Everybody agrees on what a reformed Medicare system should look like, but nobody knows how to get there from here.

This was the blunt, discouraging consensus emerging from a discussion of health care experts speculating on what a modernized version of the program should offer its 49 million beneficiaries.

Gail Wilensky, an economist and a former director of Medicare, warned that nothing will happen until Congress is forced into choosing between unattractive alternatives: making taxpayers pay more, or making beneficiaries to pay more. “We talk a good game but rarely put actions behind it,” she said at a panel discussion titled Reformed Medicare: Basic Principles. “It’s hard to get Congress to do anything painful if they don’t really, really, really, really feel they have to.”

The panel was part of a special Medicare forum on February 1 at the annual meeting of the National Academy of Social Insurance (NASI), a nonpartisan think tank dealing with Medicare and Social Security concerns.

“Don’t blame beneficiaries for high Medicare costs,” said Marilyn Moon, director of the Health Program at the American Institutes for Research. “We all like health care and use it a lot.”

The panel members all agreed on sustaining the basic principles of Medicare: it should be universal, affordable and offer high quality care. And it should be under financial control as a share of the federal budget and of the nation’s total health care spending.

But they also offered pessimistic views of the difficulties of reaching these goals. Currently, the budget deficit is promoting passionate discussions in Washington on ways to control spending, including Medicare. The reality, though, as Wilensky pointed out, is that there is no immediate deadline for Congress to take any kind of unpopular action.

If Congress does nothing at all, there is sufficient surplus in Medicare’s Hospital Trust Fund to keep paying all of its anticipated bills until 2024, according to NASI’s findings of the 2012 Trustees Report . And even after that the trustees anticipate there will be enough money raised in taxes to pay the expected bills. The Hospital Trust Fund pays the bills for Medicare Hospital Insurance (Part A).

But spending is rising inexorably for two reasons: the population enrolled in Medicare increases each year as more and more baby boomers reach the eligibility age of 65, and new medications and advances in surgical and treatment techniques add to the cost of treating a typical beneficiary.

“Costs are rising at an unsustainable rate,” said Daniel T. Durham, executive vice president for policy and regulatory affairs at America’s Health Insurance Plans, the trade association for the health insurance industry.

“We need to encourage early intervention and coordinated care,” Durham told the panel. His industry’s members operate Medicare Advantage Plans (Part C), which include 13 million members, or about 27 percent, of the total Medicare population. These members get their care within designated networks of doctors, hospitals and health care providers, and receive some extra benefits unavailable in Traditional Medicare, including access to prescription medications, eye care and dental care. Traditional Medicare, which is Part A and Medicare Medical Insurance (Part B), allows beneficiaries to see any doctor, hospital or health care provider who accepts Medicare insurance.

“We need to be sure patients get the right care in the right settings, to help them navigate a complex system,” according to Durham. Some tools to reduce hospital readmissions, for example, might include regularly scheduled phone calls or home visits to beneficiaries released from the hospital to make sure that they are following their medical instructions and that they are faithfully taking any medications.

This is important because there will now be penalties for hospitals with excess readmissions, as determined by the Affordable Care Act (ACA). “A total of 2,217 hospitals are being punished in the first year of the program, which began Oct. 1,” according to an October 2012 Kaiser Health News bulletin. “Of those, 307 will be docked the maximum amount: 1 percent of their regular Medicare reimbursements.”

The penalties, aimed at slowing the pace of Medicare spending, will not be large enough to make a significant difference in the long-term financial outlook.

This financial outlook is worrisome, but because failure to take action wouldn’t interfere with the current operations of Medicare, and there is no immediate pressure on Congress or the president to push any reform measures, according to Wilensky.

This lack of action “worries me,” said Wilensky. “It is more likely that we probably won’t do much other than to make contributions to deficit reduction.”

“We need to consider the concept of more revenue.” Higher Medicare taxes under the ACA are “a step in that direction,” she said, but looking at the growth of Medicare expenditures, “the only thing we’ve done to date is spend more.”

Another obstacle to reform is the powerful set of special interests—hospitals, medical groups, rehabilitation centers, medical specialists. These groups, all with strong political lobbies, are part of the massive national investment in health care. Currently the United States spends 17 percent of its gross domestic product (GDP), or total economic output, on health care.  

“It (the special interest groups) represents large economic interests that they don’t want to give up,” Robert Reischauer, an economist and former director of the Congressional Budget Office, told the panel .

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