Patients are Answer to Medicare's Overspending Problems

St. Paul, Minnesota - With Medicare consistently losing tens of millions of dollars each month through improper payments, senior citizens need to be fully engaged in treatment and financial decisions, says Twila Brase, president of the Citizens' Council on Health Care.

On July 9, the Office of the Inspector General testified to members of the House Budget Committee that improper payments under Medicare's fee-for-service (FFS) system totaled an estimated $13.3 billion during 2002 - 6.3 percent of $212.7 billion in total Medicare FFS payments.

"Big government programs lend themselves to corruption, greed, fraud and error. Patients have little incentive to watch the dollars so improper payments should surprise no one, but they should concern everyone," asserts Brase.

CCHC reviewed reports from two federal agencies to get a broader perspective of improper and excess payments: the Office of Inspector General (OIG), a division of the U.S. Department of Health and Human Services, and the Government Accounting Office (GAO).

SEVEN YEARS: Over the past 7 years, almost $107 billion in improper payments have been made for services provided to recipients of the traditional fee-for-service Medicare program. When the Payment Error Prevention Program first went into effect in 1996, the OIG reported improper payments of $23.2 billion, or 14 percent of all FFS Medicare payments. By 1998, that percentage rate was cut in half. However, the rate has not gone lower than 6.3 percent. (See FACT SHEET).

MILLIONS LOST EVERY DAY: Brase says that the $13.3 billion loss in 2002 equals $36.4 million per day.

EXCESS PAYMENTS: The pending Medicare bills would implement government-approved health plans, but Brase contends that health plans are not the answer to improper payments or Medicare's pending insolvency.

Despite having a healthier population, a 2000 GAO study reported that health plans approved under Medicare+Choice spent $3.2 billion, or 13.2 percent, more than would have been spent if the plan's Medicare enrollees had been in traditional Medicare. Furthermore, Medicare+Choice recipients were healthier individuals.

"Health plans are prepaid health care. Prepaid health plans waste health care dollars, hide administrative expenses, and have not proven themselves patient-friendly. Prepaid health plans prevent patients from being the customers they need to become," says Brase.

ENGAGE PATIENTS: With only 23 years until Medicare becomes insolvent, Congress must quickly and fully engage patients and citizens in health care financing, asserts Brase.

"Medicare should become a defined contribution program, with tax-deferred savings accounts as part of the overall plan. Returning health care dollars to individuals will improve patient satisfaction and financial integrity. Patients with financial incentives will get the health care they need without the billion dollar losses taxpayers can't afford," says Brase.

"People's lives are at stake. Fixing Medicare should not be part of some short-sighted political game," Brase adds.

CCHC FACT SHEET: MEDICARE: Overspending Shrinking Resources


Media Contact:

Twila Brase, President and Co-founder
Office: 651-646-8935