of expanding the federal health insurance program,
we looked at what it covers and costs.
It’s far from
“free.”
July 31, 2019
NYT
By Abby Goodnough
Medicare, the federal health insurance program for
people who are 65 or older, has become something of a panacea in the Democratic
presidential race.
Some candidates, including Senators Bernie Sanders and Elizabeth Warren, want to
give it to everyone and even expand its benefits. Others, like former
Representative Beto O’Rourke, want to give it automatically to people who don’t
have other health insurance. Many, including former Vice President Joseph R.
Biden, want to give people the right to buy into a Medicare-like public health
insurance program.
Whatever their positions, Medicare is what most of the candidates are holding up
as a model for universal coverage, a goal they all embrace.
Medicare is popular among its 60 million beneficiaries, but the program also has
limitations, and it is certainly not “free.” Co-payments can be high for some
people, especially for long-term hospitalization and some medications. Some
Democratic proposals, including those from Mr. Sanders and Ms. Warren, would
change that by eliminating premiums and deductibles, and pay for the program
instead with higher taxes.
As expansion of Medicare becomes a campaign season rallying cry, we took a look
at what it’s like to be on Medicare now.
Here are some answers to basic questions.
What exactly does Medicare cover? Are the benefits good?
The benefits are comprehensive, though not exhaustive. Medicare divides benefits
into categories. One, Part A, covers inpatient care at hospitals and — with some
limits — skilled nursing facilities, where people often go to recover from an
injury or illness. It also covers hospice care and, in some circumstances, home
health care. Another category, Part B, covers doctor appointments, outpatient
procedures and tests, some mental health services, as well as wheelchairs,
walkers and other equipment. Prescription drugs are covered under Part D. Part C
is a privately run managed care option called Medicare Advantage.
What doesn’t Medicare cover?
Medicare does not cover glasses, basic eye exams,
hearing aids and most dental care — frustrating omissions for many
beneficiaries, who are at an age when they are more likely to need these
services. It also won’t pay for care received outside the United States.
But by far the most expensive thing Medicare doesn’t pay for is long-term care
in nursing homes, assisted living facilities or at home. Some people buy
long-term care insurance, or spend down their assets to qualify for Medicaid,
which does cover nursing home care. A private room in a nursing home cost an
average of $100,375 last year, according to Genworth, a financial company.
How much does it cost?
Part A typically has no monthly premiums (like
Social Security, it’s financed by payroll taxes all workers pay), but it has a
deductible of $1,364 per “episode of illness,” plus a fixed amount — as high as
$682 a day — if you spend more than 60 days in the hospital.
For Part B — doctor’s visits and outpatient care — premiums are based on income.
The standard premium this year is $135.50 a month, but financial help is
available for people with low incomes who don’t qualify for Medicaid, the
government health program for the poor, which covers just about everything.
Richer Medicare beneficiaries — individuals with annual incomes over $500,000 —
pay $460.50 a month. Premiums are typically deducted from people’s Social
Security checks. Part B also has a deductible of $185 a year, and co-payments of
20 percent after you reach your deductible.
Many people buy supplemental “Medigap” insurance to cover Medicare’s
out-of-pocket costs.
Unlike Affordable Care Act plans, Medicare has no cap on out-of-pocket spending,
so the cost can climb quite high for sick people. An analysis by the nonpartisan
Kaiser Family Foundation found that Medicare enrollees in fair or poor health
spent an average of $6,128 in 2013, or 47 percent of average Social Security
income.
Prescription drug costs can also be high in Medicare, and they represent one of
the most complex, confusing parts of the program. Medicare Part D plans are run
by private insurers, and the premiums cost $40 a month on average this year,
according to Kaiser. There are also annual deductibles before coverage kicks in
— they are capped at $415 this year — plus co-payments and coinsurance. But if
your income is low enough, you may qualify for extra help paying for drugs, and
in some cases, owe no premiums or out-of-pocket costs.
Then, there is the dreaded “doughnut hole” — a gap in which the Medicare drug
plans don’t pay for patients’ medications after they have spent a certain amount
— this year, $3,820. At that point, enrollees have to pay 25 percent of the cost
of brand-name drugs, and 37 percent of the cost of generic drugs, until their
total out-of-pocket spending has reached $5,100. Once they hit that, they
qualify for “catastrophic coverage,” and only pay a small co-payment for covered
drugs for the rest of the year.
