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The future of Medicaid and Medicare: A Q&A with Stanford Health Policy scholars

insurance-911819_1920In the wake of the presidential election, discussions about the potential repeal of the Affordable Care Act have expanded to include debate about Medicare. Will it be reformed or replaced as well?

Probably not on a large scale, say Stanford health policy researchers Kate Bundorf, PhD, and Jay Bhattacharya, MD, PhD. In a recent Q&A, they discussed the likelihood of privatization and the effects of an Affordable Care Act repeal on Medicare and Medicaid:

Will Medicare be privatized?

Bundorf: Medicare already allows beneficiaries to replace their traditional benefit with coverage from a private plan — a program called Medicare Advantage — and about 30 percent of Medicare beneficiaries have chosen a private plan. Many analysts agree that reforms are needed to get greater value out of Medicare-financed services. The big disagreements are over how to achieve that. Democrats have traditionally favored reforming Medicare from within — keeping the single public payer structure of the program but making the government a more savvy health-care purchaser. Republicans, in contrast, have traditionally favored putting the responsibility for promoting value-based care in the hands of private, competing health plans.

Bhattacharya: I don’t see much energy being put into privatizing Medicare. Most of the discussion I have seen to date has been on repealing and replacing the Affordable Care Act. One Medicare reform proposal that I have seen from Speaker [Paul] Ryan constitutes in essence (in my opinion) an expansion of the Part C (Medicare Advantage) market which has been extremely popular since it was introduced.

What effect would repealing the Affordable Care Act have on Medicare and Medicaid?

Bundorf: The ACA and subsequent legislation including the “doc fix” (MACRA) are examples of a “reform from within” approach to getting more bang for our buck from the Medicare program. Repealing the ACA would thus roll back at least some of these initiatives and that would lead to higher Medicare spending and slow down some of the progress being made in Medicare payment reform. This would increase the pressure on a Republican-controlled Congress to make other types of reforms to the Medicare program.

Bhattacharya: Medicaid I think is likely to see very substantial changes. The most likely proposals replace Medicaid with a block grant program. This would give the states a lot more leeway in deciding not just who’s covered by Medicaid but also copayments, deductible rates and so on. For instance, Trump’s nominee as Centers of Medicare and Medicaid Services (CMS) administrator, Seema Verma, helped the Indiana legislature put together a program where the expansion to Medicaid included a health savings account and a pretty substantial subsidy. The idea was for Medicaid patients to feel some of the costs but at the same time give them enough income to pay those costs. In some ways I’m cautiously optimistic about the Medicaid expansion because it seems likely that they’ll replace it with something interesting.

Previously: When it comes to health care, what steps should the next president take?Health-care policy expert Arnold Milstein weighs in on Medicare's plan to prioritize "value over volume" and A look back at Medicare's 50 years
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