David Kendall, of the Washington, D.C.-based think tank Third Way, is a Capitol Hill veteran with progressive ideas about how to reform Medicare.

“What we (Third Way) would like to do this next year is to lay the groundwork for a grand bargain on health care cost-control to further ensure stability and security for the middle class,” Kendall said in an interview with The Medicare NewsGroup. “These costs are eating us alive.”

Of course, most legislators and industry players say they want to cut costs, yet the political climate surrounding health care reform, and specifically Medicare cuts, is one of deep divisions. U.S. House Republicans are working to repeal components of the 2010 Affordable Care Act (ACA) and would like to replace traditional Medicare with a system that puts more financial responsibility on the beneficiary.

The U.S. Supreme Court will be hearing a challenge to the individual mandate component of the ACA, which stipulates that certain citizens must purchase insurance. A ruling on the constitutionality is expected in June 2012. Traditional Medicare is Hospital Insurance (Part A) and Medical Insurance (Part B). Kendall says viable ways to reign in costs must be addressed immediately, and he criticizes the Republican plan for taking too long to implement the cuts.

Kendall published a memo in November titled, “A Health Policy Failsafe for the Super Committee,” a guide for the Congressional super committee, which tried and failed to cut $1.2 trillion from the deficit. In his memo, which reflects ideas expressed in other articles he’s authored, Kendall outlines changes to health care that would be acceptable to independent voters and goals that are palatable to those on both sides of the political debate, including improving patient care and raising contributions from wealthy beneficiaries.

Kendall is no stranger to Capitol Hill politics. He served for seven years on the staff of former Rep. Michael Andrews (D-Texas), as well as on the President’s Task Force on National Health Care Reform in 1993. As an outspoken proponent of Medicare reform, Kendall has been viewed as “radical,” a label with which he takes issue. He described himself as the “modern voice of policies that can enable progressives to succeed in the modern space.”

Indeed, Kendall believes President Obama’s Affordable Care Act (ACA) is a moderate piece of legislation, noting that the Democrats ultimately ended up rejecting a public plan and a single-payer proposal. Even with the reforms that were made in the ACA, there are many ways to cut costs, Kendall said.

One way that must be addressed is improving care for beneficiaries with chronic diseases, especially those seniors who fall into the “dual eligibility” category of receiving benefits from Medicare and state-based Medicaid. Nine million Americans fall into this category; they make up 16 percent of the Medicare population, but account for about one-quarter of its spending. Coordinating care between agencies and creating lifetime medical records, preferably electronic, are two ways to create cost-saving efficiencies in the system.

“David has been out in the front early, advancing these kinds of concepts,” Karen Ignagni, president and CEO of America’s Health Insurance Plans (AHIP) told The Medicare NewsGroup.

Kendall is not a paid consultant for AHIP,” Ignagni said. “He has been a very thoughtful voice that blends a very deep understanding of policy with a strong sense of the political realities and what it takes to move something forth.”

Chronic disease prevention for such conditions, including diabetes and heart disease, should be at the forefront of health care reform, Kendall says. The Center for Disease Control (CDC) has developed a proven, cost-effective weight loss program that can prevent these diseases, and Congress should expand this program nationwide, Kendall said. Doctors also need to have the right incentives to keep patients healthy, as opposed to the current system in which providers are paid on a fee-for-service (FFS) basis.

“We need to refocus Medicare on health outcomes,” Kendall said. “Right now, it’s based on paying the bills and limited management of what we’re paying for. It should become accountable for how well it is improving people’s health.”

Another “acceptable” way to pay for Medicare would be to ask wealthier recipients to pay more. In fact, the current House Plan, written by Republican Rep. Paul Ryan (R-Wis.) proposes “premium supports,” or vouchers for beneficiaries to buy insurance. Lower-income beneficiaries would pay less than wealthier Medicare recipients.

“I think what we see is that people who are wealthy recipients ask, "Why is the government wasting money on me?” Kendall said.

The changes that Kendall proposes in terms of Medicare financing, which would come from income taxes, would total $30 billion in savings during the next 10 years, according to his report.

-- by Susan Pasternak for The Medicare NewsGroup