Kaiser recently found that one million Medicare beneficiaries had out-of-pocket
spending above the catastrophic threshold in 2017, averaging $3,214.
What is Medicare Advantage?
Medicare Advantage is an increasingly popular
alternative to traditional Medicare. Advantage plans are offered by private
insurers that have contracts with Medicare. These plans have all the same
benefits as traditional Medicare, and often more, such as dental care or health
club memberships. Co-pays and deductibles vary depending on the plan. Unlike
traditional Medicare, all Medicare Advantage plans have limits — $6,700 this
year in most cases — on out-of-pocket spending.
Medicare pays Advantage plans a fixed monthly sum for each beneficiary, while in
traditional Medicare, providers are paid for each service based on an annual fee
schedule. As a result, Advantage plans tend to use tools like pre-authorization
requirements and strict provider networks to control costs.
Those restrictions can be a turnoff to people with a lot of medical needs. Some
data suggests people with Medicare Advantage tend to be healthier but less
wealthy than those with traditional Medicare. One thing is certain: the private
plans are growing in popularity. About one-third of Medicare recipients, or 22
million people, now have them, up from six million in 2005.
Can people choose any doctor they want?
This depends largely on whether they have
traditional Medicare or a Medicare Advantage plan. Traditional Medicare allows
beneficiaries to seek care from any doctor or hospital in the United States that
accepts it, and does not require referrals to specialists or prior authorization
for services.
But Medicare Advantage plans typically have strict networks of medical providers
that beneficiaries have to use unless they are willing to pay more. Some
Advantage plans may cover care outside the network, according to the Center for
Medicare Advocacy, but the out-of-pocket costs are generally higher than for
in-network care. Advantage plans do cover emergency care outside their network —
if you are traveling domestically, for example — but nothing else.
Does every doctor and hospital accept Medicare?
No, but most do. According to the federal Centers
for Medicare and Medicaid, 2,752 doctors and other providers opted out of
Medicare in 2018 — a minute number considering there are more than one million
practicing doctors alone. Psychiatrists are the biggest category of doctors who
opt out, according to Kaiser.
A small share of doctors who accept Medicare are called “nonparticipating
providers,” meaning they can choose to charge Medicare patients higher fees, up
to a certain limit. The patients are responsible for paying the full amount
beyond what Medicare pays — a practice called balance billing.
It is even more rare for a hospital not to accept Medicare, although some
private psychiatric or other specialty hospitals that cater to the wealthy may
not.
Can you appeal a decision if Medicare refuses to cover a service?
Yes, although few people take this step, at least
according to a report last year by the inspector general at the Department of
Health and Human Services. The report found that beneficiaries and providers
appealed more than 863,000 denials from 2014 through 2016 — only about 1 percent
of the total number of denials during that period. But their success rate was
high: About 70 percent of the appeals were fully successful at the first level
(there are five possible levels to keep appealing to), according to the report.
Most were from providers regarding payments that had been denied, not patients
regarding services that had been denied.
Medicare and
Medicaid, the two mainstays of government health insurance, turn 50 this month,
having made it possible for most Americans in poverty and old age to get medical
care. While the Affordable Care Act fills the gap for people who don’t qualify
for help from those two programs, there are important improvements still needed
in both Medicare and Medicaid.
At the time the two programs were enacted in July 1965, advocates of Medicare,
which today covers 46 million Americans over the age of 65 and nine million
younger disabled people, expected that it would expand to cover virtually all
Americans. Although polls between 1999 and 2009 showed consistent majorities in
favor of expanding Medicare to people between the ages of 55 and 64 to cover
more of the uninsured, it never happened.
Still, its achievement in improving life expectancy and reducing poverty among
the elderly has been enormous. Before Medicare, almost half of all Americans 65
and older had no health insurance. Today that number is 2 percent. Analysts say
that between 1970 and 2010, Medicare contributed to a five-year increase in life
expectancy at age 65, by providing early access to needed medical care. Even
compared with people under age 65 who have insurance, those on Medicare are less
likely to miss needed care or have unmanageable medical bills.
While Medicare, which covers hospital care, doctors’ services and prescription
drugs, is comprehensive, many people are still left struggling to pay premiums,
cost-sharing for various services and the full cost of items not covered by
Medicare, like dental care and extended stays in nursing homes. Roughly half of
all Medicare recipients live on incomes of less than $24,000 per person, and
while the poorest of them get additional help from Medicaid, many do not.
