JustCare

Tag: Medicare Trust Fund

  • Medicare Advantage overpayments drive up Medicare premiums by $220 billion

    Medicare Advantage overpayments drive up Medicare premiums by $220 billion

    If Republicans are serious about eliminating government waste and protecting Medicare and Medicaid, they will end Medicare Advantage overpayments; in addition to strengthening Medicare, ending these overpayments would lower premiums for older adults and people with disabilities by $220 billion. Ending these overpayments would also add $550 billion to the Medicare Trust Fund.

    Ending government overpayments to Medicare Advantage insurers would put spending in Medicare Advantage on a level playing field with traditional Medicare. Ending overpayments would mean reducing already high MA insurer profits, not Medicare benefits. Reducing overpayments would strengthen the Medicare program.

    Here’s the data revealing the excessive costs of Medicare Advantage relative to traditional Medicare as well as the toll it is taking on the out-of-pocket health care costs of older Americans and people with disabilities and the Medicare Trust Fund. 

    Medicare overpays Medicare Advantage insurers

    • “The MA program has been expected to reduce Medicare spending since its inception—under the original incorporation of private plans in Medicare in 1985, payments to private plans were set at 95 percent of FFS payments—but private plans in the aggregate have never produced savings for Medicare, due to policies governing payment rates to MA plans that the Commission has found to be deeply flawed.”
    • According to the Medicare Payment Advisory Commission (MedPac), the program’s watchdog agency, Medicare Advantage plans cost taxpayers 20% more than traditional Medicare, amounting to a projected $84 billion in 2025.
    • The Committee for a Responsible Federal Budget reports that overpayments to MA plans will total  $1.2 trillion dollars over the next decade.
    • A report by the Wall Street Journal of roughly 2 billion diagnoses covering 84% of the nation’s MA enrollees from 2018-2021 found that MA insurers collected $50 billion in payments for diseases that doctors never diagnosed or treated.

    Medicare Advantage overpayments strips billions from the Medicare Trust Fund

    • The Committee for a Responsible Budget reports that eliminating the overpayments would save the Medicare Trust Fund $550 billion.

    Older adults and people with disabilities pay higher premiums because of Medicare Advantage

    Here’s more from Just Care:

  • If passed, reconciliation bill in Congress is likely to strengthen Medicare Trust Fund

    If passed, reconciliation bill in Congress is likely to strengthen Medicare Trust Fund

    Senator Manchin might be terrible on climate policy or raising taxes on the wealthiest Americans, but he does not appear to have thrown a wrench into a policy that would strengthen the Medicare Trust Fund, extending its solvency three years. Jean Ross and Seth Hanlon report for the Center for American Progress on a provision agreed to in the US Senate reconciliation package that would close a Medicare loophole and raise more than $200 billion in revenue for Medicare over the next 10 years.

    The reconciliation act provision is less a tax increase and more a tax equalizer, requiring people who have in the past dodged Medicare taxes to pay the taxes that working people and small-business owners already pay.

    Right now, employers and workers split a payroll contribution of 2.9 percent. The Affordable Care Act (ACA) added an additional 0.9 percent to that pot for high-income individuals. The ACA also applied a 3.8 percent contribution to net investment income, unearned income like capital gains, dividends and interest and business income.

    But, the ACA included a tax loophole for people whose income comes from an S corporation, a limited liability company or limited partnership and who participate actively in these businesses.  Partners in private equity funds, doctors, lawyers, entertainers and others are among these individuals. The provision in the reconciliation package would close this loophole for individuals with income over $400,000 and couples with income over $500,000 and make the tax code a bit fairer.

    Almost everyone who would pay this new tax is in the top 1 percent of income earners, with annual income above $680,000.

    As of now the Medicare Trust Fund will start paying out more than it takes in in 2028. This provision would extend its solvency to 2031.

    Here’s more from Just Care:

  • Coronavirus: Medicare Trust Fund has reserves until 2026

    Coronavirus: Medicare Trust Fund has reserves until 2026

    Every year, Trustees of the Medicare Trust Fund project when the Trust Fund will not have the money needed to pay full Medicare Part A inpatient benefits. Notwithstanding the coronavirus pandemic, their 2021 projection remains the same as last year, 2026. And, Congress could and should act to shore up the Trust Fund.

    A brief Medicare primer. About 63 million older adults and people with disabilities receive health insurance coverage through Medicare. Medicare has two primary funding sources, payroll contributions and general taxes. Payroll contributions cover the cost of Medicare Part A inpatient services. Fewer people used these services in 2020 because of COVID-19.  So, even though fewer people were working and making payroll contributions, Part A remains as strong as last year.

    It’s worth noting that the Medicare Part A Trust Fund has never had its reserves depleted. And, over the last 55 years, the Part A Trust Fund reserves have fluctuated wildly. Back in 2010, Congress gave it a large injection of capital, when it passed the Affordable Care Act and imposed an additional Medicare tax on the wealthiest Americans.

    It’s also important to recognize that if the Part A reserves were to run out, Medicare Part A would still be able to cover 91 percent of projected benefits in 2026. And, if employment rises, payroll contributions will increase. Therefore, it’s more likely that the trust fund will build more reserves.

    Last year, the Part A Trust Fund lost between $60 billion and $134 billion because of loans extended to providers and suppliers to help with COVID-19 payment disruptions. The Trust Fund should get this money back this year and next.

    One critical way to strengthen the Trust Fund is for Congress to stop overpaying Medicare Advantage plans. By one expert account, if Congress does nothing, these plans will be overpaid as much as $355 billion in the next ten years. These overpayments are also driving up Medicare Part B premiums. Congress must trim the fat in Medicare Advantage.

