Modernizing USA's Medicare and Medicaid could save the federal government $542 billion over next decade; report

The US federal government, confronting an enormous fiscal challenge, could save up to $542 billion in Medicare and Medicaid spending over the next 10 years through a proven “third strategy” for modernizing health care and improving patient outcomes, according to a new report by UnitedHealth Group’s (NYSE: UNH) Center for Health Reform & Modernization.

The current national debate about Medicare and Medicaid has largely centered on either cutting patient benefits or cutting provider payments. This report analyzes a third strategy: unlocking savings through applying best practices for improved prevention, care coordination and payment reform to Medicare and Medicaid. Around 75% of the nation’s roughly $1 trillion of Medicare and Medicaid annual spending still relies on outdated indemnity-style benefits and siloed fee-for-service provider reimbursement.

“Real world evidence now shows that Medicare and Medicaid can be modernized, helping deal with the massive fiscal threat the country faces, in a way that is a win-win for people who depend on these critical programs, and for the taxpayers who fund them,” said Simon Stevens, chairman of the UnitedHealth Center for Health Reform & Modernization, executive vice president of UnitedHealth Group, and one of the paper’s authors.