JustCare

Category: Medicare

  • Medicare is the solution to out of control health care costs, everyone should be able to buy into it

    Medicare is the solution to out of control health care costs, everyone should be able to buy into it

    In a new two-minute video for MoveOn, Robert Reich makes the case for why Medicare is part of the solution to fixing our economy. We should be expanding it and offering it to everyone in America through the Affordable Care Act’s state health insurance exchanges. Seven out of ten likely voters (71 percent) support giving all Americans the choice of buying into Medicare as a way to drive competition in the health insurance marketplace.

    Medicare is far more cost-effective than private health insurance. Because Medicare covers more than 50 million older adults and people with disabilities who need a lot of health care, the government is able to negotiate doctor and hospital rates that are lower than what the private insurers are able to negotiate. And, if Congress would lift the prohibition on Medicare negotiating drug prices with the drug companies, it would be able to bring those prices down as well.

    At the same time, traditional Medicare gives people the option of seeing virtually any doctor and using almost any hospital in the country, in most instances, with no out-of-pocket costs so long as they have supplemental insurance or Medicaid. That’s why the overwhelming majority of people newly eligible for Medicare enroll in traditional Medicare.

    Those in Congress proposing to cut Medicare and shift more people into private Medicare HMOs and other private health plans need to recognize that the private plans mean higher health care costs for all. They are unable to use their leverage to bring down costs.

  • Trans-Pacific Partnership-Related Bill Contains A Medicare Poison Pill

    Trans-Pacific Partnership-Related Bill Contains A Medicare Poison Pill

    New disturbing information has surfaced that the House Republicans’ trade adjustment assistance bill, which supports the Trans-Pacific Partnership (TPP) trade deal, contains a Medicare poison pill.

    The bill includes $700 million in Medicare cuts at the end of a 10-year budget period to cover the cost of trade adjustment assistance for displaced workers, Americans who will lose their jobs because of lower cost imports. Please let members of Congress know that they should not support the bill in its current form.

    Covering the cost of assistance for displaced workers is important. But, in the words of several groups representing older Americans, including the Medicare Rights Center and The Alliance for Retired Americans, “Medicare should not be used as a piggy bank every time the government needs funding for other purposes.”

    Older adults with Medicare are already experiencing an insecure retirement. And, as currently written, if the bill is passed, it is the people with Medicare and their health care providers who are on the line.

    The bill is up for a vote this week, and there’s a huge effort underway to halt passage of the bill. We need to fight the Medicare cuts in the trade adjustment assistance bill, just as we need to ensure that the TPP does not further drive up the price of prescription drugs in the United States.

    The Medicare cuts in the trade adjustment assistance bill supporting the Trans-Pacific Partnership set a dangerous precedent, allowing Congress to treat Medicare like its own personal piggy bank. Please sign the CREDO petition to stop this attack on Medicare.

  • New Medicare law will make some wealthier individuals pay more

    New Medicare law will make some wealthier individuals pay more

    A new Medicare law—the Medicare and CHIP Reauthorization Act, or MACRA—went on the books April 15. It makes some pretty big changes to the program. Previous Just Care posts took issue with some of its provisions. See here and here. If you are in your 60s or enrolled in Medicare now, the big news is this: beginning in 2018, the new Medicare law will make some wealthier individuals pay more–higher premiums for both Part B (physician and outpatient services) and Part D (prescription drugs). They already do, but the amount is increased. The specifics:

    • If your annual income is below $133,500 as an individual or $267,000 as a couple, your Part B and D premiums will not be ratcheted up. That encompasses more than 90% of people on Medicare. You’ll still be subject to the normal annual premium uptick, which will be calculated according to existing law and not the new law. You can see current Part B and Part D premium details here and here. The Part B monthly premium in 2015 is $104.90, or $1,258.80 per year. The vast majority of people pay that.
    • If your income is between $133,500 and $214,000 as an individual or $267,000 and $428,000 as a couple, you’ll pay a higher premium than lower income people. You already do, but the amount is increased starting in 2018. The exact amount will be pegged each year to program costs, in two tiers. For example, couples with incomes between $267,000 and $320,000 will have to pay a premium that reflects meeting 65% of program costs, up from 50%. Couples with incomes above $320,000 will have to pay a premium that covers $80% of program costs, up from 75%. People in lower income brackets pay a premium that covers 25% of program costs.
    • If your income is above $214,000 as an individual or $428,000 as a couple, your premiums will not be ratcheted up higher than they already are.

