Posts tagged ‘Health Reform & Next Steps’
President Barack Obama’s re-election offers an opportunity to further implement the tenets of the Affordable Care Act, and help strengthen the Medicare program as a whole for the 50 million beneficiaries nationwide.
“The Center for Medicare Advocacy looks forward to working with President Obama and the new Congress to ensure fair access to Medicare and health care,” says Judith Stein, the founder and executive director of the Center for Medicare Advocacy. “We are hopeful that we can now move forward to preserve a full and fair Medicare program for current and future generations.” Stein continued. “By implementing the Affordable Care Act and moving away from unnecessarily expensive private plans, we can increase Medicare solvency and bring down health care costs. This is good news for beneficiaries, taxpayers, and the deficit.”
One recent step to ensuring fair coverage to all was the settlement of a class action suit brought by the Center against the”Improvement Standard,” an illegal but long practiced rule of thumb that resulted in Medicare denials based on chances of improvement – leaving thousands of beneficiaries with chronic conditions without coverage.
Medicare was in the spotlight in the Vice Presidential debate as the candidates outlined their respective plans for the program millions of American families rely on. Unfortunately, some pervasive myths were also highlighted regarding the impact of health care reform and the Ryan plan on Medicare and the 49 million Americans who count on it. [Check out the Center for Medicare Advocacy's Facebook and Twitter pages (Follow @CMAorg) for a full list of Medicare Myths and Facts from the debate.]
One of the myths that was repeated during the debate is the familiar claim that the Affordable Care Act cuts Medicare by $700 billion – the same claim that has been debunked time and again. In fact the $700 billion in savings are largely a result of rolling back unnecessary, wasteful overpayments to private Medicare insurance plans. Congressman Ryan’s budget plans have included these same $700 billion reductions; however, instead of ending overpayments to private insurance companies with the savings, Ryan’s plans would give private insurance companies an even larger share of Medicare expenditures.
The Ryan Plan to end Medicare would provide each individual with an annual allowance with which to purchase a health plan in the private market, would raise costs for current and future beneficiaries, and would repeal important Medicare benefit improvements, added by the Affordable Care Act (ACA). The ACA Medicare improvements include extending the solvency of the Medicare Trust fund, lowering prescription drug costs, adding new coverage for preventive services, and eliminating cost-sharing for most such services, such as mammograms and prostate screenings.
Mr. Ryan and other policy-makers often talk about waste, fraud, and abuse in Medicare. Yet too often these same policy-makers plan to extend private Medicare to restructure the entire Medicare program. They claim this will save money for Medicare, taxpayers, and beneficiaries. But a new study, once again, confirms just the opposite.
In a forthcoming issue of the International Journal of Health Services, researchers report that “Medicare has overpaid private insurers by $282.6 billion, or 24.4 percent of all MA payments, since 1985. In 2012 alone…MA plans are being overpaid by $34.1 billion, or 6.2 per¬cent of total Medicare spending”. This means nearly a quarter of all payments to private insurance companies in Medicare, subsidized with taxpayer dollars, have been unnecessary overpayments that have gone to profit margins and administrative costs, not health care services. Talk about waste!
The authors of the International Journal study conclude that the decades-long experiment with privatizing Medicare should end. Instead, policies should be developed to focus on the real issues of overall health costs and access to coverage. However, if the Ryan plan takes effect, the wastefully expensive private Medicare program will be expanded. Meanwhile, the cost-effective traditional Medicare program will be allowed to wither, and beneficiaries will become responsible for dramatic increases in out-of-pocket costs.
Mr. Ryan’s plan continues wasteful overpayments to private insurance companies at the expense of beneficiaries and taxpayers. It is not a plan to preserve Medicare, protect older and disabled people, or reduce health care costs.
This week, the Center for Medicare Advocacy’s founder and executive director, Judith Stein, was invited to speak before a House Policy and Steering Committee at a forum on Medicare to voice the concerns of beneficiaries and their families about the Ryan Medicare plan. Speaking alongside a health economist, a veteran medical provider, and a teacher whose family relies on Medicare and Medicaid for critical care, Ms. Stein spoke and answered questions from the Committee about the loss of coverage, higher costs, and limitations on choice that current and future beneficiaries would face under the Ryan plan. This Alert features excerpts from the testimony, as well as highlights from the subsequent Question and Answer portion of the forum.
