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President Trump’s Executive Order to privatize Medicare

December 12, 2019

Topics: Quote of the Day

By Donald J. Trump
The White House, October 3, 2019


By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. Purpose. The proposed Medicare for All Act of 2019, as introduced in the Senate (“Medicare for All”) would destroy our current Medicare program, which enables our Nation’s seniors and other vulnerable Americans to receive affordable, high-quality care from providers of their choice. Rather than upend Medicare as we know it, my Administration will protect and improve it.

“Medicare for All” would not only hurt America’s seniors, it would also eliminate health choices for all Americans. Instead of picking the health insurance that best meets their needs, Americans would generally be subject to a single, Government-run system. Private insurance for traditional health services, upon which millions of Americans depend, would be prohibited. States would be hindered from offering the types of insurance that work best for their citizens. The Secretary of Health and Human Services (Secretary) would have the authority to control and approve health expenditures; such a system could create, among other problems, delays for patients in receiving needed care. To pay for this system, the Federal Government would compel Americans to pay more in taxes. No one — neither seniors nor any American — would have the same options to choose their health coverage as they do now.

Instead of ending the current Medicare program and eliminating health choices for all Americans, my Administration will continue to protect and improve Medicare by building on those aspects of the program that work well, including the market-based approaches in the current system. The MA component, for example, delivers efficient and value-based care through choice and private competition, and has improved aspects of the Medicare program that previously failed seniors.

Sec. 2. Policy. It is the policy of the United States to protect and improve the Medicare program by enhancing its fiscal sustainability through alternative payment methodologies that link payment to value, increase choice, and lower regulatory burdens imposed upon providers.

Sec. 3. Providing More Plan Choices to Seniors.

(a) Within 1 year of the date of this order, the Secretary shall propose a regulation and implement other administrative actions to enable the Medicare program to provide beneficiaries with more diverse and affordable plan choices. The proposed actions shall:

(i) encourage innovative MA benefit structures and plan designs, including through changes in regulations and guidance that reduce barriers to obtaining Medicare Medical Savings Accounts and that promote innovations in supplemental benefits and telehealth services;

(ii) include a payment model that adjusts supplemental MA benefits to allow Medicare beneficiaries to share more directly in the savings from the program, including through cash or monetary rebates, thus creating more incentives to seek high-value care; and

(iii) ensure that, to the extent permitted by law, FFS Medicare is not advantaged or promoted over MA with respect to its administration.

(b) The Secretary, in consultation with the Chairman of the Council of Economic Advisers, shall submit to the President, through the Assistants to the President for Domestic and Economic Policy, a report within 180 days from the date of this order that identifies approaches to modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.

Sec. 5. Enabling Providers to Spend More Time with Patients. Within 1 year of the date of this order, the Secretary shall propose reforms to the Medicare program to enable providers to spend more time with patients by:

(c) conducting a comprehensive review of regulatory policies that create disparities in reimbursement between physicians and non-physician practitioners and proposing a regulation that would, to the extent allowed by law, ensure that items and services provided by clinicians, including physicians, physician assistants, and nurse practitioners, are appropriately reimbursed in accordance with the work performed rather than the clinician’s occupation.

Sec. 6. Encouraging Innovation for Patients. Within 1 year of the date of this order, the Secretary shall propose regulatory and sub-regulatory changes to the Medicare program to encourage innovation for patients by:

(b) modifying the Value-Based Insurance Design payment model to remove any disincentives for MA plans to cover items and services that make use of new technologies that are not covered by FFS Medicare when those items and services can save money and improve the quality of care.

Sec. 9.

(b) The Secretary shall study and, within 180 days of the date of this order, recommend approaches to transition toward true market-based pricing in the FFS Medicare program. The Secretary shall submit the results of this study to the President through the Assistants to the President for Domestic and Economic Policy. Approaches studied shall include:

(i) shared savings and competitive bidding in FFS Medicare;

(ii) use of MA-negotiated rates to set FFS Medicare rates; and

(iii) novel approaches to information development and sharing that may enable markets to lower cost and improve quality for FFS Medicare beneficiaries.

Sec. 11.

(b) Within 1 year of the date of this order, the Secretary shall identify and remove unnecessary barriers to private contracts that allow Medicare beneficiaries to obtain the care of their choice and facilitate the development of market-driven prices.


Moving To A Market-Driven Medicare Program

By Brian J. Miller and Gail R. Wilensky
Health Affairs Blog, December 5, 2019


As the debates amongst Democratic presidential candidates over single-payer health care reaches new heights, the Trump administration recently responded with its latest executive order targeting health care, laying out the administration’s vision for the future of the Medicare program.

Recent administration efforts have tracked traditional market-oriented principles, with previous White House policy positions and executive orders focused on choice and competition. In this post, we review the latest executive order addressing the Medicare program, how agencies could assist with its implementation, and the political challenges it brings.

Medicare Advantage: Market-Driven Medicare

Medicare Advantage (MA), the market-driven alternative to the traditional fee-for-services Medicare program, plays a central role in the executive order.

