How to Save Medicare

Key Points

Nearly all experts see a need for Medicare to change, but many also note that the program's burgeoning costs over the next 20 years are largely due to a big increase in enrollment of baby boomers. Per capita costs, however, are projected to increase less rapidly than healthcare costs for the under-65 population. The challenges Medicare faces are shared by the entire U.S. healthcare system.

"Medicare is easy to target because it's the government," says Don Berwick, MD, who headed the Centers for Medicare & Medicaid Services (CMS) until late last year. "But the problem isn't Medicare, it's the performance of the American healthcare system. That system has to change."

Following are 10 reforms for which there is relatively broad consensus among experts. This is by no means a complete list of changes that could improve Medicare. Proponents say these measures specifically would reduce total costs rather than simply shifting costs to beneficiaries, and they'd also enhance the quality of care.

1 Improve coordination of care for people covered by both Medicare and Medicaid

Many experts say that care in fee-for-service Medicare, where most still are, is highly fragmented and wasteful. One recent projection is that over 10 years, enrolling all dual eligibles in effective, integrated plans would yield federal savings of $125 billion and state savings of $34 billion.

CMS already is offering new opportunities for integration, and states and health plans are offering proposals for how they'll do it. The goal is to build comprehensive systems melding medical care, long-term and behavioral care, and social supports.

But patient advocates caution that many health plans and providers lack experience working with dual-eligible patients who have severe physical, cognitive or behavioral disabilities, and there's been little integration of managed care and long-term care up to now.

The problem, Dr. Berwick says, is the current shortage of health plans and care systems experienced and skilled in serving this difficult population.

"We need a plan to help duals get into coordinated care," he says. "But Medicare needs to invest heavily in training and education so many more organizations become capable of delivering true coordinated care."