Leader Pelosi and members of the Committee, thank you for holding this important Forum and for honoring me with the opportunity to appear before you.
I am Judith Stein, founder and executive director of the Center for Medicare Advocacy, Inc. Founded in 1986, the Center is a national, nonprofit, nonpartisan organization headquartered in Connecticut and Washington, DC, with offices around the country. I have been representing Medicare beneficiaries since 1976. My organization has represented tens of thousands of Medicare beneficiaries − more, I believe, than any other organization in the country. I know the value of Medicare, and its challenges as well as anyone.
Medicare was enacted in 1965 because private insurance failed older people. For over 47 years, Medicare has provided guaranteed benefits that have enhanced health security and financial stability when people need it most – when they are older or disabled and also sick or injured. It has been so successful that this population is now almost uniformly insured − although only 50% of people 65 or older were insured when Medicare began.
I’ve seen Medicare coverage save lives and bring peace of mind to families. I also know how Medicare has changed since I began my work representing Medicare beneficiaries. While coverage has been enhanced over the years, Medicare has also become ever more complex and difficult to navigate as private plan options have been introduced, swarmed in and out, and premiums have been income-based. While we are regularly told that “one-size fits all” does not serve people well, this was simply not the case for the traditional Medicare program. In fact, for decades the guaranteed, universal Medicare program fit most very well.
Today, the myriad Medicare choices, complex decision-making, and plan variations baffle many, often leading to inertia, and poor planning. Many people simply do not choose at all, and those who do, often stick with their initial choice, even as their plan offerings and their health needs change. Further, most people want choice of doctors, hospitals, and other health care providers, not insurance plans. Ironically, private Medicare plans reduce physician and health care provider choices far more than the traditional program.
Unfortunately, Congressman Paul Ryan proposes, and the House has twice passed, yet another effort to privatize and fragment Medicare – this time on a grand scale. The Ryan Plan would provide each beneficiary with a set annual allowance, or voucher, with which to purchase an insurance plan in the private market. While we have not seen details about the Ryan voucher system, the outlines we have seen would increase costs to beneficiaries. Regardless, of its details, the Ryan Plan would not impact the current deficit, since we are told it would not begin until 2022 at the earliest. (The 2011 Ryan Plan called for the change to Medicare to commence in 2023.)
The certitude that competition in the private market will reduce Medicare costs is belied by past experience and numerous studies. As former Medicare and Medicaid Administrator Bruce Vladeck has said, “private plans have not saved Medicare a nickel.” When the private Medicare+Choice program was tried under Mr. Vladeck’s leadership, Medicare paid private plans 95% of what it cost to cover a similar beneficiary in traditional Medicare. The idea was to test the truth of the belief that private plans could provide health insurance more cost-effectively than traditional Medicare. While dozens of private plans entered the Medicare market, they left in droves when it became clear they could not, in fact, compete with traditional Medicare.
In 2003, Congress authorized the Medicare Advantage program, which paid private plans approximately 14% more than the traditional Medicare per beneficiary cost. Not surprisingly, private plans reentered the market, but at a terrible cost to the Medicare program, all beneficiaries, and taxpayers. The Congressional Budget Office estimated that these payments would amount to $150 billion over a ten-year period.
Further, if traditional Medicare is forced to compete with private insurance, private plans will work to minimize their spending and woo the healthier, least costly beneficiaries. If older, more vulnerable, more expensive beneficiaries remain disproportionately in traditional Medicare it will not be sustainable and will wither on the vine. This increased fragmentation of Medicare and Medicare’s 49 million customers will also reduce its bargaining power, thereby limiting its ability to help drive down health care costs. Yet reducing health care costs is a key to reducing the federal deficit.
Certainly Medicare could be made more financially viable. Reducing payments to private Medicare plans is one sure way to start this important effort. However, the Ryan Plan does not propose this path. Instead, its “Path to Prosperity” would increase the age of Medicare eligibility and provide individual, defined contribution vouchers to older people − gutting the community Medicare program that has ensured access to health coverage for generations. This approach would increase costs and reduce coverage for people with Medicare and their families. Yet, according to the Kaiser Family Foundation, about half of people with Medicare live on incomes of $22,000 or less – just under 200% of the federal poverty level. They simply can not afford the additional costs projected under the Ryan Plan, costs which are tantamount to imposing a health insurance tax on older and disabled Americans.
