Medicare Wall [VIDEO]

Blog,Payment Modeling,Strategic Planning,Transformation


In this short video, Dawn Carter will briefly discuss the future of medicare and what the future holds without a transformed payment system.

Video Transcription: 

I’m Dawn Carter. I want to talk today about the Medicare wall that we are running toward. We’ve talked in other blogs about how we believe that the financing of healthcare is going to be transformed, but there are many doubters that are still out there who say, “Oh, we really don’t believe this is going to happen. Things are going to stay the same. Nothing is going to change.” we disagree with that. There are forces at play today that have never come together in this combination or of this magnitude. Those forces are going to demand that we fundamentally change how we pay for healthcare in the United States. There’s a lot of talk about how much healthcare costs in this country and that those costs are not sustainable, but let’s take a moment to look at just a few key statistics about the country’s largest payer, Medicare.

First, in 2016, Medicare spent almost $700 billion dollars. If costs continue as projected, that is expected to increase to $1.3 trillion, nearly doubling over the next 10 years to 2026. Back in 2016, just over half of those costs were actually funded by the Medicare Trust Fund. The remainder had to come out of general revenues.  For that reason the federal government operated at a budget deficit in 2016, those unfunded medicare costs represented over half of the federal budget deficit. With Medicare costs continuing to escalate over the next decade and far outpacing the availability of Medicare trust funds to cover those costs, more and more of Medicare costs are going to continue to come from general revenues or in reality, the budget deficit.

The budget deficit is currently projected to increase to over three-quarters of a trillion dollars by 2026 with Medicare expenditures representing 80% of that budget deficit. Our concern is that without a transformed payment system, the last ditch, pull-the-ripcord effort by Congress is going to be to continue the same payment system, but just simply cut the rates paid to providers. Rather than being paid to deliver care in new and innovative ways that, in themselves, reduce the cost of care, providers would be paid to continue in the same system and delivering care in the same way today, but for up to the 50% it would take to match the Medicare trust funds. Truly, we are in unchartered territory when it comes to the financing of the health care system in the United States. If you have thoughts about this, we’d love to hear from you.



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