NCPA - National Center for Policy Analysis

Can Cost Sharing Models Improve Medicare Spending Issues?

October 19, 2015

The National Center for Policy Analysis (NCPA) recently released a report by Devon M. Herrick that Medicare spending may eventually be the primary recipient of government spending.

  • Predictions for the next 10 years place Medicare per capita spending around $19,000.
  • Increased Medicare spending does not provide any incentive for patients to seek lower cost alternatives.
  • The top-down model of most Medicare reforms saves very little, and instead should be be situated at the patient- provider level.

Several Medicare reform options are available. Herrick proposed setting aside a combined 4 percent of each paycheck by both workers and employers that workers would use to pay for medical expenses after retirement. Similar to a payroll tax, the money however would be controlled by the beneficiary to meet individual medical needs. Estimates show that such a plan could save up to $2.4 trillion by 2053.

Other options include incentives for using more cost-effective treatments, or copay reductions for active involvement in their healthcare plans. The number of people enrolling in Medicare is not going to go down and as some estimate it will be fiscally solvent only until 2030, reform needs to happen soon.

Source: Sara Heath, "Can Cost Sharing Models Improve Medicare Spending Issues?" RevCycle Intelligence, September 25, 2015.


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