MedPAC’s Nine “Medicare Challenges” Demonstrate Medicare Is Junk Coverage

Michael F. Cannon

“No one I have met who supports Medicare for All understands the Medicare program,” says Donna Shalala, who oversaw the Medicare program for eight years as President Bill Clinton’s (D) Secretary of Health and Human Services.

People who do understand the Medicare program pay attention to the Medicare Payment Advisory Commission, or MedPAC, a non‐​partisan legislative‐​branch agency that advises Congress on how Medicare is performing. This week, MedPAC released its annual Report to the Congress: Medicare Payment Policy. Like previous reports, this year’s report undercuts the narrative that Medicare is efficient, is an excellent price negotiator, “is high‐​quality coverage,” and provides equitable access care.

To increase public understanding of the Medicare program, I reproduce below nine “Medicare challenges” MedPAC lists in this year’s report. Remember, these are from researchers who, like Shalala, generally support the Medicare program.

1. “Medicare pays higher prices in some care settings than in others—for the same service.”
2. “Medicare undervalues primary care and overvalues specialty care.”
3. “Providers have financial incentives to selectively treat some patients over others and furnish certain types of services, regardless of clinical value.” (MedPAC notes these incentives come from Medicare, not some external force.)
4. “Spending on drugs is growing rapidly.”
5. “Medicare is required to pay providers’ claims, regardless of clinical appropriateness.”
6. “Medicare coverage interacts with beneficiaries’ other coverage, sometimes resulting in fragmented care.” (See #9, where MedPAC clarifies that Medicare itself fragments care.)
7. “Medicare’s benefit package does not protect against high out‐​of‐​pocket (OOP) costs, and many beneficiaries have limited incentives to use care efficiently.”
8. “Medicare Advantage data limitations prevent study of utilization and program effectiveness.”
9. “Traditional Medicare lacks strong incentives to improve population‐​based outcomes and the coordination of care.”

This is nowhere near an exhaustive list of Medicare’s failings, just those MedPAC felt like highlighting this year.

If libertarians proposed a hypothetical health plan that pays higher prices in some settings than in others for the same service, undervalues primary care and overvalues specialty care, selectively encourages providers to treat some patients over others, encourages low‐​value services, pays for clinically inappropriate care, fragments care, fails to protect against high out‐​of‐​pocket costs, encourages excessive spending, scarcely measures quality, and fails to encourage population health, Medicare for All supporters would call it junk insurance.

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