When the health reform bill was passed in 2009, it looked like the end of the gravy chain for Medicare Advantage plans; the privately-run health care plans that are sold to seniors as an alternative to traditional, government fee-for-service Medicare. The Affordable Care Act cuts $136 billion over 10 years from Medicare Advantage, following years of concern over the fact that the plans cost the government about 14% more (about $12 billion a year) than traditional Medicare. These overpayments allowed MA plans to offer perks like vision, dental and prescription benefits as well as lower out-of-pocket costs for some subscribers. Now about one-quarter of all seniors are covered under these plans.
Category Archives: Medicare
Medicare and The President’s Plan to Reduce the Deficit—Cuts That Make Sense
Some of the largest cuts in President Obama’s proposed package of Medicare savings target areas where Medicare does, in fact, over-spend. Unfortunately, these are the reforms that Congress is least likely to adopt. In each case a powerful lobby representing those who profit from Medicare’s largesse will howl, and many legislators may well bow to their wishes. Nevertheless, it is useful for the President to call attention to areas where Medicare can save money—without cutting benefits.
- Prescription Drugs: The President’s plan would save $135 billion over ten years, starting in 2013, by requiring that drug companies provide additional discounts, or rebates, to Medicare for prescription drugs bought by low-income beneficiaries enrolled in the Part D Low-Income Subsidy program. In the past, I have written about the drug industry’s double-digit profit margins. In theory, the industry needs these margins in order to innovate. In fact, the number of new and effective drugs coming out of the pharmaceutical industry has slowed in recent years. Too often, they focus on creating “me too” drugs that they know will find a large market.
Obama’s Plan and Medicaid: Promising Structural Changes But Worries About Cost-Shifting to States
In President Obama’s new deficit reduction plan, he makes the following promise:
“Most importantly, we can make modest adjustments to strengthen Medicare and Medicaid in a way that does not undermine the fundamental compact they represent to our Nation’s seniors, children, people with disabilities, and low-income families. The Administration’s proposals will save approximately $320 billion over the next decade. As these reforms save money, they also will strengthen these vital programs so that they are robust and healthy to serve Americans for years to come.”
Saving money through modest adjustments while strengthening vital programs—sounds like a perfect vision for the future of government health care. But will this actually be the case for the beleaguered, but extremely necessary, Medicaid program?
Obama proposes to save $66 billion from Medicaid by taking the following actions: “limit State financing practices that increase Federal spending, replace complicated matching formulas with a single matching rate specific to each State, and strengthen Medicaid program integrity.”
Medicare Spending Slows Sharply; Zeke Emanuel Is Not Surprised
While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break neck-pace. The new numbers should be factored into any discussion about healthcare spending: From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this, both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)
What explains the 18-month slow-down? No one is entirely certain. But at the end of July David Blitzer, the chairman of Standard &Poor’s Index Committee, told me: “I’m hesitant to say that this is a clear long-term trend. But it’s more than a blip on the screen."
Since then, I have talked to an analyst at the Congressional Budget Office who is involved in putting together numbers on Medicare payments for CBO’s Monthly Budget Review. He confirmed that they, too, have seen a dramatic slow-down in Medicare spending.
When I asked, “Why?, he replied: “We have some theories.”
The Debt Ceiling Debate–A “Charade,” says Paul Volcker; Trumped-Up Political Drama, Never an Economic Crisis
In Washington, Medicare cuts are back on the table. Sunday afternoon, the Senate failed to find the 60 votes needed to pass Senate Majority Leader Harry Reid’s debt-cutting proposal, a bill which would have left Medicare and Medicaid untouched. The vote was 50 to 49. That it was so close illustrates just how divided this country is.
Now the president and Congressional leaders have signed off on a “compromise” that might best be described as “Conservatives 10; Liberals 0.
What is mind-boggling is that none of this had to happen. We were not facing a debt crisis. Conservatives manufactured a crisis, and then demanded Draconian spending cuts. For decades, the U.S., like other developed countries, has been lifting its debt ceiling on a regular basis. Normally, raising the deficit ceiling does not lead to a pitched partisan battle.
5 Myths and Facts about Medicare — In Pictures
Summary: Not long ago the Medicare Payment Advisory Commission (MedPac) came out with a data book on Medicare spending. The information is condensed into tables and charts. As I looked at the charts, I found some surprises. Below, myths and facts about:
- how hard it is for Medicare patients to find a doctor
- where most of our Medicare dollars go
- increases in Medicare payments to physicians– and whether doctors automatically hike the volume of services they provide when Medicare cuts reimbursements for services.
- hospitals losing money on Medicare patients
- which hospitals make a profit on Medicare, and which hospitals cannot break even on Medicare reimbursements
How Soon Can We Expect National Health Reform?
On this blog, we have debated how soon Americans will be ready for national health reform. Many observers believe that we’ll only get reform when more people are uninsured—specifically when more middle-class and upper-middle-class families find themselves “going naked.”
The chart below comes from a new Commonwealth Fund Report which shows that while two-thirds of low-income adults (earning less than 200 percent of the federal poverty threshold) were uninsured or underinsured in 2006, just 17 percent of those earning more than 200 percent of the federal poverty level (FPL) were either underinsured or uninsured at some point during the year.
