The Future of Medicare: A Conversation with Sean Cavanaugh

On March 28, 2017, NYHealth hosted a conversation with Sean Cavanaugh, one of the nation’s leading experts on Medicare, to discuss what is in store for Medicare in this rapidly changing health care landscape.

From 2014 to 2017, Mr. Cavanaugh served as the Deputy Administrator and Director of the Center for Medicare at the Centers for Medicare & Medicaid Services (CMS), where he oversaw the regulation and payment of Medicare fee-for-service providers, privately-administered Medicare health plans, and the Medicare prescription drug program. Prior to that, he was Deputy Director for Programs and Policy in the Center for Medicare and Medicaid Innovation (CMMI).

Mr. Cavanaugh opened with a question: Where is Medicare in this ongoing national health care debate? Though most of the attention so far has been paid to the more politically controversial pieces of the Affordable Care Act—such as subsidies, the individual mandate, and Medicaid expansion—Mr. Cavanaugh says that the attention will soon turn to Medicare. Speaker Paul Ryan repeatedly has said that because the elderly population is growing and the governmental Trust Funds (through which the program is funded) are losing money, Medicare is in trouble and needs to be completely reformed.

Though Medicare enrollment is set to increase by one-third between 2015 and 2025, Mr. Cavanaugh believes that the Medicare crisis has been exaggerated. First, Medicare beneficiaries are receiving the highest quality of care in history and are increasingly happy with their care.  Second, although the Trust Funds are losing money, there are other ways to finance Medicare. To the second point he explained that there has been essentially no increase in per capita spending on Medicare between 2009 and 2016. Also, the new, innovative ways that we pay for care—Accountable Care Organizations (ACOs), bundled payments, CMMI demonstrations, and the Medicare Access and CHIP Reauthorization Act—provide even more opportunities to save money for Medicare.

He expressed disappointment that he was unable to reform the way Medicare pays for prescription drugs, as it is one of the most expensive pieces of the program, but explained that there was no political will to do so while he was in office. However, he is proud of the progress that CMS made in new payment structures during his tenure, specifically with ACOs.

Ultimately, he expressed cautious optimism: Medicare is not in crisis yet, but if the current administration or Congress needs money to pay for other programs, they could cut the Medicare budget to do so.