At 50, Medicare Needs to Rein in Costs

Fifty years after the establishment of Medicare and Medicaid, more than 100 million Americans now rely on them for health insurance. Despite flaws, the legislation that made health care affordable for the elderly and the poor in our country have been a shining success. However, it is crucial that Congress and the Centers for Medicare and Medicaid Services (CMS) halt rising drug prices and fraud if they expect to celebrate this success fifty years from now.

This week, the nation celebrates the 50th Anniversary of President Lyndon B. Johnson signing the amendment to the Social Security Act creating Medicare and Medicaid on July 30, 1965. The push for government sponsored health insurance took more than 20 years, with President Franklin Delano Roosevelt leaving it out of his proposal for Social Security in the 1930s and President Harry S. Truman proposing national health insurance in both 1945 and 1949.

Despite its early controversy, Medicare remains one of the most popular government programs in the country. However, the affordability of government health insurance will be tested in the next ten years due to rapidly escalating drug costs and continued fraud in the system. By 2024, the cost of Medicare is expected to increase to $1.1 trillion annually.

A significant reason for the increase is the price of drugs. It should come as no surprise that drug prices have increased since the 1960s, as even the cost of a McDonald’s hamburger has risen from its original price of just 15 cents. Yet, increases in prescription drug spending have far outpaced inflation during that time period. In 2015 alone, spending on prescription drugs is expected to increase 7.6 percent. As prices for some courses of treatment begin to approach or exceed $100,000, it is necessary to take measures to halt this price growth.

One measure that can and should be adopted is to allow Medicare to negotiate drug prices. President Obama has already called for the authority to negotiate prices with pharmaceutical companies under Medicare Part D, the program that provides prescription drug coverage. Congress did not initially provide CMS with this authority when it created Part D in 2003. It must do so now.

Fraud is another massive problem in the system contributing to the high cost to taxpayers. Out of the projected $600 billion in Medicare spending to provide health care in 2014, the U.S. Government Accountability Office estimates that the agency made improper payments totaling approximately $60 billion. The government must do more in the fight to rein in this spending.

Recognizing the contributions that whistleblowers play here would be an easy first step. Since 1987, health care whistleblowers have helped the United States recover more than $20 billion in taxpayer dollars spent due to fraud.

In tandem with the 50th anniversary of Medicare, the U.S. will also celebrate the passage of the first whistleblower law this week. On July 30th, 1778, the Continental Congress passed the first law protecting whistleblowers of the United States. For the past few years, Senator Grassley has proposed and the Senate has declared this day National Whistleblower Appreciation Day. It is expected to happen again this year.

There is now a call by the National Whistleblower Center to make it a permanent day of appreciation for those who have served our country by exposing fraud, waste, misconduct and other violations of the laws of our nation. This is warranted and a simple way to encourage more people to come forward to report unnecessary spending. The False Claims Act has been the government’s most effective law against fraud in the history of the United States. When Congress amended the law in 1986 to strengthen the public-private partnership to protect taxpayer dollars from fraud, it recognized the important role of whistleblowers. If we hope to cut down Medicare spending due to fraud, we should do so on an annual basis.

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