The executive order proposes further flexibility in benefits and plan design: Medicare Medical Savings Accounts (MSA), supplemental benefits, and telehealth services. Politically popular with many conservatives, MSAs have had little uptake since their introduction.

Previous CMS efforts to broaden use of telehealth services could be expanded in multiple ways, most notably by integrating availability of telehealth services into star ratings and network adequacy requirements—beneficiaries should be able to choose not only when but how they receive medical services.

Medicare Advantage And Traditional Medicare: Wrestling For Dominance

A longstanding complaint from health plans is the differential treatment of private plans as compared to fee-for-service Medicare. The executive order proposes leveling this playing field with multiple opportunities for positive change in not only program administration but also in rulemaking and legislative activity.

To capitalize on the budgetary and care coordination benefits of MA for both beneficiaries and government, CMS could modify the enrollment process to promote auto-enrollment into high-performing MA plans. This would likely require additional legislative authority and could prompt objections by progressive Democrats. However, it would help shift the balance from an open-ended financial commitment—fee-for-service Medicare—to a risk-adjusted capitated-plan product—MA—thus facilitating long-term budgetary control over the Medicare program.

Further changes in payment rates are also proposed, which is likely to bring vigorous, or even rancorous debate. Increasing Medicare fee-for-service rates to commercial rates as specified in the executive order would likely be financially unsustainable, stressing the already strained financial footing of the Medicare program—the latest Medicare Trustees Report estimating depletion of the Hospital Insurance Trust in 2026.

Further adjustments of network adequacy requirements for telehealth services would allow MA plans to better serve rural and underserved markets. This change would require CMS—and the medical community as a whole—to better delineate which services can be safely and effectively delivered remotely, in addition to creating guidelines for when a physical exam is required. While a small part of the executive order, this could promote significant changes in both documentation and medical practice, with the potential to reinvigorate the practice of clinical medicine.

Health Plan Administration: Unsexy And Important

For much of health plan administration, the devil is in the details.

The order directs the Department of Health and Human Services to share information regarding practice patterns with providers and to provide beneficiaries with cost and quality data. The former would provide additional and potentially useful information to both practitioners and practice administrators about cost and quality based upon existing quality metrics, albeit additional work regarding disease and episode-based outpatient groups would be required to make the information clinically and administratively meaningful. Research shows that consumer interest in “report cards” is growing and that consumers can choose high-value care when cost and quality data are presented together, suggesting that health plans—including CMS—have an opportunity to help steer consumers to use cost and quality information to make better decisions.

Finally, while sensible, aspects of the executive order targeting supervision requirements for non-physician providers would require modification of state laws regarding scope of practice. Equalization of payment rates for non-physicians (currently at 85 percent of physician rates) would increase costs, and likely require both rulemaking and legislative change.

Thoughts For Policy Makers

The Medicare executive order represents a vision for a market-based Medicare program. With more than half a century of price setting in Medicare fee-for-service, we have failed to control health care expenditure growth. Now is the time to try something different.



By Don McCanne, M.D.

Congress and both Republican and Democratic administrations have periodically introduced policies that benefit the private Medicare Advantage (MA) plans while neglecting much needed reform in the traditional fee-for-service Medicare program. The goal has been to convert Medicare into a private, market-based program by giving the private MA plans a competitive advantage over traditional Medicare. The current Presidential Executive Order seems to be an effort to abandon, for the present, the goal of “shrinking Medicare and drowning it in a bathtub” to one of converting traditional Medicare into a market-based program which then would have to compete with the private plans, or perhaps be assimilated by them.

The Executive Order calls for specific actions to move the process forward. But this is not new; it has been going on for decades.

As an example, Gail Wilensky – coauthor of the Health Affairs article above – has been fighting for years to prohibit supplemental Medigap plans from covering the deductibles under Medicare. A point that is dear to the pro-market advocates in health care is that people who need medical care must feel the pain of “having skin in the game” by requiring out-of-pocket payment as a condition of receiving health care services. Wilensky won. Next month insurers will be prohibited from issuing new Medigap plans that protect beneficiaries from exposure to deductibles (grandfathered plans will be phased out by attrition).

Another example is that each year Democratic legislators have joined their Republican colleagues in pressuring CMS to ensure that the private MA plans receive very generous taxpayer contributions which has resulted in their stellar performance on Wall Street. (Do campaign contributions constitute a quid pro quo?)

As Miller and Wilensky state, “The Medicare executive order represents a vision for a market-based Medicare program.” The transformation is almost complete. Our vision of health care justice for all through a single payer model of reform will be much more difficult to achieve if we not only have to enact and implement an improved Medicare for all but we also have to drain the swamp created by the medical-industrial complex and their market-based approach to health care. Keep in mind that the insurers and the venture capitalists and their brethren are taking over and becoming the health care delivery system. If you check the smoke signals, they are already well positioned to dictate the terms of reform.

Our inertia has been quite effective in letting us get to this appalling state of reform. Miller and Wilensky state, “Now is the time to try something different.” Well, yes. The single payer model of an improved Medicare for All. But continued inertia won’t get us there.

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About the Commentator, Don McCanne

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Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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