    That’s not , we know, but worth understanding, especially if you have Medicare and are in this higher income bracket. The bottom line is that wealthier individuals will have to pay an additional $1,000 or so a year in Part B premiums under the new law.

    • The new law makes permanent a Medicare program that pays the Part B premium for people with low-incomes, those with incomes between 120% and 135% of the federal poverty level, or currently about $14,000 to $15,900 a year. (It also makes permanent a program that allows low-income families to maintain Medicaid coverage for up to one year as they transition from welfare to work.)
    • Starting in 2020, Medigap policies would no longer be allowed to provide what’s called “first dollar coverage.” That’s when the policy covers all of the Part B deductible as well as coinsurance. Only a few types of Medigap policies provide such coverage now. The 2015 Part B deductible is $147. The rationale for this change is that first dollar coverage incentivizes people to seek unneeded care since they aren’t on the hook for the tab. Again, see our previous post on this new provision here.

    The law changes the way Medicare pays doctors starting in 2019. The change is significant but it’s way too early to speculate on its impact. Medicare has for several years been slowly transforming doctor payment, shifting from a system that pays them a fee for every service no matter what the outcome to one that holds doctors more accountable for the quality of care they deliver. For a discussion of that provision, see here.  The Kaiser Health News has a good Q&A on the law.

  • New federal law precludes people from buying coverage for Medicare Part B deductible

    New federal law precludes people from buying coverage for Medicare Part B deductible

    A new federal law, which Obama signed on April 16, precludes people with Medicare from buying supplemental insurance that offers first-dollar health care coverage. Requiring people with Medicare to pay the Medicare Part B deductible will impede access to needed care for many of them and is bad public policy.

    If Medicare supplemental insurance does not cover the deductible, it forces those who need health care to pay more for their care or to forego it. The cost of the insurance policy should come down a little.  But, Medicare becomes more expensive for people who need to see the doctor.  The value of having supplemental insurance cover the deductible is that it pools risk; everyone shares in the cost of the deductible regardless of whether they need care, bringing down costs a little for those who need it.

    For sure, requiring people with Medicare to pay the Part B deductible (currently $147) themselves will keep some of them from getting health care services they need because of the cost. It will be harder for them to budget for their care and to have predictable out-of-pocket costs. Based on the research, it will no more dissuade them from getting care they don’t need, the purported reason for this proposed change in the law, than it will keep them from getting care they do need.

    The new law’s provision prohibiting Medicare supplemental insurers from offering policies with first dollar health care coverage would apply only to people newly eligible for Medicare beginning in 2020. The law discriminates against people buying supplemental coverage in the individual market since people with supplemental coverage from their former employers will still be able to have first-dollar coverage. The law also weakens Medicare by raising premiums for wealthier individuals with Medicare and positioning Medicare as a welfare program rather than a social insurance program. 

    The law does benefit many people with Medicare in two important ways. It pays for the Qualifying Individuals program that covers the Medicare Part B premium for about 500,000 people with incomes between 120 percent and 135 percent of the Federal Poverty Level ($14,100-$19,100 for individuals). And, it fixes payments to doctors, preventing a 21 percent cut in their fees. A cut that large would likely push many doctors to stop providing care to people with Medicare.

    In short, the law–a fix in Medicare payments to doctors, an extension of the Qualifying Individuals program and the Children’s Health Insurance Program–seem to outweigh the risks–a weakening of Medicare through a premium increase to some individuals with high incomes and an end to first-dollar coverage through a Medicare supplemental insurance policy.

  • Proposed Medicare premium hike would weaken Medicare

    Proposed Medicare premium hike would weaken Medicare

    In late March, the U.S. House of Representatives passed a bill with bi-partisan support that would again raise Medicare premiums for people with Medicare with higher incomes. Today, the Senate passed the legislation, and President Obama has said he will sign it.

