref> though there are some questions about private Medicare plans' capacity to manage care and achieve meaningful cost savings.<ref>Families USA, "A Guide for Advocates: State Demonstrations to Integrate Medicare and Medicaid". April 2011. {{cite web |title=Report to the Congress: Medicare and the Health Care Delivery System |url=http://familiesusa2.org/assets/pdfs/health-reform/State-Integration-of-Medicare-and-Medicaid.pdf |url-status=dead |archive-url=https://web.archive.org/web/20120324164822/http://familiesusa2.org/assets/pdfs/health-reform/State-Integration-of-Medicare-and-Medicaid.pdf |archive-date=March 24, 2012 |access-date=March 13, 2012}}</ref>

Estimated savings from more effective coordinated care for the dual eligibles range from $125 billion<ref name="ahipcoverage.com"/> to over $200 billion,<ref>Robert A. Berenson and John Holahan, Preserving Medicare: A Practical Approach to Controlling Spending (Washington, DC: Urban Institute, Sept. 2011).</ref> mostly by eliminating unnecessary, expensive hospital admissions.

==== Income-relating Medicare premiums ====
Both House Republicans and President Obama proposed increasing the additional premiums paid by the wealthiest people with Medicare, compounding several reforms in the ACA that would increase the number of wealthier individuals paying higher, income-related Part B and Part D premiums. Such proposals were projected to save $20 billion over the course of a decade,<ref name=jointcommitteereport><!--PREVIOUS: The National Commission on Fiscal Responsibility and Reform, "The Moment of Truth". December 2010. -->{{cite web |title=Living Within Our Means and Investing in the Future |url=https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf |access-date=March 14, 2012 |url-status=live |archive-url=https://web.archive.org/web/20170122170017/https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2012/assets/jointcommitteereport.pdf |via=[[NARA|National Archives]] |work=[[Office of Management and Budget]] |archive-date=January 22, 2017 }}</ref> and would ultimately result in more than a quarter of Medicare enrollees paying between 35 and 90 percent of their Part B costs by 2035, rather than the typical 25 percent. If the brackets mandated for 2035 were implemented today,{{When|date=December 2013}} it would mean that anyone earning more than $47,000 (as an individual) or $94,000 (as a couple) would be affected. Under the Republican proposals, affected individuals would pay 40 percent of the total Part B and Part D premiums, which would be equivalent of $2,500.<ref>{{cite web |publisher=Kaiser Family Foundation |title=Income-Relating Medicare Part B and Part D Premiums Under Current Law and Recent Proposals: What are the Implications for Beneficiaries? |date=February 2012 |url=http://www.kff.org/medicare/upload/8276.pdf}}</ref>

More limited income-relation of premiums only raises limited revenue. Currently, 5 percent of Medicare enrollees pay an income-related premium, and most pay 35 percent of their total costs (on average), compared to the 25 percent most people pay. Only a negligible number of enrollees fall into the higher income brackets required to bear a more substantial share of their costs—roughly half a percent of individuals and less than three percent of married couples currently pay more than 35 percent of their total Part B costs.<ref>Social Security Administration, Income of the Population, 55 and Older.</ref>

There is some concern that tying premiums to income would weaken Medicare politically over the long run, since people tend to be more supportive of universal social programs than of [[means test|means-tested]] ones.<ref>[[Theda Skocpol]] and Vanessa Williams. ''The Tea Party and the Remaking of Republican Conservatism''. Oxford University Press, 2012.</ref>

==== Medigap restrictions ====
Some Medicare supplemental insurance (or "Medigap") plans cover all of an enrollee's cost-sharing, insulating them from any out-of-pocket costs and guaranteeing financial security to individuals with significant health care needs. Many policymakers believe that such plans raise the cost of Medicare by creating a [[perverse incentive]] that leads patients to seek unnecessary, costly treatments. Many argue that unnecessary treatments are a major cause of rising costs and propose that people with Medicare should feel more of the cost of their care to create incentives to seek the most efficient alternatives. Various restrictions and surcharges on Medigap coverage have appeared in some deficit reduction proposals.<ref>National Commission on Fiscal Responsibility and Reform, "The Moment of Truth", December 2010.</ref><ref>Office of Management and Budget, "Living Within Our Means and Investing in the Future: The President's Plan for Economic Growth and Deficit Reduction". September 2011.</ref><ref>Sen. Tom Coburn and Sen. Richard Burr, "The Seniors' Choice Act", February 2012.</ref> One of the furthest-reaching reforms proposed, which would prevent Medigap from covering any of the first $500 of coinsurance charges and limit it to covering 50 percent of all costs beyond that, could save $50 billion over 10 years.<ref>CBO, "Reducing the Deficit: Revenue and Spending Options", May 2012. Option 21.</ref> But it would also increase health care costs substantially for people with costly health care needs.

