I would like to thank Michelle Serber for her assistance in assembling the information contained in this testimony and preparing the testimony itself, and Karen Davis and Stephen Schoenbaum for their helpful comments and suggestions.
The Medicare Program, created in 1965, was designed to ensure access to needed health care for the elderly population—half of whom lacked insurance to protect them against the potentially catastrophic costs of major illness. It has served that purpose well for more than 40 years. Over that time, Medicare has become one of the most popular government programs, generating consistently high satisfaction levels among its now 43 million elderly and disabled beneficiaries.
Medicare was designed to deal primarily with the effects of acute illness, which was seen at the time of its implementation as the major threat to the health and financial security of the aged. While the health care delivery and financing system in the United States remains largely oriented toward acute care, demographic and other trends are putting pressure on that system—and on Medicare particularly—to change. Health care spending overall is growing more rapidly than our economy can sustain, and Medicare faces the additional pressure of a wave of post-World War II baby boomers set to begin retiring within the next few years.
At the same time, for all we spend on health care, there are significant issues with the safety, quality, and efficiency of care, and that care is poorly coordinated across providers. This problem is especially important for Medicare, whose aged and disabled beneficiaries need and use more health care and are more likely to have chronic conditions than the rest of the population. Consequently, Medicare must play a more proactive role in making sure that appropriate, high-quality, and efficient health care is available for the elderly and disabled.
In response to these imperatives, the Centers for Medicare and Medicaid Services (CMS) is implementing an array of initiatives to address the evolving needs of the Medicare program and its beneficiaries. Many of these initiatives have been developed under CMS's demonstration authority, which allows the agency to waive certain Medicare payment rules that determine what services are covered and how they are paid in order to test potential improvements; others have been specifically mandated by Congress.
This testimony will describe Medicare's initiatives to improve care for beneficiaries with chronic conditions. I will then discuss what these initiatives may tell us about how to accomplish that goal.