The Ryan Plan is based on the belief that private is better. But Medicare controls health spending better than private insurance. Competition among private health insurance companies has not driven costs down either in the private Medicare Advantage program or for individual and employer-based policies for those under 65. As discussed above, Medicare has included private plans for decades, but they cost Medicare more than the same coverage under the traditional Medicare program. Medicare administrative costs are a fraction of those for private insurance. And, over the next ten years, Medicare spending is expected to grow at rates of 3.1% compared to 5% for private insurance plans. Thus, the traditional Medicare program, which the Ryan Plan would dismantle, shows greater promise for controlling costs than turning the program over to private insurance companies.
One last reality check: Mr. Ryan’s plan would affect current and near-term retirees, despite promises to the contrary. The Ryan Plan would immediately repeal health care reform, which greatly improves Medicare coverage for prescriptions and preventive care, saving people with Medicare a total of about $4 billion on drugs and increasing their access to preventive care. Repealing health care reform would retract these benefits. It would also reinstate the wasteful overpayments to private Medicare Advantage plans that were rolled back by the Affordable Care Act. Since all beneficiary premiums are set as a percentage of the costs of the entire Medicare program, these overpayments would translate into higher out-of-pocket costs for everyone with Medicare.
We recognize our responsibility to add constructively to the conversation. It’s fair enough for those who favor the Ryan Plan to ask, “Well what would you do?” Thus, the Center for Medicare Advocacy offers six key recommendations to keep Medicare solvent while it continues to provide fair, defined health coverage. These recommendations, unlike the Ryan Plan, do not shift costs to beneficiaries, and do not unnecessarily restructure the Medicare program. They promote choice and competition while shoring up the solvency of the Medicare Program.
“Protecting” Medicare by shifting costs from the federal government to beneficiaries and their families through the creation of a private Medicare voucher system is a perversion of Medicare’s purpose. Medicare was enacted to protect older, disabled people and their families from illness and financial ruin due to health care costs. The Center for Medicare Advocacy’s recommendations promote financial solvency without doing it at the expense of beneficiaries.
The Ryan Plan would enrich insurance companies while leaving beneficiaries with inadequate purchasing power in an increasingly expensive health care market. It would end Medicare and begin a new private system that would be more expensive and more costly for older and disabled people. It would limit people’s choice of physicians and health care providers. We welcome the opportunity to examine Medicare’s challenges and successes. But for the 49 million American families who rely on Medicare now, and for all those who will someday, we look for a debate based in fact not preferences. Simply stated, you can’t save Medicare by ending it. The Ryan Plan will end Medicare.
For a full transcript of the testimony, see: http://www.medicareadvocacy.org/2012/10/04/cma-in-action-judith-stein-testifies-in-congress-on-the-ryan-plan-to-end-medicare/.
For more information, contact executive director Judith Stein (email@example.com) at (860) 456-7790.
To stay up to date on all the Medicare myths this election season, see our “Medicare Myths and Truths” chart at: http://www.medicareadvocacy.org/medicare-facts-fiction-quick-lessons-to-combat-medicare-spin/.
Highlights from the Question & Answer Session
Members of the Committee asked panelists to respond to questions and comments including:
Q: I see a train wreck, a continuing train wreck of seniors, on the highway of despair. (Panelists were then asked to comment)
Ms. Stein: “The Kaiser Family Foundation tells us that about half of Medicare beneficiaries have an annual income of $22,000 a year or less. I really do think it’s no wonder the country thinks Congress is out of touch with what’s really happening in this country… . Medicare is in jeopardy and it’s for philosophical reasons, I believe. [The Ryan Plan is] simply not the most cost-effective way to do what is being proposed and it will absolutely put us back to where we were in 1965.
It is a train wreck waiting to happen and we have to get people to hear that. And, yes [Congressman Larson, in answer to your earlier question,] it is personal. I’m a breast cancer survivor. I know what it’s like to be perfectly healthy one day, and the next day to be maybe, maybe dying. How can you plan for this? And how can I plan to know that I can take care of my mother and maybe my children and grandchildren. This is a personal matter. [The Ryan Plan] is a train wreck. It is not best for the people or the fiscal solvency of this country. So why is it being proposed? Because there’s a preference for privatization and fragmenting Medicare. But privatizing this system will not help older people, their families, disabled people, or the deficit. So on all points, I’m very worried about it.