    Through this bill, H.R. 2, Congress does some good. It fixes the payment formula for doctors who treat Medicare patients, ensuring they are paid adequately; it also extends the Children’s Health Insurance Program. But, hiking Medicare premiums, even a small amount for wealthier individuals, as a way to cover these costs weakens Medicare for everyone.

    Driving up insurance costs for people with Medicare with higher incomes is bad policy. Insurers don’t charge wealthier people higher premiums for the same product and neither should Medicare. In fact, until 2003, during the Bush administration, everyone with Medicare paid the same premium. Higher premiums for higher income earners helps position Medicare as a welfare program, makes it easier for Congress to increase premiums on middle class individuals with Medicare next-time it seeks money, and paves the way for the privatization of Medicare.

    The overwhelming majority of people with Medicare already pay a $105 monthly premium for Medicare Part B, which covers medical and outpatient services.  That amount represents 25 percent of Medicare costs,  (Medicare Part A is free for anyone who has worked forty quarters and made payroll contributions to Medicare.)  But, today, six percent of people with Medicare–2.9 million people with incomes over $85,000 and couples with incomes over $170,000–are required to pay as much as 80 percent of Medicare’s costs. If H.R. 2 becomes law, it will raise Part B and Part D premiums for some wealthier individuals–those with incomes between $133,500 and $214,000–about another $1,000 a year ($82 a month) beginning in 2018.

    Medicare is a social insurance program and not a welfare program. And wealthier Americans already make larger payroll contributions into Medicare.  While most people affected by the proposed premium increase will not feel its effect, there are better ways to generate revenue to support Medicare, such as through a more progressive tax system or a financial transaction tax or through negotiated drug prices.

    In short:

    1. The more that wealthier individuals are asked to pay for Medicare, the more Congress positions it as a welfare program and erodes support for Medicare. It opens the door further for Congress to charge middle-income Americans with Medicare higher premiums. Medicare was created as a social insurance program that treats everyone equally, regardless of income, geography, health status.  This helps ensure broad support from people across the income spectrum.
    2. A more progressive tax system that affects everyone is the way to ensure wealthy Americans contribute their fair share to society, while keeping social insurance programs strong. For sure, people with Medicare earning $133,500 and more yearly are generally in good financial shape.  Certainly they are relative to the other 94 percent of the Medicare population. But, who knows what’s in store next on the Medicare premium front. Turning Medicare into more of a welfare program by imposing additional financial burdens on wealthier people is a poor policy choice.

    The House bill also prohibits Medicare supplemental insurers from selling insurance that covers the Medicare Part B deductible. That’s another poor policy choice.

    To be clear, the amount of the additional Medicare premium increase in H.R. 2 is just under $1000 a year.  The combined Medicare Part B and D premiums would increase $82 a month beginning in 2018.  And, this increase would only apply to individuals with incomes between $133,500 and $214,000 and couples with incomes from $267,000 to $428,000.  But, it could be the tip of the iceberg. 

  • Significant drop in hospital infection rates since 2010

    Significant drop in hospital infection rates since 2010

    When we’re hospitalized, most of us worry about getting good treatment for the condition for which we were admitted. But, it’s important to understand that far too many people acquire an infection while hospitalized that is completely unrelated to the reason for their admission. The good news is that a new report from the Agency for Healthcare Research and Quality (AHRQ) reveals a 17 percent drop in hospital infection rates and other hospital-acquired conditions (HACs) between 2010 and 2013.

    According to AHRQ, about 1.3 million fewer people contracted HACs during that time, and about 50,000 fewer people died in hospital as a result.  Though the exact causes for this drop in HACs is not known, AHRQ believes that Medicare payment incentives and HHS’s Partnership for Patients Initiative led to heightened hospital attention to patient safety.

    Hospital-acquired conditions can take several forms and be costly to treat.  Among other things, they can be falls, pressure ulcers, adverse drug events, surgical site infections, central line infections, catheter-induced urinary infections or ventilator-induced pneumonia. AHRQ attributes different costs to treating each HAC. For example, AHRQ estimates that each case of pressure ulcers costs  $17,000 to treat and each adverse drug event costs $5,000. Reducing their frequency in 2011, 2012 and 2013 led to a cumulative cost savings of just shy of $12 billion.

