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Improving and Strengthening Medicare

Medicare is a vital source of health care coverage for people age 65 and older, people with disabilities, and people with end-stage renal disease.  For most of these 44 million people, Medicare is their only health care option for affordable, quality health care.  And yet, skyrocketing health care costs combined with an economic crisis are making the program’s gaps ever more apparent.

Today, people on Medicare spend about 30 percent of their incomes, on average, on out-of-pocket health costs – including premiums for supplemental coverage. These costs are six times greater than for people with employer coverage. At a time when millions of Medicare beneficiaries have seen their retirement savings shrink, rising premiums, soaring drug costs, and increasing out-of-pocket expenses are undermining their health and economic security.

That’s why AARP supports reforms that would improve the quality of care for Medicare beneficiaries while lowering health costs by eliminating the waste and inefficiency that we cannot afford, and that often result in medical errors and poor care.  In addition to improving care, reforms must put Medicare on stable financial ground so the program can continue to provide current and future beneficiaries with affordable, quality care.

Improving Medicare for Beneficiaries

  • Closing the Donut Hole and Lowering Rx Costs:  Taking steps to close the Part D coverage gap (donut hole) and lower drug costs through: drug price negotiation; safe importation; expanding access to generic drugs; requiring drug companies to provide Medicaid rebates for those eligible for the Part D program in both Medicare and Medicaid; and eliminating the asset limits for the Part D low-income subsidy.
  • Keeping Medicare Affordable: Ensuring total premiums and out-of- pocket costs – which now average 30 percent of an average beneficiary’s income, and are becoming more burdensome as retirement incomes shrink and health care costs skyrocket – do not become excessive.
  • Limiting Out of Pocket Costs and Premium Increases:  Establishing a "stop-loss" to cover out-of-pocket expenses, which would help people who have a lot of hospitalizations or depend on costly medications such as cancer drugs.
  • Helping the Most Vulnerable: Improving the patchwork of programs that help low-income Medicare beneficiaries afford to pay for their prescriptions, premiums, deductibles, and other health costs. First, raising the income threshold for assistance to 150 percent of poverty, ideally making the standard the same across programs. Second, eliminating the stringent asset tests that prevent people who did right thing and saved a small nest egg for retirement from receiving vital assistance. Third, making sure beneficiaries know that these low-income programs exist and simplifying the application process to ensure our most vulnerable are getting the help they need.
  • Improving Quality of Care:  Establishing a transitional benefit to help people leaving hospitals and other facilities get the services and supports they need – including support to family caregivers – to improve coordination and reduce readmission rates.
  • Reducing Racial and Ethnic Disparities:  Taking steps to address racial and ethnic disparities in health care so all Americans receive high quality care, such as: issuing comprehensive federal requirements for the collection of racial and ethnic data; strengthening the capacity of the Office of Civil Rights and providing the resources to enforce existing federal language access requirements; ensuring adequate reimbursement for the provision of language services in Medicare fee-for-service and Medicare Advantage; and, increasing cultural diversity and cultural competencies in the healthcare workforce.

Strengthening Medicare for Current and Future Generations

Skyrocketing health care costs fueled by waste, fraud, abuse and inefficiencies are threatening Medicare’s financial solvency.  The Medicare Trustees last year projected the Part A Trust Fund would go broke by 2019, and this year’s report may paint an even bleaker picture.

Congress must act now to address affordability and solvency, or Medicare will not be able to effectively serve current or future beneficiaries.  Common sense ways to help put Medicare back on stable financial ground include:

  • Revising the way Medicare pays doctors and hospitals to reward high quality care rather than how much care is provided, including through "medical home programs"
  • Promoting care coordination programs for people with multiple chronic conditions and improving care at the end of life
  • Reducing overpayments to private insurance companies; and,
  • Lowering drug prices by allowing secretarial negotiation and re-importation.

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