Q: How does the Romney/Ryan plan limit people’s choices?
Ms. Stein: We need to look at what we actually know, because this is not something new. Current private plans (Medicare Advantage) and private plans in the past have all had the impact of fragmenting the risk pool. The widest network (and most effective risk pool) is traditional Medicare. As soon as you enter into a private plan you will have a limited network with a limited choice of doctors and health care options.
Traditional Medicare, which, if we encouraged it for most of those with Medicare, has the best bargaining power of any health system in the country, and so it can bring down costs if we allow it (such as requiring negotiations on prescription drugs under Part D). When you fragment Medicare as we have been doing since the 1990s, you reduce the risk pool and the buying power of Medicare and thereby reduce its impact on reducing health care costs – for everyone throughout the country, not just for Medicare beneficiaries.
One of the things we can do is look at this plan from past history. We already know what happens. We know that only 10% of beneficiaries in private plans make a change in their plans after they make their initial choice … it’s a mind-boggling set of options – it’s not just one or two choices. Ideally, an individual should review their plan and potentially change it every year, but only 10% do this.
So what happens is that – even if you could predict what health choices you will need – and you don’t really know – most people don’t make a choice so we find that people call the Center because the choice they made is no longer effective … many people choose private plans when they are healthier and then when they are diagnosed with a disease or condition and want to see the best doctor or specialist for that disease, they find that they can not do so under their plan. If they were in traditional Medicare they could still get the care they want and need.
We know from experience that private plan options in Medicare are not the best for any number of reasons, including costs and services for people. They simply do not provide as many health care options or providers as traditional Medicare does.
 For example, a recent study finds that less than 10% of people with Medicare Part D enroll in what would be the most cost-effective plan for them. (National Bureau of Economic Research, “Plan Selection in Medicare Part D,” (June 2012).
 Medicare Payment Advisory Commission (MedPAC). According to the Centers for Medicare & Medicaid Services, in 2012 Medicare Advantage plans are paid on average 7% more than similar beneficiary services would cost in traditional Medicare.
 Congressional Budget Office; Health Care Affairs, (9/20/2011).
 Kaiser Family Foundation analysis of Medicare Trustees Report 2012.
Here’s the truth follks: Rep. Ryan’s plan is about a governing philosophy, not about saving money, Medicare or reducing the deficit. If his plan was really about saving money, it would encourage movement back to traditional Medicare – which is less expensive than private plans. At the very least, his plan would equalize payments between traditional Medicare and private plans. But Mr. Ryan wants to repeal the Affordable Care Act’s payment reductions to private Medicare plans. Further, if Ryan’s private voucher system was really about deficit reduction, it would begin ASAP, not in 2022, as he proposes.
The Medicare “cuts” Mr. Ryan purports to be concerned about are almost entirely savings to Medicare’s expenses, which taxpayers and beneficiaries should welcome. They are largely from reducing wasteful overpayments to private plans and slowing increases for some providers, including hospitals, NOT from cuts in benefits. Neither taxpayers nor beneficiaries can afford to pay any more than is necessary to provide the same coverage available through traditional Medicare. Everyone should appreciate ACA’s efforts to hold down overall health care costs by looking to providers to create efficiencies in providing care.
The Affordable Care Act did not cut Medicare for beneficiaries; it added benefits (including an annual wellness visit, “Donut Hole” coverage for medicines, and no-cost preventive services). Thus, ACA represents a thoughtful approach to controlling health care costs, and reducing payments to private plans, while increasing Medicare coverage for valuable, cost-effective services. If his intent really was to save Medicare and money, Mr. Ryan would agree.
Today, the Supreme Court of the United States issued a landmark decision upholding the Affordable Care Act (ACA). The individual mandate, in addition to other provisions – including those that enhance Medicare – was ruled constitutional.
“This ruling is good news for people with Medicare, the Medicare program, and the millions of families who could not otherwise afford health care coverage,” said Judith Stein, Executive Director of the Center for Medicare Advocacy.
