Medicare can be the vehicle to drive changes in the health-care system through new payment systems that reward value over quantity of services, a former health and human services secretary told me.
“If you want to change health care, you have to change Medicare,” Michael Leavitt, former Utah governor and Department of Health and Human Services secretary under President George W. Bush, told me July 13. Medicare needs “to signal to the market that the system is going to change and that they will lead it.”
Medicare is the second-largest social insurance program in the U.S., after Medicaid, and had 56.8 million beneficiaries and total expenditures of $679 billion in 2016, according to data from the Centers for Medicare & Medicaid Services. Medicare also funds many types of care, including inpatient and outpatient services, skilled nursing facilities, and rehabilitation.
“It is the payment system that reaches every aspect of the health-care sector,” Leavitt told me. “All of the systems are billed around it.”
Leavitt said current problems in health care go back to when the Medicare program began in 1965. Medicare payments are based on a fee-for-service model, where Medicare reimburses hospitals and doctors based on the number of services they provide. Critics, including Leavitt, say this has led to runaway increases in health-care costs.
“The entire health-care system has been dependent on this model,” he told me. “We now know how unsustainable this is.”
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