Medicare and Medicaid turn the big 50 in July. Will they be around for 50 more years?
"The health of our people is, inescapably, the foundation for fulfillment of all our aspirations," President Lyndon B. Johnson said in 1965 when introducing the Medicare bill to Congress. He said the later years for seniors should not be filled with “despondency and drift, or fear of financial hardship in the event of illness,” but rather with “security and dignity.” These two programs have grown over the past 50 years; today more than 55 million people are enrolled in Medicare, according to the Centers for Medicare & Medicaid Services.
Robert Quinlan, the managing member of Quinlan Care LLC, an independent broker of life and health insurance based in New Windsor, NY, discussed with me the changes over the last 50 years to the Medicare and Medicaid programs -- and what the future may bring.
Boomer: What does Medicare cover today and who is covered?
Quinlan: Medicare covers four medical related services. Part A will pay for hospital stays, home care, care in a nursing home (limited to 100 days of coverage) and for hospice (terminally ill) care. Part B pays mostly for your doctor visits (you will pay 20%), your lab fees and outpatient equipment. Part C is an alternative plan to Parts A and B. It is called Medicare Advantage plans, like a HMO, where your doctors and hospitals are in network. Finally, your medications outside a hospital stay are covered under Part D.
Medicare does not pay 100% of your medical bills and expenses. Many Americans purchase a private insurance plan called Medicare Supplement Plan to help pay what Medicare does not pay. Americans are eligible for Medicare if they have worked 40 quarters or more and have reached age 65. If you have end stage renal disease (kidney disease) or are receiving Social Security disability payments after two years, you may also qualify for Medicare benefits even if you have under age 65.
Boomer: What differences are there between the original Medicare program started in 1965 as compared to today, 50 years later?
Quinlan: Medicare has changed significantly since its original passage. The original law only covered hospitals and doctor visits. The disabled were added in 1973. Hospice care was added in 1982 and end stage renal disease was also added later. In 1983, Medicare paid only a fixed rate for hospital stays, not what a hospital chose to charge. Medicare saw the expansion role of Medicare + Choice plans in 1997 and 2003-- better known today as Medicare Advantage plans (Medicare Part C). President Bush signed into law the latest addition to Medicare today – Medicare Part D to pay for prescription drug coverage. The law also carried higher out-of-pocket expenses if seniors fell through the coverage gap (commonly called the “doughnut hole”). In 2015, the coverage gap is between $2,960 and $4,700 of drug related expenses.
Boomer: Medicare fraud occurs when a health-care provider overbills Medicare. What can be done to stop those abusing the system and costing our taxpayers billions of dollars?
Quinlan: A simple and effective way to stop Medicare fraud is to examine Medicare’s mandated “Your Explanation of Benefits” statement. This statement is sent by Medicare or your private insurance company (for Medicare Part C plans) to beneficiaries each time that medical services are provided. It is not a bill. It lists your Medicare claim number, a description of the service(s) rendered, the date of the service(s) provided by a doctor or hospital, total cost, the Plan’s share of the costs and your share of the costs. Review the services provided on your statement or ask a trusted family member. Check your calendar. Did you receive these services on the date that was shown on the statement? If not, call Medicare (800-633-4227) or your private insurance company to report any inaccuracies.
Boomer: What impact has the Affordable Care Act had on Medicare and Medicaid programs? What changes will we see in the future due to the ACA?
Quinlan: President Obama signed the Patient Protection and Affordable Care Act in 2010 (commonly referred to Affordable Care Act or ACA today) into law. It made significant changes to both Medicare and Medicaid. It added more preventive care services and a wellness exam for Medicare beneficiaries at no out-of-pocket expense. Dependents are now covered up to age 26. It will also phase out Medicare’s prescription drug “doughnut” hole by 2020, when you will pay 25% for brand names and generic drugs in the coverage gap. It also cut government reimbursements to hospitals, nursing homes, home care agencies and private insurers that run the popular Medicare Advantage plans.
What remains to be seen is: will paying providers less like hospitals and insurance companies result in more efficient delivered services, or will we have less care? Medicaid eligibility (usually for people with limited income and resources) was also greatly expanded in many states (but not all states) to help Americans under age 65 purchase health insurance.
Boomer: What challenges lie ahead for Medicare?
Quinlan: Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and the new Affordable Care Act marketplace subsidies represents 48% of the federal budget today. Budget pressures are partially due to rising health care costs and the large numbers of aging “baby boomers” that were born between 1946 and 1964. Government and private analysts have written that Medicare will pay hospital bills in full until 2030, but not beyond. Some of the proposals to ensure future Medicare benefits are far reaching include:
• Raise the age to age 67 to become eligible for Medicare
• Increase the current payroll tax to raise more revenue to support Medicare
• Increase premiums for every one and/or beneficiaries with high income levels
• Shift away from “fee for service” reimbursements to providers to outcome based reimbursements (under way now)
• Significantly reduce health-care fraud
• Change Medicare to a defined contribution, like premium support payment system
• Cuts in Medicare services and/or higher out-of-pocket expenses for beneficiaries
• End the critical shortages in the number of primary care doctors and registered nurses
• Address the declining operating margins at hospitals, nursing homes and home care agencies (due to reduced reimbursement levels from Medicare) which will limit access of care and raise quality of care issues.
• Introduce more market competition and entrepreneurial projects to bring more working solutions
• Develop more home based care for the frail and chronically ill. Bring back house calls by doctors and nurse practitioners to head off more costly care in hospitals and nursing homes.