The law can now continue to help older and disabled Americans, children with special needs, people with pre-existing conditions, women, young adults, and small businesses. In just two years, the law has already saved over $3 billion in Medicare prescription drug costs for older and disabled Americans, put $1.1 billion in rebates back in the pockets of 12.8 million consumers, and allowed over 3 million young adults to retain access to health coverage on their parents’ plans.
“Having advocated for people with Medicare for over 25 years, the Center for Medicare Advocacy is in the unique position of having seen a program that was initially doubted, even feared, come to be a beloved American value,” said Ms. Stein. “We have no doubt that health care reform will follow the same path as families benefit from it.”
The Center for Medicare Advocacy thanks the Supreme Court for advancing affordable health care for all Americans.
Originally Published at Nieman Watchdog, in ASK THIS, June 14, 2012 (available at http://niemanwatchdog.org/index.cfm?fuseaction=ask_this.view&askthisid=00569), we offer reporters and editors a checklist for stories when the Supreme Court rules on the Affordable Care Act (ACA):
- What will happen to the Medicare Part D Donut Hole coverage, preventive benefit coverage improvements, Part D income-based premiums?
- Will young adults receiving coverage up to age 26 on their parents’ plans immediately lose their coverage? Will they be able to get coverage elsewhere?
- Will children with pre-existing conditions lose their coverage? If so, how will they get coverage in the future?
- What will happen in states that have started to implement the law, for example by setting up “exchanges”? Will some states try to proceed without ACA?
- What will happen to those who would have been covered by the Medicaid enhancements under the law?
- If so, what was struck down?
- What is left?
- Can the law still work without this requirement?
- Can the law be amended to make it work, without a minimum coverage mandate?
- What demographic groups will be most harmed?
- What will be the effect on costs to the federal government, states, and individuals?
Unless the entire law is upheld, people in need of health care will lose. Be ready to recognize what will be lost – and by whom.
This week, Republican presidential candidates vie for their party’s nomination in Florida, where millions of residents rely on Medicare as a health and economic lifeline for themselves and their families. Unfortunately, some candidates are scaring seniors – making clearly incorrect and harmful statements about the effect of the Affordable Care Act on Medicare.
As the Center for Medicare Advocacy has reported since the passage of the landmark legislation, Health Care Reform does NOT hurt Medicare benefits. In fact, it expands and improves benefits for all people with Medicare while saving our nation and taxpayers billions of dollars over the next decade.
Most recently, former Senator Santorum made significant misstatements about Medicare. Contrary to his statements, people with Medicare are NOT losing their doctors and are NOT facing rationing because of Health Care Reform. In fact, the Medicare payment board he mentions does not even exist yet. When it does begin, it will be charged with keeping overall Medicare costs down and will be specifically prohibited from reducing benefits.
Additionally, Mr. Santorum’s desire to “fix” Medicare by privatizing it and giving taxpayer money to insurance companies makes you wonder who he really wants to help. Privatizing Medicare and repealing health reform, which he also recommends, won’t help Florida’s older people or their families, but it would provide a windfall to the insurance industry. The traditional community Medicare program has helped generations of Americans at far less cost than private insurance. And health care reform has already enhanced Medicare, adding preventive benefits with no cost-sharing and reducing costs for prescription drugs.
If the Senator is truly concerned for the care of Florida’s people who rely on Medicare and the program’s integrity, he should get the facts straight and speak the truth about Medicare and health care reform. To start, he can visit the Center’s “Solutions for Strengthening Medicare” for common-sense ways to improve and expand the program while saving billions of dollars. www.medicareadvocacy.org.
Nearly one in five Medicare beneficiaries rely on Medicare Supplemental insurance policies (Medigap) to fill in the gaps of some of their Medicare coverage. As noted by the Kaiser Family Foundation, “Medigap policies help shield beneficiaries from sudden, relatively high out-of-pocket costs due to an unpredictable medical event, and also allow beneficiaries to more accurately budget their health care expenses, which is important to a population living on a fixed income” (Kaiser Family Foundation, “Medigap Reform: Setting the Context” Sept. 2011; http://www.kff.org/medicare/8235.cfm).
Unfortunately, among the proposals raised to achieve savings for Medicare as part of ongoing debt and deficit reduction talks, some policy-makers have suggested changing the way Medigap policies are structured. Under the assumption that charging beneficiaries more upfront will deter them from using unnecessary medical care, these proposals seek to increase Medigap deductibles and other cost-sharing. Such proposals are found in the Simpson-Bowles Debt Reduction Commission proposal, the President’s Plan for Economic Growth and Deficit Reduction, and have been echoed in the media. (See, e.g., a recent Washington Post editorial “Mind the Medigap” October 1, 2011.)
