Health Care Entitlements and Dual Eligibles



Mr. President, there is no greater threat to America’s growth and prosperity than our uncontrolled national debt.  Currently, the country’s debt exceeds $16 trillion.

We face the so-called ‘fiscal cliff’ that could send our economy into another recession.  In these difficult times, we are challenged by the people we represent to find real solutions – not short-term band-aids.  As we move forward, it is clear that we must discuss our spending.

I know that President Obama is hyper focused on increasing taxes as part of a deficit reduction proposal.  However, if we are serious about reducing our debt, we must talk about spending.  Not sometime next year.  Not only after we talk about taxes.  We must talk about our spending now.  We need to have a thoughtful conversation that focuses on where our federal spending most calls for control and containment.  And where our federal spending most calls for control and containment is obvious.

It is past time for the President to engage on health care entitlements with proposals that affect the long term growth of health care costs.  I’d like to draw your attention to this chart.


Charts for Hearing v3 1

This chart from the Congressional Budget Office details non-interest spending as a percentage of GDP.  Look closely at the longer term projections of our spending.  According to the Congressional Budget Office, this middle graph--- Social Security, as a percentage of GDP, will remain relatively stable over the next 25 years.  Non-interest spending, the bottom graph, as a percentage of GDP will also remain relatively stable over the same period.

Now, look at this top graph … over the next 25 years spending on health care entitlements will basically double as a percentage of GDP.

We must address the growth of health care entitlements.  Democrats cannot walk away from the issue.  We should start by looking at where we are spending the most money in our health care entitlements.  I’d like to bring your attention to this chart.


Charts for Hearing v3 2

Here we look at the federal Medicare and federal and state Medicaid spending divided into three groups.  On the left is spending by the federal government for people who are eligible only for Medicare.  On the right is federal and state spending for people only eligible for Medicaid.  In the middle is federal and state spending for people eligible for both Medicare and Medicaid, also known as dual eligibles or duals.  This middle group, the dually eligible, accounts for just over 10 percent of the entire Medicare and Medicaid population.  There is more spending on the dually eligible than on the Medicare-only beneficiaries or the Medicaid-only beneficiaries.

When we talk about the need to find ways to control spending on the dual eligibles, it is for good reason.  They are poorer, sicker and often in need of more extensive and expensive coordinated care.  The inefficiency created in the misaligned incentives of the Medicare and Medicaid is frequently cited as one of the areas in health care in greatest need of improvement.

Obamacare created an office in CMS charged with creating demonstration projects to allow for greater coordination of dual eligibles.

Those demonstration projects have been moving forward at breakneck pace with nearly half the states looking to participate.  Essentially, all the demonstrations seek to give states greater control of the acute care of dual eligibles.  CMS has the incredibly broad legal authority under Obamacare to take these demonstrations nationally if they are successful.

Mr. President, no one argues that the way Medicare and Medicaid coordinates for dual eligibles works well.  Coordination today is akin to asking me and you to compose a letter with you writing the consonants and me writing the vowels.  Giving the states greater control of duals may be a good answer.  Some states might do a good job.  But when you consider the fiscal challenges faced by states, this should be a decision considered by Congress examining all possible alternatives and in consultation with the states rather than something occurring through regulatory action.

Furthermore, moving more responsibility to the states may miss the opportunity to address an even larger cost problem.  While some dual eligibles are expensive and need extensive long-term supports and services, there are dual eligibles who are relatively low cost.  More importantly though is that not all expensive Medicare beneficiaries are dually eligible.

Take a look at this chart.


Charts for Hearing v3 3

In this chart, we see the most expensive individuals in the Medicare program.  These are beneficiaries who have multiple chronic conditions and functional impairments.  Fifty-seven percent of them are eligible for Medicare only.  Forty-three percent of them are dually-eligible for Medicare and Medicaid.  Numerous studies have shown that the care for high-cost Medicare–only beneficiaries are just as complex, and the quality of care calls for as much attention as that of the dual eligibles.

Why are we splitting these two groups?  These are two groups of similarly situated individuals.  They all have need for improved care.  They all have multiple conditions that are expensive.  Why do we tell some people, you get Medicare solely because you have income and then we tell some people you should get Medicaid, solely because you don’t have enough income?

Why is it a good idea to give states control of poor beneficiaries?  Why should low-income beneficiaries get one of 50 different models to coordinate their care and people with income get Medicare?  Why is CMS pushing states to take a greater role with a complex, expensive population when they are also being asked to find the resources to cover poor individuals in Medicaid and develop Exchanges to cover people in the private market?  Congress should consider what states should do in health care and what are reasonable expectations.  Congress should involve states in the conversation.

If Congress wants states to administer benefits for the aged, blind and disabled, and low- income individuals along with managing the exchanges for individuals with incomes up to 400 percent of poverty, Congress can do so.  If health care is the primary responsibility of states, it is because of decisions made by Congress.  States are being asked to do so much in health care while also overseeing education, public safety, roads and bridges and meet in most cases a balanced budget requirement.

Congress needs to step back and ask where states are best able to focus on health care.  We should ask states.  When we look at the long term spending growth of our health care entitlements, we should use this as an opportunity to reconsider the role of the states in providing health care coverage.  What we ask of the states should be thoughtfully considered in any discussion.

I know there are people telling us we shouldn’t talk about health care entitlements now.  President Obama hasn’t come to the table yet.  We don’t have a choice.  Look at the numbers.


Look at the spending.  We only make the problem worse by putting it off.  We can save federal dollars by extracting more from beneficiaries, providers and states, but that won’t bend the long-term growth curve.  We have to talk about solutions to actually lower the growth curve now.  

Mr. President, we are $16 trillion in debt.  One of every four dollars we will spend in this next decade will be on Medicare and Medicaid.  We will see health care entitlements double as a percentage of GDP in the next 25 years.  If we want Medicare and Medicaid to not only survive but also thrive for the next generation, we need to be willing to ask fundamental questions and seek solutions that can affect the growth curve.  I sincerely hope we are willing to look for solutions that can make a real difference.