MEDICARE MYTHS EXPOSED FOR SENIORSFeb 26th, 2012 | By Sharon Shaw Elrod MSW EdD | Category: Social Security & Medicare
Separate Fact From Fiction, Please
It’s time to be reminded about the realities of Medicare, and set aside the myths that some politicians would like us to believe. Political campaigns have a tendency to create a whole slew of fiction, and we seniors need to keep that slew in its proper place. Medicare covers 17+% of Americans, and most of us are seniors. It takes about 15% of the federal budget to cover the costs.
Myth 1. Medicare is inefficient and fails to control costs.Not true. Since Medicare’s inception in 1965, its spending growth, on a per-person basis, has stayed consistent with or lower than the increase in private health insurance premiums. The Congressional Budget office predicts that Medicare per capita spending will grow 1 percent faster than the rate of inflation over the next decade. Medicare enrollment will increase over the next 25 years from 47.5 million to 80 million in 2030, due to the Baby Boomers aging. Because of this heavy increase, system-wide health-care costs have to be reduced in the future, and Congress needs to work on a plan to do that that doesn’t penalize senior citizens and their need for health care.
Myth 2. The well-off don’t pay enough for their Medicare benefits.Rother states, “Many assume that Medicare has uniform requirements for contributing to the program, placing an unfair burden on most participants and not asking enough of upper-income seniors. This is no longer the case. Wealthier people pay more than others.” (Washington Post, February 24, 2012)
He goes on to report on Medicare Part A requirements:
“Medicare Part A — hospital insurance — is financed through a 2.9 percent tax on earnings paid by employers and employees (1.45 percent each). In 1993, Congress lifted the cap on income so that individuals who earn more pay more. This contrasts with Social Security, which caps an individual’s tax exposure at $110,100. For higher-income workers (more than $200,000 for an individual and $250,000 for a couple), the Medicare payroll tax rate will increase from 1.45 percent to 2.35 percent next year.” (Washington Post, February 24, 2012)
Premiums now also vary by income. Wealthier Americans making more than $85,000 a year and above pay more on a graduated scale. That kind of scale also applies to premiums on prescription drug plans. ‘The more you earn, the more you pay’ is already in place.
Myth 3. Medicare benefits are overly generous.
This just isn’t true. The current Medicare benefits package is much like that of the original program almost 50 years ago. Private insurance plans have much more generous plans, and Medicare beneficiaries have to have supplemental plans (Medigap) to manage gaps in coverage.
“However, Medicare coverage is still costly; beneficiaries pay relatively high deductibles and co-insurance. For example, the deductible for each hospital visit is $1,156. Many pay full price for medications once they hit Medicare’s limit for prescription-drug coverage.” (Washington Post, February 24, 2012)
And the out of pocket spending of most seniors isn’t capped. A quarter of seniors spend 30 percent or more of their income on health expenses, based on information collected by the Kaiser Family Foundation.Myth 4. Cutting Medicare is the only way to save it.
Cutting Medicare isn’t the answer. A recent report illustrates how much providers make from treating Medicare patients… almost a 20% profit.
Restraining payments to providers is not the most effective way to control costs; changing incentives is. Instead of rewarding volume of care (the number of visits to your doctor, medical tests, procedures, etc), Rother suggests providers should be paid to improve patient outcomes and reduce waste. “Better patient engagement and stronger public health measures, such as programs to prevent obesity and its related diseases, can also lower Medicare’s cost burden.” (Washington Post, February 24, 2012)
The 80-20 Rule applies to Medicare as it does to most systems: Eighty percent of Medicare spending pays for treating the sickest 20 percent of patients. Again, however, there is hope on the horizon. The Affordable Care Act creates new systems like patient-centered medical homes and organizations that coordinate care more efficiently by improving communication among providers, reducing duplicative services and managing prescription medications.
Myth 5. Medicare needs fundamental restructuring.
Medicare is working well. It doesn’t need to be changed. What we need to look at is the reality of 30 million more Baby Boomers entering the program in the next 18 years. The best of programs cannot double the number of people served without adding revenue to support the services.
Rother concludes, “Containing health-care cost growth is critical for Medicare’s survival, but it’s impossible to do that for Medicare alone. Payment restraints and incentives that improve value must be applied to the entire health-care system to be effective.” (Washington Post, February 24, 2012)