Medicare Deciphering the Debate
Content
Saturday, August 25, 2012
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www.postcrescent.com
The Post-Crescent, Appleton-Fox Cities, Wis.
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B5
MEDICARE: DECIPHERING THE DEBATE
THE PROBLEMS
INCREASING HEALTH COSTS
“The truth is that no one can preserve Medicare as we know it. There isn’t a prayer that your father’s Medicare will be around in 10 years.” BOB LASZEWSKI,
a health care consultant
A national debate has exploded over Medicare, which provides health care to seniors. Today, we explore all aspects of the program and how President Obama and GOP nominee Mitt Romney differ on reform.
OBAMA HEALTH CARE LAW
Q: Does the Obama plan cut $716 billion from Medicare, as the Romney campaign argues it does? A: Not exactly. There are no cuts in benefits, and, in fact, seniors have already seen preventive services, such as annual exams and cancer screenings, with no co-pays. Instead, the savings comes by decreasing provider payments. Paul Ryan’s plan repeals the health care law but keeps the $716 billion in savings in place. Romney says he favors “putting that $716 billion back.” Q: Does Romney oppose these cuts? A: He says he does — but Ryan’s budget includes them. Q: What about Medicare Advantage? Do those benefits decrease, as the Romney campaign has claimed? A: No. Payments to Medicare Advantage insurers created to encourage participation will shrink to levels of traditional Medicare payments. Insurers must provide all benefits to participate in Medicare Advantage. Q: Is there an unelected group — or a death panel, as Romney spokeswoman Barbara Comstock mentioned in a recent CNN interview — that can determine that seniors are not eligible for some benefits when they reach a certain age? A: No. The Independent Payment Advisory Board, which is appointed by the president and confirmed by Congress, goes into effect in 2022 and can recommend limits to Medicare spending only if spending is not under control. The recommendations go into effect if Congress does not act to stop those changes. Legally, it cannot ration health care, cut benefits or increase Medicare premiums. It may only make changes in payments and delivery of services. Q: Will Medicare Part B average monthly premiums increase under Obama’s plan, more than doubling to $247 by 2014, as claimed in an anonymous chain email circulating again? A: No. The premium dropped in 2012 to $99.90, down $14.50 from the previous year. Future premiums have yet to be figured because they’re based on Medicare costs, but Medicare trustees predict the average premiums will not top $200 until 2020.
KEY QUESTIONS
Medicare costs have been increasing for years. Seniors are living longer than they did in 1965 and their medical care is costing more than the premiums paid into the program.
THE PLANS
Republicans and Democrats agree that any effort to keep Medicare alive for future generations requires a slowdown in spending so that expenses match up with revenue coming in. The two sides have starkly different philosophies about how to make that happen.
OBAMA
Made changes to Medicare in the Affordable Care Act to extend the life of Medicare to 2024. He eliminated subsidies to private Medicare Advantage plans and slowed the rate of spending.
KEY QUESTIONS
ROMNEY-RYAN PLAN
Q: Obama says Romney wants to “end Medicare as we know it.” Is that true? A: Not really. The original budget plan written by Ryan and passed by House Republicans would turn Medicare into a “premium support” plan. Seniors would have a fixed government subsidy with which to purchase private insurance. But the new version of that plan includes an option to retain traditional Medicare coverage. Q Does Ryan’s plan affect people on Medicare today, as the latest online ad by the Obama campaign implies by showing seniors in a seated exercise class and referring to “Florida’s massive retirement population”? A: No. It would not begin until 2023. That means today’s seniors, plus those 55 and older, would be exempted from the new system. And by the time there’s a deal on any plan, a 10-year exemption likely would include people younger than 55 today. Q: Wouldn’t the Ryan plan raise the Medicare eligibility age to 67? A: Yes, by 2034, but the eligibility age for Social Security already is headed to 67.
RUNNING OUT OF MONEY
As the baby boomers (born between 1946 and 1964) retire, the number of seniors will grow rapidly and Medicare will become unsustainable without changes. Medicare was set to run out of money in 2016 because spending exceeded the money coming in to pay for the program.