There is some evidence that claims of Medigap's tendency to cause over-treatment may be exaggerated and that potential savings from restricting it might be smaller than expected.<ref>Jeff Lemieux, Teresa Chovan, and Karen Heath, "Medigap Coverage And Medicare Spending: A Second Look", Health Affairs, Volume 27, Number 2, March/April 2008.</ref> Meanwhile, there are some concerns about the potential effects on enrollees. Individuals who face high charges with every episode of care have been shown to delay or forgo needed care, jeopardizing their health and possibly increasing their health care costs over time.<ref>Beeuwkes Buntin M, Haviland AM, McDevitt R, and Sood N, "Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans", ''American Journal of Managed Care'', Vol. 17, No. 3, March 2011, pp. 222–230.</ref> Given their lack of medical training, most patients tend to have difficulty distinguishing between necessary and unnecessary treatments. The problem could be exaggerated among the Medicare population, which has low levels of health literacy.{{full citation needed|date=November 2012}}

==== Vision Coverage ====
The [[Build Back Better Act|Build Back Better]] legislation was passed in Congress in November 2021, and adds hearing services subject to Medicare Part B deductible and 20% coinsurance beginning in 2023. The initial proposal of this bill also aimed to address gaps in Medicare such as dental and vision coverage, however both services were removed following objections in the Senate. A study performed by Urban Institute showed that Medicare enrollees spend more on routine vision services ($8.4 billion) than routine hearing services ($5.7 billion), of which $5.4 billion and $4.7 billion were spent out of pocket respectively.<ref name=":0">{{Cite web |last1=Gangopadhyaya |first1=Anuj |last2=Shartzer |first2=Adele |last3=Garrett |first3=Bowen |last4=John |first4=Holahan |date=November 2021 |title=Are Vision and Hearing Benefits Needed in Medicare? |url=https://www.urban.org/sites/default/files/publication/105115/are-vision-and-hearing-benefits-needed-in-medicare_1.pdf |website=Health Policy Center at the Urban Institute}}</ref> In addition, nearly 1 in 3 Medicare beneficiaries used vision services annually, and averages a spending of $411 per person;<ref name=":0" /> as such, the impact of expanding Medicare to include vision services would benefit many people. There is an income gradient seen in those who use vision services and a severe unmet needs for these services in those with lower incomes. Enrollees below the federal poverty level spent $190, whereas those 400% above the level spent $465;<ref name=":0" /> and a likely trend that far fewer non-Hispanic Black and Hispanic beneficiaries use and spend on vision services—which is in keeping with the trend seen with hearing aids.<ref>{{Cite journal |last1=Arnold |first1=Michelle L. |last2=Hyer |first2=Kathryn |last3=Small |first3=Brent J. |last4=Chisolm |first4=Theresa |last5=Saunders |first5=Gabrielle H. |last6=McEvoy |first6=Cathy L. |last7=Lee |first7=David J. |last8=Dhar |first8=Sumitrajit |last9=Bainbridge |first9=Kathleen E. |date=2019-06-01 |title=Hearing Aid Prevalence and Factors Related to Use Among Older Adults From the Hispanic Community Health Study/Study of Latinos |url=https://doi.org/10.1001/jamaoto.2019.0433 |journal=JAMA Otolaryngology–Head & Neck Surgery |volume=145 |issue=6 |pages=501–508 |doi=10.1001/jamaoto.2019.0433 |pmid=30998816 |pmc=6583684 |issn=2168-6181}}</ref><ref>{{Cite journal |last1=Reed |first1=Nicholas S. |last2=Garcia-Morales |first2=Emmanuel |last3=Willink |first3=Amber |date=2021-03-01 |title=Trends in Hearing Aid Ownership Among Older Adults in the United States From 2011 to 2018 |url=https://doi.org/10.1001/jamainternmed.2020.5682 |journal=JAMA Internal Medicine |volume=181 |issue=3 |pages=383–385 |doi=10.1001/jamainternmed.2020.5682 |pmid=33284312 |pmc=7921897 |issn=2168-6106}}</ref>