The Journal Gazette
Thursday, December 23, 2021 1:00 am

Proposed Medicare changes are unhealthy for consumers

Dr. Jonathan D. Walker

There is a looming problem with Medicare. It is called direct contracting, a program being pursued by the Biden administration.

It has received little coverage in the media and no congressional oversight, yet it can affect millions of people on Medicare – and cost taxpayers more money.

Direct contracting is a pilot program that changes the way that Medicare pays for seniors' care.

Instead of paying doctors and hospitals directly, Medicare will give middlemen called “direct contracting entities” a monthly payment to cover some or all of each senior's medical expenses, allowing the contracting entities to keep as profit what they don't spend on care.

Under this program, seniors who actively choose traditional Medicare are automatically assigned to a direct contracting entity without their full knowledge or consent.

Almost any type of company can apply to be a direct contracting entity, including commercial insurers, venture capital investors and even dialysis centers. Applicants are approved without input from Congress.

The current direct contracting pilot phase includes potentially 30 million traditional Medicare beneficiaries across 38 states, including Indiana. (There are about 36 million people enrolled in traditional Medicare, so the program actually goes far beyond a small pilot project – potentially affecting more than 80% of the people who chose traditional Medicare.)

Direct contracting entities are allowed to keep what they don't pay for in health services, establishing a financial incentive for them to restrict and ration seniors' care.

So instead of tax dollars paying for health care, that money will end up paying for complicated rules and a bureaucracy that will cost taxpayers far more than if people remained on traditional Medicare.

Traditional Medicare is incredibly efficient, spending 98% of its budget on patient care. Experts estimate that direct contracting entities only spend 60% of what Medicare pays them on patient care, keeping up to 40% of revenue for their own profit and overhead.

This is similar to what happens with commercial Medicare Advantage plans. The data show that inserting a profit-seeking middleman into Medicare doesn't save money or make things more efficient. Instead, the middlemen generate confusing rules, networks and regulations that create barriers to needed care. This costs taxpayers more and leaves seniors with fewer choices and worse health outcomes.

If you opted for traditional Medicare so you can choose your own doctors and hospitals, you need to understand that this program will take away that choice with no input from you or Congress.

If left unchecked, this program could radically transform Medicare within a few years, adding to costs and inefficiency with no benefits, all without input from voters or Congress. Please consider contacting Rep. Jim Banks to ask him to work to halt this program.

Dr. Jonathan D. Walker is a retired physician and a clinical assistant professor at IU School of Medicine. He is also a member of Physicians for a National Health Program.

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