Transcript: Q&A on the 2012 Social Security & Medicare Trustees report

Press conference Q&A on the 2012 Social Security & Medicare fund trustees report released on April 23, 2012:

Question:

“With the disability trust fund, what’s the administration’s plan to deal with that in the near term. Is it to combine the two funds or to direct money away from the OASI fund?”

Read more: Analysis: Reforms needed to ensure sustainability of Social Security & Medicare

Treasury Secretary Timothy Geithner: “As you know there’s a precedent for dealing with this in the past. Congress faced this problem back in 1994 with less time to act and they acted then with a temporary solution. I think our general message is the best thing to do is a long-term solution and we’re going to be working towards that with the Congress.”

Question:

“In this report, as in last year, there’s some question raised by the trustees and even more forcefully by Rick Foster about whether even the projections under the Affordable Care Act will come pass. Do you have any thoughts, since you’ve spent so much time defending the law and also the significance of these projections, what does it mean that there’s some shadow hanging over that in such an important report?”

Health & Human Services Secretary Kathleen Sebelius:

“Well, I think there has been traditionally, I would say, a reluctance among Congress often to adopt payment reforms. And Medicare Advantage is a great example of that. It was begun with a floor intentionally above Medicare fee-for-service as a way to encourage competition in the marketplace, but 15 years later we were still paying, at the passage of the Affordable Care Act, 114% of fee-for-service in spite of the fact that people kept saying that that needs to be lowered. The Affordable Care Act has done that. The good news is that in the last 2 years, Medicare Advantage plans are now being paid at a rate 107% higher, not 114% higher. We are on track to get to parity with fee-for-service but we are assuming that the payment reductions included in the Affordable Care Act will be indeed carried out.

“If Congress chooses to interrupt those, if Congress chooses to add additional funding, then we’d have to make different assumptions. But I think the skepticism is because often Congress has intervened at times where there have been challenges about lowering costs and kept costs at a higher rate than MedPac or others would have seen as advisable.”

Question:

“Sen. Orrin Hatch (R-Utah) claims that the Medicare Advantage quality bonus demonstration program is wasting over $8 billion in taxpayer money, and he questions whether HHS had the legal authority to even establish the program. How do you respond?”

Health & Human Services Secretary Kathleen Sebelius:

“I think…the good news is I think Medicare Advantage, in spite of all of the allegations that somehow the Affordable Care Act would destroy the program, is stronger than ever before. We have more companies participating in the plan. For the first time ever, consumers are actually getting information about quality ratings and we have more beneficiaries migrating to 4-star programs than ever before. Even with the demonstration, which is due to expire in 2014, we are on track to reduce the over-payments of Medicare Advantage as I’ve said. With the demonstration money included, we’ve dropped from a 114% of fee-for-service to now 107% of fee-for-service, so it cut in half the over-payment for Medicare Advantage. And I think it’s a basic win-win-win situation. Beneficiaries are also paying lower rates. So you’ve got lower rates, you’ve got more plans, you’ve got consumer information for the first time about quality programs, and we’re on track to reduce the over-payments which will substantially save money in the long haul.”

Question:

“Do you plan on letting that demo run out and not renew it for the MA bonuses?”

Health & Human Services Secretary Kathleen Sebelius:

“Well, that’s certainly our plan. It is designed as a demonstration project. Our goal is not only to give consumers information but actually to put Medicare Advantage plans on notice that we are measuring quality for the first time as opposed to just having a periphery of plans available, often very confusing to the beneficiaries about what the differences are. We think this is a really important step. We are pleased to see that more beneficiaries are migrating to the higher-rated plans. And we think at the end of 2014, it will have accomplished just what the goal was which is to give some financial incentives to those plans that are improving quality results. So you know, one of the most discouraging factors around Medicare Advantage not only were those plans being paid 14% more than fee-for-services and 75% of the beneficiaries were picking up that additional cost because the cost was spread, there was no increased health outcome as a result of that over-payment. So we think this demonstration was important to, again, inform consumers. We intend to keep the quality system in place, not the additional incentives. But again, Medicare Advantage rate were down substantially over where they when the President signed the Affordable Care Act.”

###

Learn More: