Mayo Clinic Statement on Medicare Reform

August 21, 1998 Statement

Mayo Clinic supports patient-centered Medicare reform, based on the concepts of choice, competition, and innovation, with a defined role for government. Medicare should be transformed to a model similar to the Federal Employees Health Benefits Plan (FEHBP), where multiple private insurance options are available (including fee-for-service, health maintenance organizations, preferred provider organizations, point-of-service and others). The government should get out of the insurance business, and end price controls.

1. Patient-Centered System
   

   A patient-centered system empowers individuals to select physicians and hospitals via the health insurance plan of their choice.

   A model similar to the Federal Employees Health Benefits Plan allows choice and competition, as well as patient decision making and responsibility. The FEHBP model allows individuals a choice among private insurance plans, with a defined government financial contribution.

2. Choice
   

   Choice requires a private market with multiple providers and insurance options, and financial contribution from the federal government and individuals.

   Choice requires freedom to purchase care outside of the insurance plan at the patient's own expense.

   A diverse group of providers and insurance plans promotes competition, patient empowerment, personal responsibility, and innovation.

3. Competition
   

   Competition based on value is the best way to ensure both quality improvement and cost containment. Appropriate use of outcomes data will enhance quality, and provide the opportunity to compare outcomes across health insurance plans.

   Competition based on value cannot take place in an environment of government price controls.

4. Innovation
   

   Value-based competition is a catalyst for innovation.

   Research and education are the underpinnings of innovation. Research, education, and public health are societal benefits that should be supported by society as a whole.

   Research and education will both require more broad-based support than in the past because funding of these functions from the practice of medicine is diminishing greatly under the price-competitive practice environment.

   Support for graduate medical education should be expanded beyond the Medicare program. An all-payer trust fund model should be established to support adequately graduate medical education.

5. Government Role
   

   The government should coordinate the competition among health insurance plans, in a manner similar to the role of the Office of Personnel Management under the FEHBP model.

   The government payment for each Medicare beneficiary should be determined based on a scientifically valid risk-adjustment method in order to insure that everyone has access to available insurance plans.

   The government should continue to provide support for hospitals serving rural and low income populations, as well as for research and education as previously noted.

Commentary

Mayo Clinic supports a model similar to the Federal Employees Health Benefits Plan as the centerpiece of Medicare reform. We reach this conclusion based on our long-held health policy principles, and on the demographic realities. We have always supported a system that maximizes individual choice, individual decision making, and individual responsibility, yet provides a basic level of health care coverage for all. Such a system maximizes both quality and cost containment.

The demographics of the aging baby boom generation likewise demand a model that affords maximum flexibility for patients, yet provides basic coverage for all. As the ratio of elderly beneficiaries to younger workers significantly increases, the current Medicare model will no longer be viable without a significant increase in payroll taxes, which is unlikely in the current political environment. Attempting to continue to fund the current model by further reducing provider reimbursement will likewise not be viable, and puts the entire health care system at risk. In addition, the proposal would remove the government from its current bureaucratic role in which complex regulations, micromanagement, and burdensome documentation requirements breed patient and provider dissatisfaction and negatively affect patient care.

The intersection of our health policy principles and the demographic realities of Medicare is a model similar to the Federal Employees Health Benefits Plan (FEHBP). The FEHBP model includes a benchmark basic set of benefits that must be covered, maximum flexibility in benefit design, multiple choices of insurance plans and options, and a defined government contribution that can be augmented by the individual to pay for additional coverage. The model maximizes individual choice and minimizes government micromanagement of the health care system.

Mayo is not recommending expansion of Medicare to younger retirees at this time. However, we believe that the model we are recommending provides the flexibility to extend Medicare coverage to additional groups in a self-funding manner. Early retirees for example could have access to the private Medicare options, but without any government financial contribution to the premium cost.