Trump’s New Order Will Give Seniors Better Health Care Choices, Lower Costs

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President Donald Trump is making an
ambitious move to build on a string of regulatory relief actions that “protect
and improve” Medicare, the federal health care program that serves
approximately 60 million senior and disabled persons.

The president’s
executive order, issued Thursday, is yet another step following a roadmap
that’s leading to better choices and lower costs for Medicare recipients and helping
taxpayers by reducing federal spending.  The
order is primarily directed to the Health and Human Services Department, instructing
the agency to undertake more administrative and regulatory measures to secure
these policy goals.

Specifically, the president acted to
provide Medicare beneficiaries with more “diverse and affordable” health plan choices in the Medicare Advantage program,
Medicare’s system of competing private plans. Because of the order, health
plans will have new regulatory flexibility to respond to customer demands for
innovative benefit designs and to incorporate telehealth, which lets patients
see their doctor using tools like internet video calls.  

The order would also authorize several other changes improving the practice environment for doctors and helping seniors. The envisioned rule changes would also help relieve doctors and other medical professionals who are wrestling with growing paperwork burdens.

If finalized, the rule would additionally “reduce barriers” for seniors who wish to use “medical savings accounts,” and thus pay for medical care more easily.  

Importantly, Section 3 of the order envisions a rule change in the provision of Medicare Advantage supplemental benefits that would “allow Medicare beneficiaries to share more directly in the savings of the program,” including “cash or monetary rebates” that would encourage seniors to seek and secure “high value” care.  

Regulatory Relief Is Working

Trump is building on a three-year record of success, particularly in stewardship of the Medicare Advantage program. His administration has promoted regulatory flexibility that has unleashed market forces in Medicare Advantage, which will secure better care and savings for seniors, as well as savings for taxpayers.

Because of the Trump administration’s 2018 regulatory changes, Medicare Advantage enrollees, particularly those who are suffering from debilitating chronic illnesses, have access to a much wider variety of supplemental health benefits, including transportation to doctors’ offices, caregiver support, and safety improvements in their home environment.  

Medicare Advantage enrollees are also enjoying record increases in health plan choices and benefitting from intense market competition. For next year, the Centers for Medicare and Medicaid Services projects the number of patient choices at the county level will increase from 33 to 39 plans, representing a 49% increase in beneficiary choice since 2017 and the largest participation rate since 2009.

Meanwhile, seniors are experiencing significant
declines in their Medicare Advantage premiums. This year’s average
monthly premium is $26.87. Next year, it’s expected to be $23.  

Altogether both the Medicare prescription drug program (Medicare Part D) and Medicare Advantage have generated a savings of approximately $2.5 billion in seniors’ premium costs. Better health benefits at lower cost for patients is the essence of value. 

Patients are signing up for Medicare Advantage in big and growing numbers. Next year, Medicare Advantage will enroll 24.4 million, or nearly 39% of people in Medicare. That’s up 30% from the time the president took office.   

Further Medicare Reforms Needed

The administration is doing all in its power under existing law to improve Medicare for beneficiaries and taxpayers. Congress must build on what the president has begun and make further reforms. 

Dark clouds are on the fiscal horizon. Medicare spending over the next decade, averaging nearly 8%, according to the Medicare trustees, is projected to outpace wages, general inflation, and the growth of the economy. It is also projected to grow faster than other health care spending and private health insurance.

The initial indicator of trouble is
the deteriorating state of the traditional Medicare hospitalization program
(Part A), which faces insolvency as early as 2026, meaning
that the program will not be able to pay for all of its promised hospital
benefits. To get the Medicare hospital program back into long-term fiscal
balance, Congress will either have to impose a significant tax increase or
resort to major benefit reductions.  

The best path forward would build on
the success of the president’s existing reforms.

Trump and Congress should work
together and replicate this successful record on Medicare Advantage on a much broader
scale. This would require a transition of all Medicare financing to defined
contribution financing, similar to Medicare Advantage today, where the
government makes a direct payment to the health plan of a senior’s choice. The traditional
Medicare model, which is a defined benefit program instead of defined
contribution system, is unsustainable in the long term.

Independent analysts, ranging from
the Congressional Budget Office to The Heritage Foundation,
estimate that a defined contribution program’s broader choice and greater
intensity of market competition could yield substantial program savings.

Choice and competition works. By
harnessing the free market forces of choice and competition, compelling
traditional Medicare to compete head to head with Medicare Advantage and other
private plans, the policymakers would be able to simultaneously slow the growth
in Medicare spending, secure better care at lower cost for America’s seniors, and
secure serious savings for America’s taxpayers. It’s the right thing to do.