MYTH: Eliminating First-Dollar Medigap Coverage Will Lead To Beneficiaries Choosing Only Necessary, “Higher Value” Health Care Services
Many of the proposals to reform Medigap coverage aim to achieve Medicare savings by creating “financial incentives for newly eligible beneficiaries to seek high-value health care services.” (See, for example, the President’s Plan for Economic Growth.) However, as discussed in our recent CMA Alert, many so-called cost-saving measures are based on the misguided assumption that greater out-of-pocket expenses will lead to more reasonable decisions about obtaining various types of unnecessary or “low-value” medical care. (See CMA Alert at: http://www.medicareadvocacy.org/2011/09/the-presidents-plan-for-economic-growth-and-deficit-reduction-a-first-look-at-the-impact-on-medicare/.)
On the contrary, these proposals would at best fail to steer people toward high-value services and, at worst, would charge people more for obtaining needed health care, or deter them from seeking care altogether.
FACT: As Cost-Sharing Goes Up, Utilization of Services – Both Necessary and Unnecessary – Goes Down.
Raising cost-sharing for beneficiaries will discourage utilization of health care, including necessary services. The National Association of Insurance Commissioners (NAIC), the organization of state insurance regulators who oversee Medigap plans, recently warned of just such dire consequences:
It is important to note that the proposed changes will impact cost-sharing coverage for “medically necessary” services. By contract, Medigap policies only pay cost-sharing for items and services that Medicare itself has already determined to be medically necessary. The NAIC is concerned that the effects of this proposal will result in many seniors foregoing needed medical care because they cannot afford the care resulting in more costs to the Medicare program later on. Additionally, the proposal will simply shift more costs onto seniors (who by and large are not wealthy) and not address the underlying cause of increased medical costs. (Emphasis added.)
National Association of Insurance Commissioners, Letter to the Joint Committee on Deficit Reduction (September 21, 2011), http://www.naic.org/documents/committees_ex_grlc_
March 23rd marks the first anniversary of the health care reform law. Health care reform is good for people and good for Medicare. It provides a boost for Medicare solvency and adds important benefits for Medicare beneficiaries. It also provides new coverage for sick children and for uninsured young adults. In these ways, older people, people with disabilities and their families are already benefiting from health care reform; they stand to gain even more in the years ahead. Unfortunately, efforts to repeal the law and to stop funding its implementation, threaten the future of Medicare and the improved benefits for Medicare beneficiaries and their families.
The Center for Medicare Advocacy has already seen how health reform has improved the lives of Connecticut’s 560,000 Medicare beneficiaries. For example, as a result of the health care reform law:
• Medicare beneficiaries no longer have to pay for preventive services such as mammographies, prostate screenings, glaucoma screenings, and diabetes management.
• Medicare beneficiaries are now able to have an annual wellness visit and to develop a health plan with their physicians.
• Medicare beneficiaries with particularly high medication needs are paying less for their medicines.
• Major efforts to eliminate fraud and waste in Medicare are underway.
• Billions of dollars in overpayments to private Medicare Advantage (MA) health plans are being phased out; while bonuses will be paid for those MA plans that do a laudable job.
• The long-term solvency of the Medicare program has been extended by approximately 12 years, until 2029.
• Families also benefit because older and disabled people have better Medicare coverage and security, insurance companies are prohibited from denying access to children with pre-existing conditions, and young adults up to age 26 can now get coverage under their parents’ health insurance.
All these benefits will end if the bills in Congress to de-fund health care reform pass, or repeal efforts succeed. The myriad additional benefits going into effect between now and 2014, when health care reform is fully implemented, will disappear. Medicare costs to taxpayers and beneficiaries alike will increase dramatically and the Medicare program itself will be in jeopardy.
Health care reform is good for Medicare, good for Medicare beneficiaries, and good for families. Funding and implementation of the law should proceed.
