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After 50 years, how do we ensure Medicare and Medicaid longevity?

July 29, 2015 at 6:20 PM EDT
Fifty years since Medicare and Medicaid were established, the programs cover the health care needs of more than 120 million Americans. But new projections underscore worries over long-term sustainability. Judy Woodruff speaks to two former secretaries of the Department of Health and Human Services, Kathleen Sebelius and Louis Sullivan, about the successes and challenges.

JUDY WOODRUFF: Health spending in the U.S. grew by 5.5 percent last year to more than $3 trillion. And new projections show spending will keep rising by nearly 6 percent a year over the next decade.

This comes after several years of a slowdown in spending growth. And it potentially has major implications for Medicare and Medicaid, which together cover about one of every three Americans. By 2024, nearly four out of every 10 health care dollars will be spent on enrollees in the two programs. The latest warnings comes as both programs are celebrating their 50th anniversary.

Before President Lyndon Johnson signed Medicare and Medicaid into law in 1965, with President Harry Truman by his side, the country’s social safety net left many seniors living in poverty in their retirement years.

There are those alone in suffering who will now hear the sounds of some approaching footsteps coming to help.

JUDY WOODRUFF: Fifty years later, the programs cover tens of millions more people and are deeply woven into the fabric of the American health care system. Nearly one in six Americans, or about 53 million people, receive coverage through Medicare.

Medicaid, which provides care for low-income and disabled people, has grown even larger. It covers nearly one in four Americans, 71 million in all.

The success of both programs was hailed by President Obama at a recent White House event.

When Medicare was created, only a little more than half of all seniors had some form of insurance. Before Medicaid came along, families often had no help paying for nursing home costs. Today, the number of seniors in poverty has fallen dramatically.

JUDY WOODRUFF: But new projections underscore worries over long-range solvency. Among them, 10,000 people become eligible for Medicare each day. Medicare’s growth rate is below that of the private sector, but the Hospital Insurance Trust Fund will run out of money by 2030, and only be able to cover 86 percent of costs, unless there are more changes, such as higher costs for beneficiaries, raising taxes or cutting benefits.

Choice of doctors and providers has shrunk in recent years, as payment rates decline. Beneficiaries’ out-of-pocket costs are rising. People enrolled in Medicaid have a harder time finding specialists and dentists willing to treat them. Nearly a third of beneficiaries reduced their use of dental, vision and hearing care.

Medicaid, which has expanded through the federal health care law, remains the focus of major political battles around the country.

I sat down recently with two former secretaries of Health and Human Services, who oversaw the programs — Kathleen Sebelius, who served under President Obama until last year, and Dr. Louis Sullivan, who served under President George H.W. Bush.

Welcome, Secretary Sullivan, Secretary Sebelius.

And, Secretary Sebelius, let me start with you.

What difference have Medicare and Medicaid made in this country?

KATHLEEN SEBELIUS, Former Health and Human Services Secretary: Well, I think they have made an incredible difference in the lives of about 120 million Americans and counting.

So, seniors were the poorest group of Americans when Medicare was passed 50 years ago. They were going bankrupt because of medical bills. They couldn’t afford the care they needed. And to have that guarantee once you turn 65 or are so disabled that you qualify early, that you have a set of benefits, and you don’t have to be qualified by health, you qualify by age, has made a huge difference in this country.

And, Secretary Sullivan, what about Medicaid?

Former Health and Human Services Secretary: Medicaid has also contributed greatly to improving the health and access to health care for our citizens.

For example, 50 percent of the births in the country are paid for by Medicaid, most of the care for HIV/AIDS patients, poor patients and families. So this is really the safety net for the health system. So I think Medicaid, along with Medicare, are two successes that we can all congratulate.

At the same time, we know that so many more people in this country depend on these programs than was ever envisioned. The costs have skyrocketed to the government at the federal level, and, in the case of Medicaid, also at the state level.

Secretary Sebelius, how sustainable are these two programs?

KATHLEEN SEBELIUS: Well, I think that the cost issue is something that this administration particularly has taken head on.

And part of the framework around the Affordable Care Act was really to look at government spending on health and whether we’re getting the best bang for the buck. The good news, Judy, is in the five year since the president signed the ACA into law, health costs have risen at the lowest level in 50 years. And, in fact, Medicare was supposed to be insolvent by 2017. When I came in with the president, that was what the trustee report said. It’s now 2030.

And each year, years are added onto that solvency, because costs are going down, in spite of the fact that we have 11,000 people a day turning 65 in this country. We have a baby boom increase in Medicare, but the costs are lower than they have ever been.

JUDY WOODRUFF: At the same time, Secretary Sullivan, there is still concern about the long-term financial viability of these programs, isn’t there?

DR. LOUIS SULLIVAN: Oh, yes. And that’s a fair question.

I think all of us want to be sure that we do a better job in holding back the increases in health care costs. But one of the features in the Affordable Care Act that I’m very pleased with is a greater emphasis on prevention. I believe that the 21st century really will be the century in which we improve health literacy of our citizens and have them play a more active part in remaining healthy, staying out of the hospital, coordinating care better than we have been able to do it in the past.

So there are a number of things that can be done to help ameliorate the increase in costs, while seeing that our patients and our citizens get access to care.

JUDY WOODRUFF: How does that happen, Secretary Sebelius, in the long run?

And we already — we know many doctors are saying they won’t accept patients who come to them saying they depend on Medicaid. And, in some cases, Medicare physicians are saying they won’t see them.

KATHLEEN SEBELIUS: Well, it is still about 70 percent of the doctors, less than 100, but 70 percent take Medicaid patients. And almost 95 percent of doctors accept Medicare patients.

So we still have the vast majority of providers. But I think, again, it’s reasonable to look at what their payment is. Are they being compensated enough? And, as Dr. Sullivan said, what we don’t do very well is pay doctors for keeping their patients healthy in the first place. That payment system is changing rapidly within the government.

Paying for outcomes, paying for health, paying for people to actually have less contact with the hospital system is a new way of actually using the trillion dollars that the government spends every year to try and drive health and wellness, and not wait until somebody comes into the acute care system, goes into the hospital, does more tests, does more prescriptions. It’s really about health and wellness at the outset.

JUDY WOODRUFF: Secretary Sullivan, what else needs to be done?

We know there are proposals out there to cut benefits, to raise premiums, to make it harder for people at various income levels to access Medicare. What do you think needs to be done to make these programs sustainable?

DR. LOUIS SULLIVAN: Well, I believe there are a number of things that we can do.

For example, the 20th century was a tremendous growth in the scientific community, with many advances that really were miracles. We have developed vaccines of all kinds. When I was a medical student, I took care of patients with paralytic polio. In the mid-50s, when the polio vaccine was introduced, overnight, polio almost disappeared from our country.

But we have a misunderstanding with some of our citizens about the value of vaccines, where people have misunderstandings, so they’re not using these advances that have been made properly. So, that’s why I say we need to improve the health literacy of our citizens, have them understand the value of these scientific advances.

And they have to be partners with the health professionals to see that they get the care that they need. The 21st century is going to be a century in which our citizens play a more active role in maintaining their health, working with their health professionals. But we also need to have new kinds of health professionals.

We don’t need doctors or dentists in every town or hamlet. We have developed physician’s assistants and nurse practitioners. They are valuable members. In dentistry, we are developing dental therapists, mid-level dental providers. We can get care to citizens at less costs.

So there are a number of things we can do to change the way we provide care and keep our costs under control.

JUDY WOODRUFF: Just quickly, what would you add?

KATHLEEN SEBELIUS: Well, I think he’s right.

And I think the notion that people need more information, they want to stay healthy, they don’t know exactly what to do, but that, in the long run, focus on prevention and away from acute care, having a real health care system, not a sick care system, is really what I think the goal is in the long run.

JUDY WOODRUFF: Secretary Kathleen Sebelius, Secretary Louis Sullivan, we appreciate your being with us on this 50th anniversary of Medicare and Medicaid. Thank you.

Nice to be here

Thank you. And happy anniversary, Medicare.