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Medicare Needs Responsible Solutions, Not Harmful Benefit Cuts

Medicare provides guaranteed, affordable coverage that millions of older Americans depend on. However, the program faces a number of challenges, including the rising cost of health care and a growing aging population. Without adjustments, Medicare will no longer be able to cover the full amount of seniors’ hospital bills in about 10 years.

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Unfortunately, too many politicians in Washington say the answer to these challenges is simply to cut benefits or force seniors to pay more. AARP believes there’s a better way. There are responsible solutions that will stabilize the system for future generations and keep the promise to seniors. Washington can start to put Medicare on stable ground by clamping down on drug companies’ high prices; improving coordination of care and use of technology; and cutting out unnecessary testing, excess paperwork, waste and fraud. Some ideas for reducing health care costs are outlined below.

Negotiating for Lower Drug Prices

Today, seniors and all patients in the United States pay significantly more for prescription drugs than people in other advanced countries. Yet unlike private insurance plans, Medicare is legally prohibited from negotiating with pharmaceutical companies to lower drug costs. Allowing Medicare to use the bargaining power of its 49 million beneficiaries to negotiate lower prescription drug prices, particularly for high-priced brand-name drugs, could save money for seniors and reduce the cost of health care.

Stop Drug Companies from Gaming the System

Right now, some brand name drug companies are driving up the cost of health care by entering into agreements with generic drug companies that pay the generic company to delay bringing a competing product to the market. These agreements have delayed consumers’ access to less expensive generic drugs. For example, the manufacturer of the cholesterol drug Lipitor entered into an agreement with a generic manufacturer that delayed generic competition for almost two years.

Reducing Costs by Improving Care

In 2010, Medicare spent nearly half of its funding on care for the 14 percent of Medicare beneficiaries who had six or more chronic conditions. More effective care coordination will reduce medical errors; help prevent dangerous, preventable hospital readmissions; ensure patients are getting recommended care; and save taxpayer dollars. By creating systems that better connect doctors and health care facilities and make better use of information technology, we can ensure patients receive safer, better care. For example, the Transitional Care Service program in Philadelphia sends a nurse to visit the home after the patient is discharged from the hospital. The nurse checks that the patient has appropriate medical services, like a wheelchair and oxygen, and community support services, like meals-on-wheels. The nurse also checks that the patient and/or family caregiver has all the appropriate medications and understands when to take them.

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In addition, New York-based Independent Health built a digital medical record database that allows nearly all of western New York’s health care providers to quickly access health records of their patients. Doctors, hospitals and other health care providers can conduct an Internet-like search to pull up their patients’ pharmacy, lab and test results; allergies; diagnoses; and hospital and doctor records – saving time and reducing the chances of medical errors.

Harmful Cuts

Some in Washington are considering charging Medicare patients new copays for lab tests and home health services. Such proposals would be harmful to Medicare patients who already pay copays, premiums and deductibles for their doctor, hospital and prescription coverage, spending an average of 20 percent of their income on out-of-pocket costs.

Charging copays on lab visits is based on the faulty notion that seniors will get fewer lab tests if they are forced to pay for them. This theory falls flat because physicians are the ones who order lab tests. Seniors who can’t afford the copay risk going without diagnosis and treatment, which will drive up Medicare costs. Similarly, requiring people who are prescribed home health services to pay copays would do nothing to reduce Medicare costs. More likely, it would increase costs because people who can’t afford the copays could end up returning to the hospital.

Since one of the drivers of Medicare costs is unplanned hospital readmissions, patients should be encouraged to get proper follow-up care, not penalized for following their doctors’ orders.

AARP is fighting for responsible solutions to keep Medicare strong – not only for today’s retirees but also for our children and grandchildren.

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