    The reduction in adverse drug events was almost as big as the reduction in all other HACs.  Hospital rates of adverse drug events dropped almost 44 percent over three years.  By comparison, pressure ulcer rates fell 22 percent.But, the reduction in pressure ulcers contributed most significantly to the number of lives saved.  The 22 percent reduction in pressure ulcers saved an estimated 20,272 lives; the 44 percent reduction in adverse drug effects saved an estimated 11,540 lives.

    Medicare’s focus on addressing the HAC problems that the HHS Office of the Inspector General surfaced in 2010 seems to have paid off.  Back then, the Office of the Inspector General reported that almost three in 10 Medicare patients (27 percent) had been harmed as a result of care they received in hospital.

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  • Most Americans want the choice of a government-administered health plan, like Medicare

    Most Americans want the choice of a government-administered health plan, like Medicare

    A December 2014 New York Times/CBS News poll shows that almost six in ten Americans (59 percent) favor the choice of a government-administered health plan like Medicare. Health-care costs have become prohibitive for many. Americans want to see new solutions to rising costs.

    Today, almost half of all Americans (46 percent) are finding it a hardship to afford medical care. That’s up nearly 30 percent from last year (36 percent).   Out-of-pocket costs have risen in the last few years, according to about half of the survey respondents.  And, one third of Americans say they have risen a lot.

    Almost three quarters of those surveyed say that treatments have become more expensive. Increasingly, health plans are requiring people to pay a percentage of the cost of care rather than a small flat rate.

    Slightly more than half of respondents (56 percent) said that they were as likely to go to the doctor now as a few years ago.  And, some (18 percent) said that they were more likely to get care.  But, almost one in four (24 percent) said that they were less likely to see the doctor today.

  • Americans with Medicare are most satisfied with our health care system

    Americans with Medicare are most satisfied with our health care system

    According to two Gallup polls over the last year, people over 65 with Medicare are more satisfied with their health insurance than people under 65 with commercial insurance.

    One poll found that people with government-provided health insurance, including people with Medicare and VA coverage, are more satisfied with their health care coverage than other Americans.  Almost four out of five people 65 and older are satisfied with their treatment by the health care system (79 percent of people with Medicare, Medicaid and VA coverage) as compared with about three out of five people between 18 and 45 (61-66 percent).

    More specifically, people without health insurance are the least satisfied with the health care system (36 percent). People with military or veterans coverage are the most satisfied (77 percent) and people with Medicare or Medicaid are the next most satisfied (76 percent).For this survey, Gallup did not separate out satisfaction rates for people newly insured in the health insurance exchanges.  They plan to do so in future polls as soon as practicable.

    The survey also does not speak to the reasons why people over 65 are more satisfied with the health care system than the rest of the population.  Joe Baker, president of the Medicare Rights Center, speculates it’s because Medicare and Medicaid coverage are easier to use than private insurance and in most cases provides better protection against financial risk.  “For sure, Congress can improve Medicare.  But, compared with the hassles of referrals and huge copays and deductibles with private insurance, Medicare is relatively simple.”

    The second survey reveals again that people over 65 are more satisfied (79 percent) with our health care system than any one else.  It further shows that people with health insurance are far more satisfied with the health care system (70 percent) than people without health insurance (37 percent). Interesting, Democrats and Democratic-leaning independents are more satisfied with the health care system (74 percent) than Republicans and those who lean Republican (60 percent).

  • Medicare’s future is bright

    Medicare’s future is bright

    In the second part of his presentation to the National Academy on Social Insurance, Medicare and Medicaid: The Next 50 Years, Princeton health economist Uwe Reinhart sees great promise in Medicare’s future.  He makes mincemeat of all the “serious people” who worry about Medicare’s sustainability because the U.S. population is aging.Today, people over 65 represent 14.7 percent of the population and in 35 years, 2050, that percentage will jump to 20.3 percent. If real inflation adjusted GDP per capita grows at 1.5 percent annually, Medicare spending will account for 8.7 percent of the nation’s gross domestic product (GDP) in 2050, up from 3.6 percent in 2005.  The “serious people” suggest that this is a serious problem. However, few of them publicly acknowledge that just as Medicare spending will grow, GDP will grow. In 2005, per capita GDP was $40,000; by 2050, per capita GDP will grow to $73,000.