ROMNEY
Wants to repeal Obama’s bill, which would mean Medicare would run out of money again in 2016. Romney says he’ll pass new changes that will strengthen Medicare, but he hasn’t said what they would be.
3 KEY PROVISIONS Comparing Obama’s and Romney’s Plan
ELIGIBILITY
Seniors qualify for Medicare at age 65. OBAMA: Wants to keep it at 65. Democrats argue that workers in physically demanding industries (like construction) need access to Medicare at 65 and that private plans would be unaffordable at that age. ROMNEY: Ryan’s plan gradually increases the eligibility age to 67 by 2034. By delaying entry into Medicare, workers pay taxes longer and use the program for fewer years. Romney says this will keep Medicare healthier for a longer period of time.
NURSING HOMES
After senior citizens have exhausted their personal financial resources, Medicaid takes over to cover the cost of nursing home care. In fact, Medicaid currently picks up the tab for about half of all nursing home costs. On average, that can be $50,000 a year or more. ROMNEY: Ryan’s plan cuts $800 billion from Medicaid over the next decade — almost a 40 percent reduction — and turns the money over to the states. Just as health care for the poor varies now from state to state, so too would the amount a state pays toward nursing home care. OBAMA: The White House also has proposed spending less on Medicaid over the next decade, but it’s a much smaller reduction — about $60 billion.
Now, Medicare pays 95% of everything over $4,550.
Next year? The whole process starts all over again at zero.
OBAMA: The Affordable Care Act phases out the doughnut hole over the next decade. It has saved seniors nearly $4 billion on medications since it was passed in 2010. Savings, on average, were $629 per person during the first half of the year, according to the White House. ROMNEY: Repealing the Affordable Care Act brings back the “doughnut hole.” Romney has not proposed a solution to the hole.
THE DOUGHNUT HOLE
The Medicare prescription drug expansion, passed in 2003, has a gap where seniors must pay all of their drug costs before Medicare resumes picking up the bill.
-- By Kelly Kennedy and Richard Wolf, USA Today
COVERAGE GAP “DOUGHNUT HOLE”
Here’s the hole Seniors pay all of the cost until they reach $4,550. ($1,750)
RYAN’S PLANS
Paul Ryan introduced budget plans in 2011 and 2012 that dramatically cut taxes and spending. Each plan also proposed changes to Medicare and Medicaid, which pays for many seniors’ nursing home expenses. The first plan passed on April 15, 2011, on a 235 to 193 vote. No Democrats voted for it. The second plan passed on March 28, 2012, on a 228 to 191 vote. Again, no Democrats voted for it. In both years, the Democratic-controlled Senate rejected the Ryan plan. CURRENT SENIORS AND 55+: Remain in Medicare. YOUNGER THAN 55 NOW: When they retire after 2022, seniors receive a fixed amount (“premium support”) from the government to buy a private health insurance plan. The Congressional Budget Office says this plan would increase seniors’ out-of-pocket expenses by an average of $6,400 annually.
KEY:
Patient paid Insurer paid $2,800 Seniors then pay 25 percent of the bill until they hit $2,800. $310 Seniors pay the first $310 of their drug costs.
THE REGISTER
It’s not uncommon for seniors to take a dozen or more prescriptions over the course of a year, so a lot of people hit the hole in the past — about 4 million.
75% paid by insurer
25% paid by senior
RYAN (2011)
Sources: National Council on Aging, Kaiser Health News
THE COST
Amount the federal government will spend on Medicare in the 2012 budget year, about 13 percent of the national budget.
$485 BILLION
HOW IT’S FUNDED Seniors pay a monthly premium and it varies depending on their income. Medicare also gets money by taxing workers 1.45 percent of their pay.
A BRIEF HISTORY LESSON
THE START: Congress created Medicare in 1965 so that all senior citizens and the disabled had health insurance. The new program collected premiums from seniors and a payroll tax from younger Americans and used that money to pay the bills from doctors and hospitals. Prior to that, many seniors didn’t have health insurance because they couldn’t afford a private insurance policy. MEDICAID: In the same year that Medicare was started, Congress also created Medicaid to pay for the health care of the nation’s poorest citizens. That included nursing home care for seniors after they exhausted their personal financial resources. Medicaid, which includes money from the states, pays for about half of the nation’s nursing home bill. In the 2012 budget year, the government spent $269 billion on Medicaid. 1990s: Congress created and subsidized competition for Medicare. These private insurance plans became known as Medicare Advantage. In 2003, Congress added a prescription drug benefit for Medicare.
MEDICARE ENROLLMENT
Medicare enrollment (in millions) Medicare enrollment as percentage of the population
RYAN (2012)
1970 1975 1980 1985 1990 2000 2005 2010 2015 2020 2030
20.4 24.9 28.4 31.1 34.2 39.6 42.5 47.2 53.9* 62.3* 79.0*
1970 1980 1990 2000 2010 2020 2030
10% 13% 14% 15% 15% 19%* 22%*
THE REGISTER
-- By Kelly Kennedy and Richard Wolf, USA Today
Sources: Centers for Medicare and Medicaid Services, AARP, Kaiser Health News, U.S. Census Bureau.
COMPILED BY JEFFREY BRUNER, KELLI BROWN AND KATIE KUNERT / THE DES MOINES REGISTER WITH CONTRIBUTIONS FROM USA TODAY AND ASSOCIATED PRESS
CURRENT SENIORS AND 55+: Remain in Medicare YOUNGER THAN 55 NOW: When they retire after 2022, seniors receive a fixed amount from the government to buy a private health insurance plan or stay in Medicare. If seniors stay in Medicare and a comparable private plan is less expensive, seniors must pay the difference. The Congressional Budget Office has not scored this plan to determine how much out-of-pocket expenses would increase. HOW MUCH DO SENIORS GET? Romney and Ryan would give low-income seniors “more generous support,” but neither has offered specifics.
‘PREMIUM SUPPORT’
*Estimates Sources: Centers for Medicare and Medicaid Services, AARP
■
www.postcrescent.com
The Post-Crescent, Appleton-Fox Cities, Wis.
■
B5
MEDICARE: DECIPHERING THE DEBATE
THE PROBLEMS
INCREASING HEALTH COSTS
“The truth is that no one can preserve Medicare as we know it. There isn’t a prayer that your father’s Medicare will be around in 10 years.” BOB LASZEWSKI,
a health care consultant
A national debate has exploded over Medicare, which provides health care to seniors. Today, we explore all aspects of the program and how President Obama and GOP nominee Mitt Romney differ on reform.
OBAMA HEALTH CARE LAW
Q: Does the Obama plan cut $716 billion from Medicare, as the Romney campaign argues it does? A: Not exactly. There are no cuts in benefits, and, in fact, seniors have already seen preventive services, such as annual exams and cancer screenings, with no co-pays. Instead, the savings comes by decreasing provider payments. Paul Ryan’s plan repeals the health care law but keeps the $716 billion in savings in place. Romney says he favors “putting that $716 billion back.” Q: Does Romney oppose these cuts? A: He says he does — but Ryan’s budget includes them. Q: What about Medicare Advantage? Do those benefits decrease, as the Romney campaign has claimed? A: No. Payments to Medicare Advantage insurers created to encourage participation will shrink to levels of traditional Medicare payments. Insurers must provide all benefits to participate in Medicare Advantage. Q: Is there an unelected group — or a death panel, as Romney spokeswoman Barbara Comstock mentioned in a recent CNN interview — that can determine that seniors are not eligible for some benefits when they reach a certain age? A: No. The Independent Payment Advisory Board, which is appointed by the president and confirmed by Congress, goes into effect in 2022 and can recommend limits to Medicare spending only if spending is not under control. The recommendations go into effect if Congress does not act to stop those changes. Legally, it cannot ration health care, cut benefits or increase Medicare premiums. It may only make changes in payments and delivery of services. Q: Will Medicare Part B average monthly premiums increase under Obama’s plan, more than doubling to $247 by 2014, as claimed in an anonymous chain email circulating again? A: No. The premium dropped in 2012 to $99.90, down $14.50 from the previous year. Future premiums have yet to be figured because they’re based on Medicare costs, but Medicare trustees predict the average premiums will not top $200 until 2020.
KEY QUESTIONS
Medicare costs have been increasing for years. Seniors are living longer than they did in 1965 and their medical care is costing more than the premiums paid into the program.
THE PLANS
Republicans and Democrats agree that any effort to keep Medicare alive for future generations requires a slowdown in spending so that expenses match up with revenue coming in. The two sides have starkly different philosophies about how to make that happen.
OBAMA
Made changes to Medicare in the Affordable Care Act to extend the life of Medicare to 2024. He eliminated subsidies to private Medicare Advantage plans and slowed the rate of spending.
KEY QUESTIONS
ROMNEY-RYAN PLAN
Q: Obama says Romney wants to “end Medicare as we know it.” Is that true? A: Not really. The original budget plan written by Ryan and passed by House Republicans would turn Medicare into a “premium support” plan. Seniors would have a fixed government subsidy with which to purchase private insurance. But the new version of that plan includes an option to retain traditional Medicare coverage. Q Does Ryan’s plan affect people on Medicare today, as the latest online ad by the Obama campaign implies by showing seniors in a seated exercise class and referring to “Florida’s massive retirement population”? A: No. It would not begin until 2023. That means today’s seniors, plus those 55 and older, would be exempted from the new system. And by the time there’s a deal on any plan, a 10-year exemption likely would include people younger than 55 today. Q: Wouldn’t the Ryan plan raise the Medicare eligibility age to 67? A: Yes, by 2034, but the eligibility age for Social Security already is headed to 67.
RUNNING OUT OF MONEY
As the baby boomers (born between 1946 and 1964) retire, the number of seniors will grow rapidly and Medicare will become unsustainable without changes. Medicare was set to run out of money in 2016 because spending exceeded the money coming in to pay for the program.
ROMNEY
Wants to repeal Obama’s bill, which would mean Medicare would run out of money again in 2016. Romney says he’ll pass new changes that will strengthen Medicare, but he hasn’t said what they would be.
3 KEY PROVISIONS Comparing Obama’s and Romney’s Plan
ELIGIBILITY
Seniors qualify for Medicare at age 65. OBAMA: Wants to keep it at 65. Democrats argue that workers in physically demanding industries (like construction) need access to Medicare at 65 and that private plans would be unaffordable at that age. ROMNEY: Ryan’s plan gradually increases the eligibility age to 67 by 2034. By delaying entry into Medicare, workers pay taxes longer and use the program for fewer years. Romney says this will keep Medicare healthier for a longer period of time.
NURSING HOMES
After senior citizens have exhausted their personal financial resources, Medicaid takes over to cover the cost of nursing home care. In fact, Medicaid currently picks up the tab for about half of all nursing home costs. On average, that can be $50,000 a year or more. ROMNEY: Ryan’s plan cuts $800 billion from Medicaid over the next decade — almost a 40 percent reduction — and turns the money over to the states. Just as health care for the poor varies now from state to state, so too would the amount a state pays toward nursing home care. OBAMA: The White House also has proposed spending less on Medicaid over the next decade, but it’s a much smaller reduction — about $60 billion.
Now, Medicare pays 95% of everything over $4,550.
Next year? The whole process starts all over again at zero.
OBAMA: The Affordable Care Act phases out the doughnut hole over the next decade. It has saved seniors nearly $4 billion on medications since it was passed in 2010. Savings, on average, were $629 per person during the first half of the year, according to the White House. ROMNEY: Repealing the Affordable Care Act brings back the “doughnut hole.” Romney has not proposed a solution to the hole.
THE DOUGHNUT HOLE
The Medicare prescription drug expansion, passed in 2003, has a gap where seniors must pay all of their drug costs before Medicare resumes picking up the bill.
-- By Kelly Kennedy and Richard Wolf, USA Today
COVERAGE GAP “DOUGHNUT HOLE”
Here’s the hole Seniors pay all of the cost until they reach $4,550. ($1,750)
RYAN’S PLANS
Paul Ryan introduced budget plans in 2011 and 2012 that dramatically cut taxes and spending. Each plan also proposed changes to Medicare and Medicaid, which pays for many seniors’ nursing home expenses. The first plan passed on April 15, 2011, on a 235 to 193 vote. No Democrats voted for it. The second plan passed on March 28, 2012, on a 228 to 191 vote. Again, no Democrats voted for it. In both years, the Democratic-controlled Senate rejected the Ryan plan. CURRENT SENIORS AND 55+: Remain in Medicare. YOUNGER THAN 55 NOW: When they retire after 2022, seniors receive a fixed amount (“premium support”) from the government to buy a private health insurance plan. The Congressional Budget Office says this plan would increase seniors’ out-of-pocket expenses by an average of $6,400 annually.
KEY:
Patient paid Insurer paid $2,800 Seniors then pay 25 percent of the bill until they hit $2,800. $310 Seniors pay the first $310 of their drug costs.
THE REGISTER
It’s not uncommon for seniors to take a dozen or more prescriptions over the course of a year, so a lot of people hit the hole in the past — about 4 million.
75% paid by insurer
25% paid by senior
RYAN (2011)
Sources: National Council on Aging, Kaiser Health News
THE COST
Amount the federal government will spend on Medicare in the 2012 budget year, about 13 percent of the national budget.
$485 BILLION
HOW IT’S FUNDED Seniors pay a monthly premium and it varies depending on their income. Medicare also gets money by taxing workers 1.45 percent of their pay.
A BRIEF HISTORY LESSON
THE START: Congress created Medicare in 1965 so that all senior citizens and the disabled had health insurance. The new program collected premiums from seniors and a payroll tax from younger Americans and used that money to pay the bills from doctors and hospitals. Prior to that, many seniors didn’t have health insurance because they couldn’t afford a private insurance policy. MEDICAID: In the same year that Medicare was started, Congress also created Medicaid to pay for the health care of the nation’s poorest citizens. That included nursing home care for seniors after they exhausted their personal financial resources. Medicaid, which includes money from the states, pays for about half of the nation’s nursing home bill. In the 2012 budget year, the government spent $269 billion on Medicaid. 1990s: Congress created and subsidized competition for Medicare. These private insurance plans became known as Medicare Advantage. In 2003, Congress added a prescription drug benefit for Medicare.
MEDICARE ENROLLMENT
Medicare enrollment (in millions) Medicare enrollment as percentage of the population
RYAN (2012)
1970 1975 1980 1985 1990 2000 2005 2010 2015 2020 2030
20.4 24.9 28.4 31.1 34.2 39.6 42.5 47.2 53.9* 62.3* 79.0*
1970 1980 1990 2000 2010 2020 2030
10% 13% 14% 15% 15% 19%* 22%*
THE REGISTER
-- By Kelly Kennedy and Richard Wolf, USA Today
Sources: Centers for Medicare and Medicaid Services, AARP, Kaiser Health News, U.S. Census Bureau.
COMPILED BY JEFFREY BRUNER, KELLI BROWN AND KATIE KUNERT / THE DES MOINES REGISTER WITH CONTRIBUTIONS FROM USA TODAY AND ASSOCIATED PRESS
CURRENT SENIORS AND 55+: Remain in Medicare YOUNGER THAN 55 NOW: When they retire after 2022, seniors receive a fixed amount from the government to buy a private health insurance plan or stay in Medicare. If seniors stay in Medicare and a comparable private plan is less expensive, seniors must pay the difference. The Congressional Budget Office has not scored this plan to determine how much out-of-pocket expenses would increase. HOW MUCH DO SENIORS GET? Romney and Ryan would give low-income seniors “more generous support,” but neither has offered specifics.
‘PREMIUM SUPPORT’
*Estimates Sources: Centers for Medicare and Medicaid Services, AARP
