Seeking to fend off larger cuts in federal medical spending, executives from big pharmaceutical, hospital and insurance companies are crafting their own plan to reduce the deficit which calls for wringing Medicare savings from beneficiaries, not just from hospitals and drug makers.
Members of the Healthcare Leadership Council—which includes top executives from Pfizer Inc., Aetna Inc. and the Mayo Clinic—on Wednesday are expected to approve a proposal that would call for raising Medicare's eligibility age and shifting the program toward private plans for beneficiaries. The group plans to press members of the congressional "supercommittee," charged with finding $1.2 trillion in budget savings, to include the changes in its broader cost-cutting plan.
The council's proposal is part of a larger effort inside the health industry to overhaul how lawmakers achieve savings from federal health programs. For years, Congress largely has relied on slicing payments to doctors and hospitals that treat Medicare beneficiaries to shrink spending in the program that insures 48 million elderly and disabled Americans.
Frustrated at being the target, the health industry is pushing back, arguing that some of those savings should come directly from the pockets of Medicare beneficiaries.
"This thinking that we're protecting beneficiaries because we're only cutting providers—that's mythical," said Mary Grealy, the council's president. "At some point it does affect beneficiaries," she said, because such cuts weaken health-care providers' ability to offer services.
There's growing pressure in Washington to rein in the major healthcare entitlement programs—Medicare and Medicaid—as lawmakers struggle to cut the federal budget deficit.
On Tuesday, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, told the supercommittee that an aging population and rising health costs make the costs of the nation's safety-net programs "starkly different" from the way they have been historically.
The health-industry council estimates its plan would save $410 billion over a decade. The central plank is reworking Medicare so that, starting in 2018, beneficiaries could either shop for a federally subsidized private insurance plan in a new Medicare-only exchange, or stay in traditional Medicare.
The proposals are expected to meet resistance from consumer groups, particularly those representing seniors. The advocacy group AARP this summer warned senators that it is opposed to increasing Medicare's eligibility age and increasing out-of-pocket costs for beneficiaries.
House Republicans earlier this year approved a switch to private Medicare plans, though their legislation didn't allow new enrollees to opt for traditional Medicare. The council's proposal would peg the private plan subsidy at the average cost of an individual Medicare plan, which the group estimates was $11,018 in 2009. If beneficiaries chose a private plan that costs less, they could pocket the savings, and the government could save money too because people would have less-generous coverage.
The council's plan also would gradually increase the Medicare eligibility age to 67 from 65 starting in 2014. President Barack Obama has shown openness to lifting that age over time.
The group's proposal would require Medicare beneficiaries to pay a greater portion of their smaller, out-of-pocket costs through higher co-payments and deductibles, while also putting caps on how much beneficiaries pay for catastrophic expenses. It would require single seniors earning $150,000 a year or more and couples earning $300,000 a year or more to pay the full premiums for Medicare's physician and prescription drug coverage.
The plan includes a series of curbs on medical liability lawsuits, including capping non-economic[i.e. punitive]damages awarded in such cases.
Some healthcare lobbyists have suggested the industry would be better off if the congressional supercommittee fails to reach a budget-cutting agreement by its November deadline. That would trigger a fallback set of spending cuts that would hit health-care providers but not people on Medicare directly. The cuts would be capped at 2%, meaning the loss in any one area of healthcare would be limited.
Tony Tersigni, chief executive of the Catholic health system Ascension Health, says the council's target proposals are a better alternative than the fallback because they would make Medicare more sustainable and "do more than simply chop away."
The Healthcare Leadership Council—whose four dozen members also include medical product maker Johnson & Johnson and pharmacy chain Walgreens—largely supported President Obama's 2010 health overhaul, though it didn't take a prominent position in that debate.‹
Market Data 
Markets 
AI
