Representative Ryan's Medicare and Medicaid Proposals Stun

The selection of Representative of Paul Ryan as the presumptive Republican nominee for the office of Vice President, prompts me to repost this blog (originally posted in March) surveying Ryan's plans to deconstruct the existing Medicare and Medicaid programs. "

To understand the profound implications of the Ryan proposals to deconstruct Medicare and Medicaid, it  bears repeating that these two federal programs together pays for 75% of the approximately 1.2 million residents living in a skilled nursing facility (SNF). Any proposal to redesign these programs will profoundly affect the lives of the program participants and reshape the entire long-term care services and supports industry. Features of Representative Ryan's proposal include:

  • Gradually raise the eligibility age to 67 by 2034;
  • Cap Medicare spending growth at GDP growth plus 0.5 percent;
  • Turn Medicaid cover to the states in the form of a federal block grant (estimated cut to Medicaid spending by $810 billion over 10 years);
  • Future Medicare beneficiaries would be provided a sum of money - those under the age of 55 - to purchase either a private health plan, or the traditional government-administered program through a newly created Medicare exchange beginning in 2023. This is a premium support/voucher model and its implementation would end the Medicare entitlement as it has existed since 1965.

When does quality matter?

Placing aside the obvious concerns regarding the Ryan proposal (i.e. where would average Americans find the financial resources to pay the gap between their voucher and their actual expense) I wonder how this reform would impact trends to place expand existing (and create new) community based services and supports along with a desire to improve outcomes? There is little talk about this concern from Rep. Ryan or from the think tanks which support the plan.

Interesting research presented by R. Tamara Konetzka PhD, associate professor at the University of Chicago, sheds light on the complicated relationship between reimbursement and quality outcomes. Recognizing that SNF Medicare revenues subsidize low Medicaid rates (Illinois rate is lowest in the nation) Professor Konetzka studied the impact of the Medicare prospective payment system (PPS) implemented on SNF's in 1998 on quality of care. Interestingly, although no impact could be found among the Medicare SNF population outcomes, the long-term stay residents (whose primary payment source is Medicaid) experienced a great risk of urinary tract infections as well as pressure sores. Apparently, SNF providers reduced staffing needed to care for long-term care residents rather then risking poorer outcomes among the "more important" Medicare patients. At the very least, any proposal to restructure Medicare and Medicaid needs to be viewed from through this prism in order to consider indirect effects.

It also occurs to me that this voucher proposal may only exacerbate a long standing deficiency of the current system. Historically, federal agencies have ignored the need to coordinate the provision (and payment) of services to older adults and only in the past couple of years have initiatives been implemented to improve efficiencies.  Not only elder advocates, but the elder care industry has long desired greater coordination, and I wonder whether Rep. Ryan's plan would only further complicate matters? De-funding the current federal system in favor of  "pushing down" planning to the state level may lead to greater inefficiencies and not less.

For a profile of older adults in America review this report by the U.S. Administration on Aging. Learn more on Twitter @aginginchicago.



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  • Has not President Obama sliced 700 Billion out of Medicare to fund Affordable Health? Is not that stunning? Or perhaps ideology makes it less or non-stunning?

    The unfortunate reality is that Medicare is broke.

  • In reply to Richard Davis:

    Mr. Davis,

    Thank you for reading my blog. Please note, I try very hard in my posts to avoid politicizing the issue I care about deeply: access for appropriate institutional and community based services and supports for older adults. However, if a policy maker proposes a plan to eliminate an existing program and replace it with something I deem to be insufficient, then I will express my opinion on that proposal.

    To your point. In actuality, President Obama has not sliced Medicare benefits to fund the Affordable Care Act and in actuality, the Affordable Care Act extends the solvency of the Medicare trust fund for another eight years.

    Asserting that Medicare is "broke" does not inform the discussion on how to proceed. Please read my prior blogs on the history of the Medicare program: this is not the first time that the program has faced financial uncertainty.

    Representative Ryan's proposal is an approach, but based on my experience as an expert on the elder care ecosystem I believe his approach is detrimental to older adults because it will destroy an existing system which, since 1965, has unquestionably improved the health and well-being of older adults and replaces it with...nothing much.

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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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