    In addition to the Part A Trust Fund, Medicare has a Supplemental Medical Insurance Trust Fund that covers 75 percent of outpatient care under Medicare Part B. The Medicare Part B premium covers the remaining 25 percent.  And there is a Trust Fund that covers prescription drugs under Medicare Part D.

    The Medicare Part B and D Trust Funds have the money they need to cover outpatient and drug benefits. General revenues cover these expenses, so money never runs out.

    Here’s more from Just Care:

  • Will Congress support raising the cap on Social Security contributions in 2021?

    Will Congress support raising the cap on Social Security contributions in 2021?

    Teresa Ghilarducci explains in Forbes why we need to raise the cap on Social Security contributions. The Social Security cap means that the wealthiest Americans contribute only the tiniest fraction of their income–income representing less than a day of work–to the Social Security Trust Fund, while almost everyone else pays in throughout the year. President-elect Joe Biden supports raising the cap on Social Security. Will Congress?

    Contributions to the Social Security Trust Fund are supposed to represent 12.4 percent of income. Generally, workers pay half of that and employers pay the other half. Self-employed workers pay the full amount.

    But, there’s a limit to how much people must contribute. In 2021, the contribution is based on earned income up to $142,800. That’s a $5,100 increase from 2020. It should be more for wealthier people, as Congressman Larson and large numbers of Democrats in Congress are proposing in the Social Security 2100 Act.

    More than nine in ten workers, 94.6 percent–about 160 million people–pay into Social Security throughout the year. But, 5.4 percent, about nine million workers, earn above $142,800. They do not pay in to Social Security for the full year.

    Of the nine million people who earned above the Social Security cap, in 2019, 4,027 earned over $10 million. That works out to $2,397 every hour. These people will have paid into Social Security the full amount they owe on their first day of work.

    Google’s CEO, Sundar Pichai, earns more than $280 million annually, largely in stock options. Intel Corporation’s Robert Swan earned $66,935,100 in one year. But, they pay into Social Security as if their incomes were $142,800. Mr. Pichai and Mr. Swan look to the Social Security Administration as people who earn just $142,800 a year.

    The Social Security Trust Fund, unlike the Medicare Trust Fund, is in good shape for 12 more years. But, if Congress acted now to lift or remove the cap on Social Security payroll contributions, it would strengthen the Social Security Trust fund for many more years. It would enable Congress to expand Social Security benefits. Notably, there is no cap on Medicare Trust Fund contributions.

    Without additional Social Security contributions, it is projected that the number of older adults living in poverty will nearly double in 12 years. About nine percent of older adults will be living in poverty in 2033, up from 4.8 percent.

    Contributing more to Social Security should be of minimal consequence to the wealthiest Americans. As it is, Mr. Pichai gives way more to to charity each year than he would contribute to Social Security if Congress lifted the cap. More important, raising the Social Security cap would promote health and racial equity. It could also wipe out poverty among older Americans over the next 75 years.

    President-elect Biden supports raising the Social Security cap. With any luck, a majority in Congress will as well.

    Here’s more from Just Care:

  • Strengthening Medicare Trust Fund must be a priority

    Strengthening Medicare Trust Fund must be a priority

    Almost from its inception, the Medicare Trust Fund has been at risk of running out of money. The life of the Trust Fund has fluctuated tremendously over the last several decades. Whenever necessary, Congress has stepped in to keep Medicare strong. Given the new Congressional Budget Office projection that the Trust Fund will run out of funding in 2024, President-elect Joe Biden should prioritize Congressional action to strengthen the Medicare Trust Fund once again.

    The Medicare Trust Fund covers most of the cost of inpatient services under Medicare Part A. Every working American pays a small percentage of their earned income into the Medicare Trust Fund, which their employers match. When they become eligible for Medicare, if they have contributed to the Trust Fund for at least 10 years, they receive Part A coverage premium-free. They are responsible only for out-of-pocket costs, deductibles and copays. (People with Medicare contribute about 25 percent of the cost of outpatient services in monthly premiums under Medicare Part B. General tax revenues cover the remaining costs.)

    In 1975, the Medicare Trust Fund was projected to have a 24-year life, writes David Muhlestein in the Health Affairs blog. Seven years later, it was projected to be exhausted in five years. A decade after that, it had just four years of funding. But, Congress took action and, in 2002, the Trust Fund again had a projected life of more than two decades, 28 years.

    With the passage of the Affordable Care Act in 2010, the Trust Fund received a new injection of funding from higher payroll contributions of people with high incomes. At that time, it was projected that the Trust Fund had 19 years before exhaustion. But, as things evolved and, now, with the pandemic and a high unemployment rate, the Trust Fund is receiving less money than projected. Consequently, the Congressional Budget Office again has revised its estimate of when the Trust Fund will be exhausted to 2024.

    It is not clear what will happen if the Medicare Part A Trust Fund is depleted in 2024, and we do not want to find out. People will continue to pay in. But, that money will cover only about 83 percent of the cost of inpatient care. Unless Congress acts, beginning in 2024, CMS will either have to delay payments to Part A health care providers until money comes in or adjust their rates down to 83 percent of negotiated rates. Either way, the providers are sure to sue for the full amount they are due or stop treating people with Medicare.

    What’s crystal clear is that President Biden will need to work closely with Congress to arrive at a solution to shore up the Medicare Trust Fund.

    Here’s more from Just Care: