Transcript MEDICARE: PAST, PRESENT AND FUTURE

MEDICARE: PAST,
PRESENT AND FUTURE
James G. Anderson, Ph.D.
Department of Sociology & Anthropology
MEDICARE PART A
Federal heath insurance for persons over 65
years of age
 Covers acute care hospitalization
 Covers limited nursing home care and other
institutional services
 The permanently disabled were covered at a
later date
 In 1973, the end-stage renal disease program
was added to Medicare

MEDICARE PART B
Requires financial contributions from enrollees
 Covers professional fees for medical and
surgical services

MEDICARE ENROLLEES
(In Millions)
100
90
80
70
60
50
40
30
20
10
0
80
60
Enrollees
38.1
19.5
1967
25
1975
31.1
1985
1996
2020
2040
MEDICARE EXPENDITURES
(In Billions)
350
309
300
225
250
200
148
Expenditures
150
100
37
50
8
0
1970
1980
1993
2000
2004
CBO PROJECTIONS
(Enrollment as % of Population)
30
24.7
25
22
23.1
20
15
13.6
14.8
%
10
5
0
1995
2010
2030
2050
2070
CBO PROJECTIONS
(Spending as % of GDP)
10
9
8
7
6
5
4
3
2
1
0
7.8
7
6.3
3.7
%
2.6
1995
2010
2030
2050
2070
PROBLEMS WITH MEDICARE
Impending insolvency of the hospital
insurance trust fund
 Favors acute care over chronic care
 Does not cover most long term care
services
 Omits prescription drug coverage
 Permits medical costs to impoverish
older adults and their families

THE FUTURE OF MEDICARE
Number of Workers per Retiree
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
4
3.9
2.8
2.1
1980
2000
2020
2040
Enrollees
Medicare’s Dwindling Reserves
(In billions)
110
110
85
90
70
55
50
18
30
Reserves
10
-10
-30
-30
-50
1997
1998
2000
2001
MEDICARE ENROLLEES IN
MANAGED CARE
9.5
11
9
5.7
7
5
%
3
1
-1
1990
1995
ELDERLY NEEDING HELP
WITH ACTIVITIES
(In Millions)
13.8
15
13
11
9
7.1
7
Elderly
5
3
1
-1
1990
2030
ELDERLY NEEDING
NURSING HOME CARE
(In Millions)
5.3
6
5
4
3
Elderly
1.5
2
1
0
1990
2030
REFORM PROPOSALS
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Gradually raise eligibility age to 70
Raise direct payments by recipients by higher
premiums for MD insurance or raise co-payments for
services
Provide incentives for Medicare beneficiaries to join
HMOs
Offer Medicare beneficiaries more choice in their health
care plans
Institute a means test for Medicare
Enact an annual budget for Medicare
Authorize medical savings accounts
MEDICARE PRESCRIPTION
DRUG BENEFIT
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New drug benefit begins in 2006
Premiums are estimated to be $35/month, $420/year
After the premium is paid and a $250 annual deductible the plan will
pay 75% of drug costs until the enrollee reaches $2,250. The
coverage stops and the enrollee pays for the next $2,850 in drug
expenses. At this point the enrollee has spent $3,600 0n drugs plus
$420 on the premium.
For the rest of the year the enrollee pays $2 for every generic drug
prescription and $5 for every brand name prescription or 5% which
ever is greater.
Before the program starts in 2006, seniors will be able to purchase a
drug discount cared for $30/year
.
MEDICARE PRESCRIPTION
DRUG BENEFIT
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Low income enrollees will be able to obtain drugs at $12 per generic drug and $3-5 per brand-name drug
The drug benefit will be provided through private
prescription drug plans that contract with the Medicare
program. Private plans can charge different premiums.
Premiums, deductibles and the “doughnut hole” will
grow with the cost of the plan.
Financial incentives would be given to employers who
continue retiree health coverage if it provides a
prescription drug benefit.
In addition to the annual premium of $420 a year…
If your drug costs are…
Cumulative total amount out
of your pocket…
You pay…
Up to…
$0 – $250
100%
$250
$250
$251 – $2,250
25%
$500
$750
$2,251 –$5,100
100%
$2,850
$3,600
5%
No limit
$3,600 +
5% of costs above
$5,100
Over $5,100
PRESCRIPTION DRUG
BENEFIT
Advantages
Prescription drug prices are out of
control
 More than 1/3 of Medicare
beneficiaries lack coverage
 Price discrimination against the
elderly
 Drugs are now routinely used to treat
heart disease, cancer, arthritis, etc.
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PRESCRIPTION DRUG
BENEFIT
Disadvantages
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The bill does virtually nothing to moderate drug costs.
The legislation prohibits Medicare from negotiating
lower drug prices for beneficiaries
Drugs can only be re-imported from Canada if the
Secretary of DHHSA certifies that they are safe and will
significantly reduce costs.
Drug cost will rise significantly under this program.
Long Term Care Benefit
Arguments For
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(1) Long-term custodial care accounts for 81% of
catastrophic costs for the elderly.
(2) Over half of those 65 years and older will need some
kind of long-term care (LTC).
(3) Over 70 % of single elderly patients spend down to the
poverty level after 13 weeks in a nursing home.
(4) 5% of Medicaid recipients in nursing homes consume
43% of the Medicaid budget.
(5) The most equitable policy would be a universal
mandatory LTC health insurance program financed by the
federal government.
(6) There are a number of ways of financing universal LTC.
Long Term Care Benefit
Arguments Against
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(1) Family members should not be allowed to shift the cost
of LTC onto the government and thus, onto taxpayers.
(2) A government sponsored LTC health insurance program
would be enormously costly.
(3) Such a program would enormously increase both the
demand for and the cost of LTC.
(4) A tax supported program would be regressive - taxing
younger working people to provide benefits for elderly
persons with substantial resources.
(5) The government should only provide assistance to those
who do not have the resources to pay for long term care.
(6) Instead of a government sponsored program the
government should provide incentives for private insurance
and savings to finance LTC. Outline.
DISCUSSION QUESTIONS
Should we regulate drug prices like
other countries do?
 How would regulation affect
development of new drugs?
 Should Medicare cover prescription
drugs? For all enrollees? For only
the poor?
 Should Medicare purchase drugs at
a discount and sell them to the
elderly?
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DISCUSSION QUESTIONS
Should we extend Medicare to
provide for Long Term Care?
 Should Medicare cover Long term
care for all enrollees? For only the
poor?
 How would we pay for Long Term
Care? Increase the general payroll
tax? Require the elderly to pay part
or all of the premium for LTC?
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