Senate Finance Committee Holds Hearing on Medicare Trust Fund

The Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth held a hearing on Feb. 2 titled “The Hospital Insurance Trust Fund and the Future of Medicare Financing.” The hearing focused primarily on the solvency of the Medicare trust fund and strategies to improve its long-term fiscal health.

Prior to the hearing, the AAMC and other key stakeholders submitted a statement for the record expressing support for value-based payment arrangements and alternative payment models, highlighting the potential for these models to prolong the solvency of the Medicare trust fund. “The committee should be focused on leveraging knowledge gained over the last decade of work in value-based payment to promote a more fiscally sustainable health system,” the groups stated.

Subcommittee Chair Elizabeth Warren (D-Mass.) opened the hearing by emphasizing the importance of ensuring the long-term health of the trust fund. “The Medicare system is hemorrhaging money on scams and frauds,” she said. “It is critical that we stop the flow, and, if we do, the system will have more than enough money to operate at its current level and increase coverage.” Warren also specifically highlighted the high cost of prescription drugs and Medicare Advantage billing issues as key drivers in Medicare insolvency. Ranking Member Bill Cassidy (R-La.) echoed Warren’s concerns about solvency of the trust fund and noted that this is something Congress should have addressed years ago.

Witnesses for the hearing included Michael Chernew, PhD, chair, Medicare Payment Advisory Commission (MedPAC); Susan Rogers, MD, FACP, president, Physicians for a National Health Program; Amy Kapczynski, professor of law, faculty co-director, Global Health Justice Partnership, faculty co-director, Law And Political Economy Project, Yale Law School; Katherine Baicker, PhD, dean and Emmett Dedmon professor, Harris School Of Public Policy, University of Chicago; and James Capretta, senior fellow and Milton Friedman chair, American Enterprise Institute.

In one notable exchange, Sen. Sheldon Whitehouse (DR.I.) and Cassidy jointly asked Chernew how to address the diminishing returns of Accountable Care Organizations (ACOs). Chernew replied that MedPAC is supportive of ACOs and that there are “ways in the regulations that you could address that problem. However, more broadly speaking, payment reform is particularly important.” He also explained that “The trick is to get the regulations right to provide the incentives for efficient delivery of care and maintaining access to high-quality care.” Finally, Chernew noted that MedPAC would be releasing a report on the topic in June.

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