Tuesday, July 26, 2016

The Problem with Medicare and the Clintons

Dear Mrs. Clinton –
It’s probably good politics to suggest making Medicare available to some under 65s , just when Congressional Republicans are proposing to increase the Medicare eligibility age. Sometimes, though, good politics doesn’t produce good policy.

Medicare may be well-regarded by most Americans, but the program has four huge weaknesses that need to be fixed before considering any expansion. 


Here’s what’s wrong.
Medicare is absurdly, insanely overcomplicated.  When Medicare was created in 1965, it consisted of just two components, Part A hospital care and Part B physician and other care, with the split made only to gain AMA support for the legislation. Fast forward to 2016: we now also have Part C (Medicare Advantage), Part D (prescription drug), and seven versions of dual Medicare-Medicaid eligibility (in turn dependent on 50-plus states’ and territories’ own Medicaid regulations). And that’s all before the thousands of pages regulating payments to providers. The complexity provides a lot of jobs for bureaucrats and consultants, but does little for beneficiaries.

Medicare payments are unfair to many (including taxpayers).  For beneficiaries in the fee-for-service program, Medicare currently pays all allowed provider charges (after copays and deductibles). For those choosing Medicare Advantage, the program typically pays the full premium bid by the private plan.  The effect of this misplaced generosity is that one senior’s care may be subsidized by up to $5,000 a year more than another’s with the same health status in the same city—with taxpayers paying the difference. 

Medicare is regressive. Traditional Medicare imposes the same deductibles and coinsurance regardless of income and charges the same Part B premiums for the vast majority of beneficiaries. Similarly, Medicare Advantage plans impose the same cost-sharing for all incomes. Congress’s answer has been to allow Medicaid to pay premiums or cost-sharing for lower-income seniors, but many of those potentially eligible are not enrolled, while Medicaid’s rules can mean that a difference of a dollar of income make the difference between eligibility and otherwise.

 

Medicare is enormously (and unnecessarily) costly—and getting rapidly more so. According to the latest Medicare Trustees report, Medicare expenditures will rise from $683 billion in 2016 to $1.3 trillion in 2025. Even though Medicare per capita costs are rising slightly less rapidly than overall health care costs, the Trustees project that—unless changes to the program are made—these will increase from $12,925 in 2016 to $19,400 in 2025, far, far more than we can afford!

What’s the answer?  Three fixes.

This article first appeared here: http://thehealthcareblog.com/blog/2016/07/25/lets-fix-medicare-before-we-expand-it-mrs-clinton-but-then/

Related articles:  https://blog.medicare.gov/

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