    So, even with Medicare spending at 8.7 percent of GDP, in 2050, there will be a lot of additional money to spend to provide a financially secure, healthful retirement for Americans. We will have $66,600 of non-Medicare GDP per capita, up from $38,600.  In short, Reinhardt makes the case that we have the resources and the reason to strengthen benefits for people with Medicare if we want true retirement security to be part of the social contract.

    Not only that, there’s room for us to raise taxes without impeding economic growth.  In 2012, we had lower taxes as a percent of GDP than every country in the Organisation for Economic Co-operation and Development (OECD) except Mexico, at 24.3 percent.  Denmark’s is 48 percent and Canada’s is 30.7 percent.  And, the US has had lower economic growth than many other OECD countries with higher taxes.

    Most cynically, Reinhardt suggests that the moneyed interests may be our best allies in ensuring that Medicare remains strong – as long as they get a slice of the larger economic pie.  After all, Congress passed both Medicare and the Affordable Care Act after paying off powerful industries. Who knows – that just might get the serious people to change their tune.

  • Medicare controls costs while private insurers sit idly by

    Medicare controls costs while private insurers sit idly by

    In a presentation to the National Academy on Social Insurance that traces Medicare’s 50-year history, influential Princeton health economist Uwe Reinhardt explains how Medicare controls costs, despite the overwhelming influence of special interests in shaping Medicare when it was passed into law in 1965.

    We hear a lot of talk from the health insurance industry about how hard it works to hold down health care costs, but that claim doesn’t stand up to scrutiny. The surprising truth is that when insurance companies adopt new techniques to rein in health costs, they take their cues from the phenomenally successful Medicare program – all run by Uncle Sam.

    Congress was able to pass Medicare only by satisfying the demands of the American Medical Association and the American Hospital Association that doctors and hospitals be paid whatever they wanted to charge. You know what that gave us, exorbitant prices. In Reinhardt’s words these special interests made Congress “surrender to them the key to the Treasury.”

    For Medicare to become law, it would have to be a cash cow for doctors and hospitals. Wilbur Cohen, one of Medicare’s chief architects said: “I was required to promise before the final vote in the Executive Session of the House Ways and Means Committee that the Federal Agency [to be in charge of administering Medicare] would exercise no control.”  No one could question the necessity of the care provided or the prices charged.Despite these constraints, Medicare has still managed to do a far better job of containing costs than private insurance.

    Per capita health costs for people with Medicare have grown at an average annual rate of about 1.5 percentage points less than private insurance from 1969 through 2012.

    Reinhardt attributes Medicare’s slower cost growth to what the ultra-conservative American Enterprise Institute bitterly calls “Soviet-style pricing” – even though the pricing schemes were imposed by Ronald Reagan and George H.W. Bush. As a result, Medicare today has cast off the shackles of the 1960s and now controls most of the prices it pays. This is in sharp contrast to private insurance companies, who until the Affordable Care Act simply raised rates any time they pleased.Some people object to the way Medicare sets prices.

    But, Reinhardt notes that the methodology and the prices are fully transparent, unlike with private insurance. Medicare has been the chief innovator on pricing, leading the way for everyone else. Private insurers and other nations have copied many of our government’s approaches to pricing for Medicare.

    Yet that that doesn’t prevent hospitals from setting their prices for everyone not yet eligible for Medicare arbitrarily, driving up costs. Reinhardt shares a 2004 quote from William McGowan, then chief financial officer of University of California-Davis Health System, a 30-year veteran of hospital financing: “There is no method to this madness. As we went through the years, we had these cockamamie formulas. We multiplied our costs to set our charges.”

    And as we often have seen, insurers have little negotiating power with the hospitals—especially the biggest and most prestigious ones. That’s why prices for the same procedure vary considerably in different regions and often within only a few miles.

    Because insurers cannot or will not rein in provider fees, those not yet eligible for Medicare are left holding the bag as deductibles and copayments climb. Some call that consumer-directed health care.  We might want to call that insurer-mandated costs.

    This slide speaks volumes:6317357_orig

    In part two, we share Reinhardt’s insights on Medicare’s future.