July 30th marks the 45th anniversary of Medicare. When President Johnson signed the Medicare program into law in 1965, he ushered in an era of better health and financial security for older Americans and their families. Medicare did what private insurance failed to do – provide health coverage for people age 65 and older. Over the years Medicare was expanded to cover other people not popular with private insurance: people with disabilities, End Stage Renal Disease and Amyotrophic Lateral Sclerosis (also known as Lou Gehrig’s Disease). Today, 47 million older and disabled people receive health insurance and access to health care through Medicare.
In 2010, when President Obama signed the Affordable Care Act (ACA) into law (also known as the health care reform law), he helped ensure a brighter financial future for Medicare, better coverage for beneficiaries, and reduced costs for beneficiaries and taxpayers. Health care reform will extend the solvency of the Medicare Trust Fund by about twelve years, add preventive benefits without cost-sharing for beneficiaries, and improve the Part D prescription drug program. It will likely result in reduced Part B premiums for most beneficiaries. Health care reform will also slow the privatization of Medicare that over the past decade has added costs without corresponding benefit. In 2010, therefore, it’s particularly important to remember and celebrate the effect that Medicare has had on this country, and its importance to the daily lives of millions of Americans.
We forget what it was like before Medicare (and Social Security and Medicaid). Before Medicare, half of all older people had no insurance. Private insurance companies did not want to cover this population because of their age and chronic conditions. When health insurance was available, many older people could not afford it. In 1965, 25% of Medicare beneficiaries lived in poverty. Medicare has enhanced the health and financial security of older people and their families; they no longer have to worry about paying for catastrophic medical costs. Because of Medicare, virtually all Americans age 65 or older are insured.
Medicare has had a remarkably broad, positive impact on the country’s well-being in so many ways. Did you know, for example, that by refusing to pay for care at segregated facilities, Medicare helped desegregate hospitals and other health care institutions?
Today, traditional Medicare continues to be one of the most flexible health insurance programs available. The program covers care provided by a broad array of doctors, hospitals, home health agencies and other health care providers. The 75% of Medicare beneficiaries who are currently in the traditional Medicare program can choose virtually any doctor, hospital, or other provider that accepts Medicare, anywhere in the country.
Further, unlike people who receive health insurance through private insurance coverage, Medicare beneficiaries don’t have to worry about having their health insurance rescinded if they become sick or file “too many” claims. Nor will Medicare exclude coverage based on a pre-existing condition or impose annual or life-time payment caps.
It’s no wonder that Medicare is very popular with the people it serves. In fact, Medicare beneficiaries rate their satisfaction with Medicare much higher than workers with employer-sponsored insurance rate their health care coverage, citing access to providers in particular.
Despite Medicare’s success, however, it faces serious challenges and threats – some real, some imagined, some imposed. The increased role of Medicare private plans during the last decade took a toll on Medicare’s well-being. Private plans were paid approximately 14% more on average than traditional Medicare would have been paid to cover the same services. Fortunately, these overpayments will be gradually turned back, pursuant to the health care reform law, resulting in adding about twelve years to the solvency of the Medicare Trust Fund.
Some policy-makers, however, including the bipartisan National Commission on Fiscal Responsibility and Reform, are focused on reducing the federal deficit by limiting programs such as Medicare. Others continue to call for turning Medicare into a voucher program, or increasing the age of eligibility, or continuing to income-base benefits cost-sharing. These approaches threaten the promise of Medicare as a program providing stable, uniform coverage to all its beneficiaries.
Indeed, Medicare’s future as a public social insurance program with a uniform benefit and cost-sharing system has been whittled away during the last ten years. Medicare private plans (known as Medicare Advantage plans) were given increased funding and more market-share during the Bush Administration. In 2003 the Part D prescription drug benefit was initiated only through private plans. Part B and D cost-sharing mechanisms are increasingly based on the individual’s income. All this has eroded the single community of interest among all beneficiaries, rich, poor, healthy, or infirm, that has kept Medicare strong.
So, while celebrating Medicare, we also urge vigilance lest we inadvertently return to the circumstances before Medicare – when so many older and disabled people could not obtain health insurance. Our goal is to keep Medicare’s promise to provide fair access to health care through a stable, unified program. In this way we can help ensure that Medicare’s 45th anniversary will mark its grand maturity, not its mid-life crisis.
 Mark Blumenthal, “Who’s Afraid of Public Insurance?” National Journal (June 29, 2009) http://www.nationaljournal.com/njonline/mp_20090629_2600.php