“Underinsured” is defined as someone who finds himself spending 10 percent or more of his income on out-of-pocket medical expenses. (For those earning less than 200 percent of FPL, the number is 5 percent.)
The report observes that employers are continuing to back away from offering health benefits: “Between 2000 and 2005, the proportion of workers receiving employer-provided health insurance declined from 74.2 percent to 70.5 percent,” and again “middle- and lower-wage workers,” suffered most, with “the largest decreases” hitting this group.
Complaints about Medicare Advantage Mount…While Congress Contemplates Slashing Fees Traditional Medicare Pays Docs
Recently I argued that eliminating the private insurance industry would not suddenly make health care affordable. But this is no reason to gratuitously overpay private insurers to provide health care to Medicare patients—while simultaneously planning to slash the fees that Medicare pays physicians.
Begin with the insurers. When Congress created Medicare Advantage, the program that allows private insurers to offer Medicare to seniors, it agreed to pay for-profit insurers about 12 percent more per patient than traditional Medicare would spend if it were covering those patients directly. Add up those extra payments and they amount to a $16-billion-a-year subsidy for the health insurance industry.
Why the sweetener? Lobbyists argued that the government would have to pay more to persuade for-profit insurers to join the Advantage program. Moreover, they promised that the insurers would use the $16 billion to offer patients extra benefits like acupuncture and eye exams that they would not receive under traditional Medicare. And Congress agreed. Now, think about this for a minute: legislators agreed to use our tax dollars to help for-profit insurers draw customers away from a government program that most people liked—and that cost taxpayers less. This is not about saving money by transferring Medicare to the supposedly more efficient private sector. This is about the conservative agenda: some politicians are determined to try to outsource government to for-profit corporations.
Predictably, private insurers structured their plans to siphon off the healthiest seniors. In New York City, for example, Oxford included free memberships to some pretty posh gyms as part of the package. They called it the “Silver Sneakers” program. Unfortunately, a year after seniors signed up they discovered that the number of gyms involved in the program had suddenly shrunk. The options that remained weren’t nearly as tony, and most were no longer located in upper-middle-class residential neighborhoods. Is this “bait-and-switch”? You decide.
The Unhappy Legacy of Medicaid
In September, the non-profit organization Public Citizen (PC) issued a report comparing Medicaid and Medicare payments to doctors in 10 states and Washington D.C. The results underline the fact that Medicaid has been designed, from day one, to give states an easy cop-out when it comes to health care for the poor.
The study highlights cases where the disparities between what different states pay a doctor to care for a Medicaid patient are greatest: “In New York, doctors are paid $20 for an hour-long consultation with a Medicaid patient, while in higher-paying states, doctors receive an average of $157.92 for the same service – a difference of greater than sevenfold. The difference within a state between what Medicaid pays [a physician to treat a patient who is poor enough to qualify for Medicaid] and what Medicare [pays a doctor to care for an elderly patient] is just as dramatic. For this hour-long consultation, a physician in New York could earn $196.47 from Medicare, almost 10 times more than from Medicaid.”
Last month the AMA posted a chart of these and other disparities on its medical news website, and seen side-by-side, the comparisons are startling: a physician in New Jersey or Pennsylvania gets, on average, about one quarter as much for seeing a Medicaid patient as a Medicare patient; in New York and Rhode Island, less than a third; and in the nation’s capital less than half as much. Other states lie at the other end of the spectrum. Alaska, Wyoming, Delaware, and North Carolina all pay more for Medicaid than Medicare.
Is there any rhyme or reason to how states reimburse Medicaid care? Looking at Alaska (which pays more for Medicaid, relative to Medicare, than any other state) and New Jersey (which pays the least) it initially seems that poverty rates may factor into disparities. Alaska’s poverty rate is the 7th highest in the nation, so it would make sense that it would want to encourage health care for the poor. New Jersey, on the other hand, is almost last in the nation when it comes to poverty rates (no. 47 on the list) so the state may not feel as strongly about the need to ensure care for the poor.
Universal Coverage –Why Massachusetts is the Last Place to Begin the Experiment
At the Massachusetts Medical Society’s 8th Annual Leadership Forum last Wednesday, Dr. Steven Schroeder, former head of the Robert Wood Johnson Foundation
and Distinguished Professor of Health and Health Care at the University
of California, San Francisco, told a provocative story about a poll
that asked patients in the U.S. `Canada, Australia, New Zealand and
the U.K the following question:
“If your personal doctor told you that you had an incurable and fatal
disease, would you accept that diagnosis or seek a second opinion?
- In the U.S. 91 percent of patients said they would seek a second opinion.
- In Canada 80 percent “ “ “ “ “ “ “
- In Australia 71 percent “ “
- In New Zealand 51 percent
- In the U.K. 28 percent
“You have to love the British,” Schroeder commented. “You can just hear
an Englishman saying ‘Well, Luv, it’s been a good life, hasn’t it? Now
let’s make a pot of tea and discuss the funeral arrangements.”
At the other end of the spectrum, we find the Americans who, Schroeder
noted, “are the only people in the world who expect to live ‘in
perpetuity’.”
Today, I would like to suggest that our expectations as patients help
to explain why we spend roughly twice as much per person on health care
as most developed countries—even when, overall, it’s not clear that our
healthcare is better. In fact, in some areas outcomes are worse.