Medicare still lacks a cap on the amount a beneficiary has to pay out of pocket,
the most basic function of insurance. By contrast, the Affordable Care Act puts
limits on beneficiary spending per year and over a lifetime.
The Affordable Care Act has helped Medicare beneficiaries by eliminating
co-payments and deductibles for preventive care like mammograms and
colonoscopies, and by providing discounts for very heavy users of prescription
drugs. It will strengthen Medicare as a system through demonstration projects to
find new ways to deliver care that will improve its quality and lower its cost.
The challenge will be to identify and spread the most promising innovations so
that they benefit not just Medicare, but the entire health care system.
Medicaid, the other part of the medical safety net, is a joint state-federal
program for the poor. For the past five decades, it has been critical in
reducing childhood deaths and infant mortality. It has saved the lives of
patients with chronic conditions like heart disease, diabetes and asthma. Last
year it covered some 64 million people in a typical month and 80 million people
at some point during the year. If Medicaid did not exist, life expectancy in
America would be much lower.
The problem with Medicaid is that federal rules give states great leeway in
deciding whom the program helps. Many states are so cheap that only extremely
poor parents qualify for Medicaid coverage and childless adults are excluded
entirely. Texas, for example, only covers parents who earn up to 15 percent of
the federal poverty level, or less than $4,000 a year for a family of four, and
does not cover other non-disabled adults at all, while other states, including
New York and California, offer far better coverage. The result is huge
differences across the country for assistance to poor, sick people.
The Affordable Care Act was intended to reduce this disparity by offering
additional federal funding for states to expand their Medicaid programs to cover
all adults up to 138 percent of the federal poverty level, or $32,913 for a
family of four. Yet 21 states, the vast majority run by Republican governors,
have chosen not to expand.
Medicaid could be improved by raising its payments to doctors, who often refuse
to take Medicaid patients because the rates are so low compared to private
insurance and Medicare. Medicaid should also cover legal immigrants, who
currently have to wait five years to be eligible, and illegal immigrants, who
are currently denied coverage entirely.
Despite the perennial fear that the costs of these two programs will grow
uncontrolled, spending in both has been growing at a relatively modest rate in
recent years. Medicare and Medicaid have changed and grown over the decades,
through Republican and Democratic administrations, to meet new challenges. Their
performance and popular support has allowed them to withstand
ideologically-driven attacks on their continuance as government entitlements.
These programs succeed, in fact, because they entitle all eligible Americans to
receive the health care they need.
September
19, 2011
The New York Times
By ROBERT PEAR
WASHINGTON — President Obama’s budget director said Monday that the president’s
new deficit-reduction plan would impose “a lot of pain,” and that is clearly
true of White House proposals to cut $320 billion from projected spending on
Medicare and Medicaid in the coming decade.
Mr. Obama proposed higher premiums and deductibles for many Medicare
beneficiaries and lower Medicare payments to teaching hospitals and rural
hospitals. He would start charging co-payments to frail homebound older people
who receive home health services. And he would reduce the growth of federal
payments to states for treating low-income people under Medicaid.
The White House said Mr. Obama’s proposals would cut $248 billion from the
projected growth of Medicare in the next 10 years, while shaving $72 billion
from Medicaid and other health programs. A large share of the Medicare savings
would, in effect, be used to pay doctors, who would otherwise face deep cuts in
the fees they receive for treating Medicare patients.
The proposals are part of a package to reduce deficits by more than $3 trillion
over 10 years, beyond the $1 trillion in savings already assumed under the debt
limit law that Mr. Obama signed in early August. The package includes tax
changes intended to raise $1.5 trillion in revenue over 10 years.
Mr. Obama would also allow the Postal Service to cut its losses by ending
Saturday mail delivery. He would reduce farm subsidies by $31 billion over 10
years, require federal employees to contribute more to their pension plans,
force military retirees to pay more for prescription drugs and charge higher
fees to air travelers for “aviation security.”
Jacob J. Lew, director of the White House Office of Management and Budget,
rejected suggestions that the White House was going after rich people.
“If you look at the details of what’s in the plan that the president is sending
to the Congress,” Mr. Lew said, “there is a lot of pain, and it’s spread — it’s
spread broadly and we think fairly.”
Medicare and Medicaid insure more than 100 million people and account for nearly
one-fourth of all federal spending. The proposed savings, which provoked
predictable protests from health care providers, represent less than 3 percent
of what the government expects to spend on the programs in the next 10 years.
