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AFSA Speaker Series: The Future of Medicare
AFSA hosted the second
session in its speaker series
on federal benefits on Sept.
10. Dr. Judy Feder, a nation-
ally recognized leader in
health policy, spoke on the
future of Medicare, a topic of
much current interest.
Feder provided a compre-
hensive explanation of how
Medicare works and how the
Afordable Care Act comple-
ments the program. She
compared and contrasted
Republican and Democratic
proposals for the future of
Medicare and assessed their
impact for beneficiaries.
“Medicare is efective at
containing health costs for
its beneficiaries. Because the
program is such an enor-
mous purchaser of health
services, it has the power to
set rates for health providers,
rates that are generally 20 to
30 percent lower than costs
for private health plans,”
Feder said.
“Because of the huge size
of its risk pool, Medicare
assures afordable health
coverage for senior and
disabled beneficiaries. These
beneficiaries would have
difculty obtaining coverage
if the risk pool were to be
divided up, with insurance
companies cherry-picking
healthier and younger ben-
eficiaries,” she went on to
Medicare now consumes
13 percent of the federal bud-
get and its costs will continue
to escalate. This increase will
not be due to an increase
in health costs, but to the
expected enrollment of more
than a million baby boomers
to Medicare’s rolls each year.
Feder noted that the ACA
will reduce excessive health
costs by $716 billion. Current
savings have reduced growth
of costs per person to an
historic low (now roughly at
the growth of the economy),
and have extended the life of
the Medicare Trust Fund by
eight years, to 2024.
The ACA’s Independent
Payment Advisory Board is
empowered to make ongoing
rate reduction recommenda-
tions in payments; it cannot
make recommendations to
cut or reduce health ser-
vices. Feder predicted that
continued coordination and
experimentation will continue
to improve quality of services
and lower costs.
Turning to the proposals
to change Medicare from a
defined benefit plan (which
pays all covered services for
its beneficiaries), to a defined
contribution one (which
provides beneficiaries with a
voucher or specified amount
of money to shop for private
health plans), Feder stressed
that beneficiaries in a defined
contribution system would
have little bargaining power.
As the risk pool risk would be
divvied up, it would become
difcult for people to acquire
afordable health coverage.
The burden of increased
health costs would shift from
Medicare to individuals.
As a related matter, she
stressed that the proposal by
Rep. Paul Ryan, R-Wisc., does
not provide a mechanism for
containing health costs. In
fact, it projects a growth rate
that would exceed the growth
of the economy.
After her talk, Dr. Feder
answered the audience’s
many questions on Medi-
care, long-term care and the
Federal Employees Health
Benefits Plan.
A video of the event is
available for viewing at
The views expressed by Dr.
Feder are her own and do not
necessarily represent those of
Dr. Judy Feder explains the intricacies of Medicare as she compared and
contrasted Republican and Democratic proposals. Her talk inspires a lot of
questions, as members of the audience stand in line to ask theirs.