Five Ways to Squeeze Medicare

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Five ways to squeeze Medicare

WASHINGTON Nearly 50 million people on Medicare, as well as those entering the

program at a pace of one every eight seconds, are likely to get more than their money's

worth before they die.

The same can't be said for anyone under 55 who will rely

on the federal health care program for those 65 and older

in the future. They face higher costs and, possibly, longer

waits before they qualify for coverage.

Medicare one of the most popular programs ever

devised by the federal government is on the chopping

block. Again.

Medicare at the center of budget debate

But just a year after President Obama's health care

overhaul called for $500 billion in Medicare savings, a

variety of factors may protect the program this time. An

effort to exempt older workers from cuts, the advertising

and lobbying clout of health care providers, and the

approaching 2012 elections all point toward putting off

major changes.

"There's not much left in the well," says Dan Mendelson,

CEO of Avalere Health, a consulting firm. "There's

nothing that is politically acceptable or pain-free."

Since its creation in 1965, Medicare has risen in public

esteem. Today it enjoys the sort of favorable ratings

President Obama and Congress can only dream of.

Since the late 1980s, Medicare has battled efforts to tame

its explosive growth or make it more self-sustaining.

Powerful lawmakers have been chased down city streets

and lofty commissions rendered impotent by the forces

that rely on Medicare for their health or wealth, from the

AARP to the American Medical Association.

Today the program is again the top target of budget-

cutters. They know the nation can't keep running the $1

trillion annual deficits that have sent the national debt to

$14.7 trillion nearly the size of the $15 trillion economy.

The aging of the Baby Boom generation will boost

enrollment by 1.6 million annually over the next two

decades, bringing it to 81 million by 2030. Actuaries must

project out 75 years; when they do, they see 120 million

people on Medicare.

Its annual cost $555 billion, more than 15% of the

By Richard Wolf, USA TODAY Updated 2d 7h ago

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federal budget will rise to 18% of the budget within a

decade. Over the next 75 years, it will owe $38 trillion to its beneficiaries.

So clear is the need to trim the program that Obama and Congress agreed on a deficit-

reduction law in August virtually guaranteeing some reductions: If lawmakers fail to do it

themselves, automatic cuts will begin to squeeze up to 2% savings from almost every part

of the program.

Here's one problem for the budget-cutters: There's not much appetite amongpolicymakers to give less to those age 55 and up, who will qualify for the program within

10 years.

Here's another: Doctors, drugmakers, hospitals, medical colleges, home health providers,

medical equipment manufacturers and insurers have been targeted before most

recently in last year's health care law. They agreed to those cuts because the overhaul is

projected to expand insurance coverage to 32 million people who likely would seek more

services. This time, they have no such incentive.

And another: Although a 12-member congressional "supercommittee" has until late

November to propose a deficit-reduction plan, the following November already beckons.

That's when Obama and most members of Congress run for re-election. In 2008, 70% of

seniors ages 65 to 74 turned out to vote, the highest rate of any age group.

The message from many Medicare beneficiaries, says Robert Blendon, professor of

health policy and political analysis at Harvard University's School of Public Health, is

simple: "Don't cut my benefits, and don't ask me to pay a lot more for what I have."

Most Americans, in fact, are protective of Medicare. A non-partisan Kaiser Family

Foundation poll in September found that 51% of people didn't want Medicare cut at allto

reduce the federal deficit. Only 13% favored "major reductions."

To make sure lawmakers get the picture, AARP, the nation's biggest seniors group with 37

million members, is running a multimillion-dollar ad campaign. "We're giving voice to what

people actually tell us," says legislative policy director David Certner.

Here are five ways Medicare could be squeezed and the reasons it will be difficult.

1 Target 'rich people'

Most proposals that focus on raising premiums or limiting benefits have only the wealthy in

mind and for good reason. Polls show that's the only way to win public support.

"Anything that has upper-income people pay more does well at the moment," Blendon

says.

But in 1989, those people rebelled against a new federal law intended to provide basic

catastrophic health care coverage under Medicare at their expense, going so far as to

chase Rep. Dan Rostenkowski, D-Ill., a House committee chairman, down a Chicago

street. The law was repealed later that year.

