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MEDICARE
MD/DC ARA opposes any premium support, voucher plan or undermining of federal administration of Medicare by turning it, or any part of it, over to insurance companies and other private sector plans.
MD/DC ARA supports a strengthened Medicare program that is universal, voluntary and affordable. Medicare should have expanded benefits including:
- A prescription drug benefit administered by the Medicare program
- Affordable home and community-based long-term care
- Preventive services, such as annual physical exams
- Rehabilitative, nursing home and other vital services
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Have a specific affordable limit on out-of-pocket expenses by beneficiaries
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Have reimbursement levels that ensure quality care and access and hold providers accountable for how monies are spent
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Cover early retirees at affordable premium rates
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Repeal Part B premium means-test provision which motivates higher income persons to drop Part B and buy private insurance. This provision puts lower and moderate income persons at risk of paying higher premiums and leads to further undesirable privatization;
- Allow for negotiated drug prices and allow safe reimportation of drugs;
Medicare is Beneficial and Needed
Since its inception in 1965, traditional Medicare has become the nation's largest and most successful health insurance system serving the health needs of about 40 million senior and disabled beneficiaries and their families. It is not a welfare program. Medicare is very popular: 95 percent of Americans of all ages think that Medicare should be available and preserved for everyone at retirement.
The traditional Medicare program is a two-part scheme: it covers hospital and skilled nursing care facilities, hospice and some home health services (Part A) and doctor and other outpatient services (Part B). Part A is financed by a 1.45 percent payroll tax from both employees and employers. Part B is voluntary and is financed through a combination of beneficiary premiums and federal general revenues. Most services are delivered by private providers chosen by the beneficiaries. Although coverage of limited preventive services, such as annual medical examinations have been introduced over the last decade, the program still does not provide coverage for other preventive health care needs, such as dental, podiatry and vision care. Many retirees depend upon their union or employer based health care plans to close many of the gaps in Medicare services, but rising premiums and cost sharing make this less possible. Further, Medicare does not cover most long-term care which is growing more costly. Private long-term insurance is now available, but is too costly for most persons. Further, many retirees have no insurance coverage.
Medicare is Solvent
Medicare is solvent for at least the next 23 years according to the most recent Medicare Board of Trustees report but threats are occurring. Now it is considered financially efficient; administrative costs average only about 2 percent of its program costs compared with 25 percent in private small group market plans and 5-6 percent in large market plans.
Privatization is Costly
The privatization of Medicare (Private sector incursions into Medicare) has added huge costs for beneficiaries as evidenced by Medicare Parts C and D. In the guise of addressing higher health costs and providing a prescription drug benefit, Congress and the Bush Administration enacted The Medicare Prescription Drug Improvement and the Modernization Act of 2003, P.L. 108-173. These laws have created Medicare Part C offering Medicare Advantage (MA) plans providing choices of private managed care plans which Medicare contributes to and through Medicare Part D, a prescription drug benefit offered by private insurers. Unfortunately for taxpayers, through tax-free subsidies to the private MA plans, the federal government pays 12 to 19 percent more than if Medicare administered the program.
Part D is voluntary and funded by beneficiary-paid monthly premiums, federal government general revenues and state payments. However, the legislative design of the drug prescription benefit allows a significant gap in coverage ("the donut hole") when beneficiaries must pay for all of their drug costs. Further, the program creates an overly complex array of choices and limitations. Creating further deficits, State governments have had to help seniors pay for these gaps.
Additionally, the 2003 laws do nothing to control prescription drug price and health cost inflation while at the same time giving unprecedented tax shelters to the wealthy non-Medicare population and young healthy persons through the establishment of Health Savings Accounts. Further, structural changes to Medicare and attempts to privatize Social Security, together with budget short falls from tax cuts, represent major threats to current and future retirees' health and security. They also reduce the capacity of the government to finance Social Security and Medicare benefits and provide other needed services, including investments in schools and health care.
Medicaid is Essential for Low-Income Persons
Medicaid and the State Children's Health Insurance Program address the health needs of the low-income population, estimated to be over 55 million persons. Excluding donated care, which is typically home-based, about two-thirds of long-term care expenditures are for costly institutional care. Medicaid, a jointly funded federal-state program, pays for nearly half. These programs should be strengthened to ensure that the most vulnerable population receives quality health care. To do so, with the support of the federal government, labor unions and businesses, states and non-profit organizations must be allowed to innovate and succeed.
Expert Recommendations
Dr. Alice Rivlin, Brookings Institute, U.S. Government Accountability Office and other experts offer means for dealing with unsustainable health spending. Specifically, the new President and Congress should adopt a broad agenda of reform, including:
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Support incremental advances using regulatory reform, such as a strengthened Federal Food and Drug Administration;
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Continue to use Medicare and Medicaid to promote system-wide improvements through, for example, providing for scientific based evidence of the effectiveness of treatments, adoption of clinical practice guidelines and disease management for costly chronic conditions;
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Use marketplace clout of government to improve price-setting through carefully applied pay-for-performance strategies, competitive bidding, and direct price negotiations;
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Encourage better system performance and productivity through deployment of health information technology, useful technologies, and effective management practices;
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Promote preventative measures and consumerism in health care, to make individuals more aware and responsible for costly health coverage and care choices;
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Promote employment and adequate salaries and benefits for home health and nursing aides and support training of care providers and professionals;
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Recognize mental health needs of older persons; and
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Provide funds needed for health research conducted by the National Institutes of Health (NIH) to provide promising treatments and cures for diseases.
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