Speaking in the Rose Garden on Monday, Mr. Obama said his plan — in the form of
recommendations to a bipartisan Congressional committee on deficit reduction —
“includes structural reforms to reduce the cost of health care in programs like
Medicare and Medicaid.”
The proposal would require new beneficiaries to pay higher deductibles before
Medicare coverage of doctors’ services and other outpatient care kicks in. The
deductible, now $162 a year, is already adjusted for inflation. Mr. Obama would
increase it further by $25 in 2017, 2019 and 2021.
In addition, the White House would increase Medicare premiums by about 30
percent for new beneficiaries who buy generous private insurance to help fill
gaps in Medicare.
Many beneficiaries choose these private Medigap policies because they want the
financial security they get from the extra insurance. But the White House said
this protection “gives individuals less incentive to consider the costs of
health care and thus raises Medicare costs.”
Mr. Obama would raise $20 billion over 10 years by charging higher premiums to
higher-income beneficiaries and by freezing the income thresholds so more people
would have to pay the surcharges.
About 5 percent of the 48 million Medicare beneficiaries now pay the higher
premiums. The proportion would eventually rise to 25 percent under the proposal.
Starting in 2017, Mr. Obama would require certain new beneficiaries to pay
co-payments for home health care, which is now exempt from such charges. The
co-payment would be $100 per episode, defined as a series of five or more home
health visits not preceded by a stay in a hospital or a skilled nursing home.
Howard J. Bedlin, vice president of the National Council on Aging, a service and
advocacy group, said such co-payments would “significantly increase
out-of-pocket costs for many low-income widows with multiple chronic
conditions.” Likewise, Mr. Bedlin said, “The Medigap proposal would shift costs
onto Medicare beneficiaries.”
Mr. Obama also proposed these changes:
¶ Require drug companies to provide additional discounts, or rebates, to
Medicare for prescription drugs bought by low-income beneficiaries. This
proposal, opposed by drug makers, would save the government $135 billion over 10
years.
¶ Squeeze $42 billion over 10 years from Medicare payments to nursing homes,
home health agencies and rehabilitation hospitals. Cut Medicare payments to
nursing homes with large numbers of patients hospitalized because they did not
receive appropriate care in the nursing home.
¶ Require doctors to get approval from Medicare for the most expensive imaging
services.
¶ Revise the formula for calculating Medicaid payments to states, saving $15
billion over 10 years. Restrict states’ ability to finance their share of costs
by imposing taxes on care providers.
¶ Cut $3.5 billion over 10 years from a prevention and public health fund
created by the new health care law.
Another White House proposal would save $20 billion over 10 years by reducing
Medicare payments to hospitals and other providers for bad debts that result
when beneficiaries fail to pay deductibles and co-payments.
WASHINGTON — The Senate voted Thursday to reinvent the
nation’s health care system, passing a bill to guarantee access to health
insurance for tens of millions of Americans and to rein in health costs.
The 60-to-39 party-line vote, starting at 7:05 a.m. on the 25th straight day of
debate on the legislation, brings Democrats closer to a goal they have pursued
for decades and brings President Obama a step closer to success in his signature
domestic initiative. When the roll was called, with Vice President Joseph R.
Biden Jr. presiding, it was the first time the Senate had gathered for a vote on
Christmas Eve since 1895.
If the bill becomes law, it would be a milestone in social policy, comparable to
the creation of Social Security in 1935 and Medicare in 1965. But unlike those
programs, the initiative lacks bipartisan support. Only one Republican supported
a broadly similar bill that the House approved last month 220 to 215, and no
Republicans backed the Senate version.
After the vote, lawmakers and Mr. Obama wasted no time leaving for their holiday
break, well aware that their return to Washington would mean plunging into
negotiations to reconcile the measures passed by the two chambers.
If a deal can be struck, as seems likely, the resulting law would vastly expand
the role and responsibilities of the federal government. It would, as lawmakers
said repeatedly in the debate, touch the lives of nearly all Americans.
The bill would require most Americans to have health insurance, would add 15
million people to the Medicaid rolls and would subsidize private coverage for
low- and middle-income people, at a cost to the government of $871 billion over
10 years, according to the Congressional Budget Office.
The budget office estimates that the bill would provide coverage to 31 million
uninsured people, but still leave 23 million uninsured in 2019. One-third of
those remaining uninsured would be illegal immigrants.