Under the health care overhaul passed last year, the 2.9% Medicare tax was raised for

individuals with income above $200,000 and couples above $250,000. Now the focus is

on upper-income Medicare beneficiaries with income above $85,000, who already pay

more for outpatient care and prescription drugs.

"I guess you go after rich people," says Robert Laszewski, a non-partisan health care

consultant. "That's where you've got the most ability to hurt someone who can take the

hurt."

Obama has proposed raising premiums for upper-income beneficiaries and gradually

bringing more people into that group, so that eventually one in four seniors would pay

more.

The question will be: Who can afford it?

"I would be cautious about that," says John Rother, president of the non-partisan National

Coalition on Health Care. "You're getting pretty deep into ordinary middle-income

families."

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2 Give beneficiaries skin in the game

Making all Medicare beneficiaries pay more is tougher politically. But analysts say giving

patients more skin in the game will lead them to make better health care choices.

Obama last month recommended increasing beneficiary costs beginning in 2017. New

beneficiaries would face higher deductibles for outpatient care and co-payments for home

health care. Those who buy expensive Medigap policies to avoid co-payments would face

30% higher premiums.

Those proposals pale compared with what House Republicans passed in April: Budget

Committee Chairman Paul Ryan's plan to offer future Medicare beneficiaries a flat federal

payment in order to buy private or government insurance.

The Congressional Budget Office estimated that plan would cost beneficiaries an average

of $6,400 more annually. Even so, a Kaiser Family Foundation poll in June found 45%

supported it, while 49% preferred the current system.

Eugene Steuerle, a health care specialist at the Urban Institute, argues that Medicare

should be forced to live within a budget. He would give beneficiaries options, such as

getting bundled services from one health care organization or taking a fixed federal

payment, as a way to ratchet down prices. "At least for a long time to come, you have to

offer traditional Medicare as the alternative," Steuerle says. "But if it's more expensive,

you should have to pay more for it."

3 Raise the eligibility age

In the midst of the summer's talks over hiking the nation's debt limit, Obama raised the

possibility of gradually increasing Medicare's eligibility age to 67. He has since backed off.

Little wonder: His health care law expanding insurance coverage remains a work in

progress and could get overturned by the Supreme Court or a Republican-led Congress.

That could leave people ages 65 and 66 in jeopardy.

The idea is patterned on the 1983 law that rescued Social Security: One provision

gradually increased the retirement age for collecting full benefits from 65 to 67.

But in this case, analysts say it could increase health care spending by passing on the

costs to employers that insure retirees and older Medicare beneficiaries who could face

higher premiums.

"Medicare would save some money, but overall health system spending would go up, notdown," says Robert Berenson, a Medicare official in the Clinton administration and now

vice chairman of MedPAC, which advises Congress on Medicare.

4 Reduce providers' profit margins

Nearly every effort to reduce Medicare costs has focused on doctors, hospitals,

drugmakers and insurers. It happened in 1990, 1993, 1997, 2006 and again last year.

Doctors already face a nearly 30% reduction in Medicare payments under an outdated

formula. It's avoided annually, but only by Congress finding the money elsewhere.

Repealing the formula would cost more than $300 billion over 10 years.

"Congress created the Medicare physician payment formula, and the congressional deficit

committee must now find a way to repeal it to preserve seniors' access to health care,"

says Peter Carmel, president of the American Medical Association, which plans an ad

campaign.

Other providers appear to be fair game again. Obama would get $135 billion over 10

years from drug companies by requiring them to offer discounts to low-income patients.

The drugmakers' trade association says that would eliminate thousands of jobs and result

in higher premiums.

Hospitals that swallowed $155 billion in reduced payments under last year's health law

face an additional $50 billion cut under Obama's plan. They, too, have launched an ad

campaign and are focusing on the potential job loss at hospitals often a community's

largest employer.

"Whatever it takes," says Rick Pollack, executive vice president for advocacy and public




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policy at the American Hospital Association.

Insurers continue to profit under the popular Medicare Advantage program, which bundles

benefits together, but it was cut $200 billion under last year's overhaul. They are fighting

changes in Medigap coverage and endorsing a plan to enroll people who qualify for both

Medicare and Medicaid in private health plans.

Also on the chopping block are medical colleges and teaching hospitals that train doctors

while providing much of the nation's Medicaid and charity care. The Association of

American Medical Colleges is running ads to "make sure that we connect the dots forpeople," says chief advocacy officer Atul Grover.

Providers argue that the more reimbursements are reduced, the more likely it is that

doctors and others will limit Medicare patients, as they have done with Medicaid. Most

would rather accept the threatened 2% across-the-board cut than anything worse. "All the

providers are in a tenuous situation," says Chip Kahn, president of the Federation of

American Hospitals. "Across-the-board reductions are brutal justice. But on the other

hand, it's better than the alternative."

5 Root out waste and inefficiency

If providers fight successfully to avoid further cuts and lawmakers are afraid to hit

beneficiaries, the debate could turn to waste, fraud and abuse.

Medicare is considered a high-risk program by the Government Accountability Office

because it's prone to high rates of fraud, waste, abuse and improper payments. The GAO

estimates that $48 billion was lost through improper payments in 2010 nearly 10% of

Medicare's total cost.

Government recovery efforts have lagged far behind the problem. Inspector general

reports show that just $4 billion was recovered last year from improper payments in

government health care programs. Last year's health care law called for about $6 billion in

savings by cracking down on waste and fraud.

The attraction of targeting fraudulent and inefficient health care providers is obvious:

Unlike all the other cost-saving measures, it doesn't diminish the nation's health care

system. "If you put less money into health care," Steuerle says, "to some extent, you're

going to get less health care."

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EditorBrent Jones. For publication consideration in the newspaper, send comments to [email protected]. Include name,phone number, city and state for verification. To view our corrections, go to corrections.usatoday.com.

Posted 2d 16h ago | Updated 2d 7h ago

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270 comments Sort:Oldest to Newest

Score: 35_LUNATIC_6:25 AM on October 3, 2011




5/6

Next

6 replies

OBAMACARE IS THE PROBLEM. Report Abuse

Score: 16bepajoe6:26 AM on October 3, 2011

4 replies

o.k. so here is the solution!

eliminate obama care and put everyone on medicare. YES EVERY ONE! This way

we have lots young healthy people paying into a system where we now have a

bunch of older and more sickly people draining the system.

And here is the thing: Medicare is already in place and i t works and there is no

question that it is unconstitutional.

Report Abuse

Score: 1Laterguy6:28 AM on October 3, 2011

1 reply

Gov't takes away our money and then gives us back the part it thinks we

"deserve". We would have been better off without gov't interference in our lives.Gov't should have never taken over funding our retirement.

~~~~~~~~~~~~~~~~

You are about 75 years too late to complain. And in today's world, just how

would someone save and plan for a collapsing economy? The dollar is worth less

and less every day and there is no interest on savings...nor any real increase in

401ks since it started. The money would have been there for Social Security

except for the fact that it was used to keep taxes down f or the last 30

years...while the wealthy scammed the system, and cleaned it out.

As for Medicare...yes, it will have to be cut down. And heroic measures to save

lives will have to be eliminated...totally. Especially that last year that costs most

of the expenses. We have the most expensive, for profit, medical system in the

developed world and are still way down the list for life expectancy and good

health.

The pack a day, six pack a day, obese American is just going to have to die of

his/her bad health choices in the years to come. Or pay c ash out of pocket for

treatments.

Report Abuse

Score: 70cato02116:33 AM on October 3, 2011

1 reply

"fraud, waste, abuse and improper payments...nearly 10% of Medicare's total

cost."

This should be an automatic starting place. Eligibility age, benefit reduction and

higher premiums should be reviewed as secondary cost savers. For that matter,

the entire gov't should be scrutinized for fraud, waste and abuse!!!! If the same

percentage holds true we could knock off nearly $1.5 dollars off the national

debt.

Report Abuse

Score: 15work4changein126:57 AM on October 3, 2011

3 replies

The debt problem is Bank bailouts, cash for clunkers, bailout of the GM, l oans to

China, yes China, and ALL of Obama's spend, spend & spend !!

Report Abuse




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Five Ways to Squeeze Medicare