Mr. Obama hailed the Senate action. “We are now incredibly close to making
health insurance reform a reality,” he said, before leaving the White House to
celebrate Christmas in Hawaii.
The president, who endorsed the Senate and House bills, said he would be deeply
involved in trying to help the two chambers work out their differences. But it
is unclear how specific he will be — if, for example, he will push for one type
of tax over another or try to concoct a compromise on insurance coverage for
abortion.
Senator Olympia J. Snowe of Maine, a moderate Republican who has spent years
working with Democrats on health care and other issues, said she was “extremely
disappointed” with the bill’s evolution in recent weeks. After Senate Democrats
locked up 60 votes within their caucus, she said, “there was zero opportunity to
amend the bill or modify it, and Democrats had no incentive to reach across the
aisle.”
Like many Republicans, Ms. Snowe was troubled by new taxes and fees in the bill,
which she said could have “a dampening effect on job creation and job
preservation.” The bill would increase the Medicare payroll tax on high-income
people and levy a new excise tax on high-premium insurance policies, as one way
to control costs.
When the roll was called Thursday morning, the mood was solemn as senators
called out “aye” or “no.” Senator Robert C. Byrd, the 92-year-old Democrat from
West Virginia, deviated slightly from the protocol.
“This is for my friend Ted Kennedy,” Mr. Byrd said. “Aye!”
Senator Kennedy of Massachusetts, a longtime champion of universal health care,
died of brain cancer in August at age 77.
Senator Jim Bunning, Republican of Kentucky, did not vote.
The fight on Capitol Hill prefigures a larger political battle that is likely to
play out in the elections of 2010 and 2012, as Democrats try to persuade a
skeptical public of the bill’s merits, while Republicans warn that it will drive
up costs for those who already have insurance.
“Our members are leaving happy and upbeat,” said the Senate Republican leader,
Mitch McConnell of Kentucky. “The public is on our side. This fight is not
over.”
After struggling for years to expand health insurance in modest, incremental
ways, Democrats decided this year that they could not let another opportunity
slip away. As usual, lawmakers were deluged with appeals from lobbyists for
health care interests who have stymied similar ambitious efforts in the past.
But this year was different.
Lawmakers listened to countless stories of hardship told by constituents who had
been denied insurance, lost coverage when they got sick or seen their premiums
soar. Hostility to the insurance industry was a theme throughout the Senate
debate.
Senator Sherrod Brown, Democrat of Ohio, said insurance companies were often
“just one step ahead of the sheriff.” Senator Dianne Feinstein, Democrat of
California, said the industry “lacks a moral compass.” And Senator Sheldon
Whitehouse, Democrat of Rhode Island, said the business model of the industry
“deserves a stake through its cold and greedy heart.”
The bill would establish strict federal standards for an industry that, since
its inception, has been regulated mainly by the states. Under it, insurers could
not deny coverage because of a person’s medical condition; could not charge
higher premiums because of a person’s sex or health status; and could not
rescind coverage when a person became sick or disabled. The government would, in
effect, limit insurers’ profits by requiring them to spend at least 80 to 85
cents of every premium dollar on health care.
The specificity of federal standards is illustrated by one section of the bill,
which requires insurers to issue a benefits summary that “does not exceed four
pages in length and does not include print smaller than 12-point font.”
Another force propelling health legislation through the Senate was the
Democrats’ view that it was a moral imperative and an economic necessity.
“The health insurance policies of America, what we have right now is a moral
disgrace,” said Senator Tom Harkin, Democrat of Iowa. “We are called upon to
right a great injustice, a great wrong that has been put upon the American
people.”
Costs of the bill would, according to the Congressional Budget Office, be more
than offset by new taxes and fees and by savings in Medicare. The bill would
squeeze nearly a half-trillion dollars from Medicare over the next 10 years,
mainly by reducing the growth of payments to hospitals, nursing homes, Medicare
Advantage plans and other providers.
Republicans asserted that the cuts would hurt Medicare beneficiaries. But AARP,
the lobby for older Americans, and the American Medical Association ran an
advertisement urging senators to pass the bill, under which Medicare would cover
more of the cost for prescription drugs and preventive health services.
Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group,
said the bill appeared to be unstoppable. But she added: “We are not sure it
will be workable. It could disrupt existing coverage for families, seniors and
small businesses, particularly between now and when the legislation is fully
implemented in 2014.”
