The Latest Medicare Proposals - More Cuts to Providers, Means Testing, and Rationing

  1. This blog discusses the politicians' familiar knee-jerk solution to the Medicare solvency crisis - making ever deeper cuts in reimbursements to providers. It also discusses how means testing will fundamentally alter the very nature of Medicare. Furthermore, it points out how these proposals raise the ugly specter of healthcare rationing on the basis of age.

    from an editorial in the new york times, dated sept 24, 2011:

    president obama’s plan to cut $248 billion from medicare over the next decade as part of his deficit reduction plan has drawn heat from all sides... some 90 percent of mr. obama’s medicare savings would come from reducing payments to drug companies and to health care providers. only $24 billion would come from charging the beneficiaries more, and that would not happen until 2017.

    the biggest added cost to beneficiaries — raising $20 billion over 10 years — would be an increase in the premiums that higher-income enrollees pay for coverage of doctors’ services and prescription drugs. currently, individuals earning more than $85,000 a year pay more in steps that increase as income rises. starting in 2017, the premiums would be raised, and a gradually increasing number of people would have to pay them, eventually reaching middle-class enrollees. with medicare in trouble, it makes sense to make the better-off pay more.

    also starting in 2017, new enrollees who buy private medigap policies that cover virtually all of the cost-sharing required for doctors’ services and outpatient care would have to pay a surcharge to medicare that might amount to $300 or more. those fees would raise $2.5 billion over 10 years. the more important goal is to push beneficiaries away from so-called first-dollar coverage and make them think twice before getting a test or a procedure or deciding to visit the doctor. new enrollees would also have to pay a higher deductible before medicare would start covering doctors’ and outpatient services. and certain new enrollees would be charged a $100 co-payment for home care, just as they face co-payments for other medical services...
    sound familiar? let's just continue to cut medicare reimbursements to providers and hospitals in an effort to save medicare - the politicians' simplistic knee-jerk solution to the medicare solvency crisis. i believe many hospitals are reaching the tipping point, since these business establishments depend on medicare for the bulk of their revenue. if cuts to medicare reimbursements continue to be made, many hospitals (especially the small community facilities) and their corresponding outpatient care delivery systems will simply be forced to shut down.

    along with reimbursement cuts, "means testing" of individuals eligible to be enrolled in medicare is predictably becoming more prominent. when the 2003 medicare prescription drug bill was passed there was a scarcely noticed provision tacked on that added a "means" test to the bill. means testing is reducing, eliminating, or charging more for benefits to seniors who have substantial private pensions, savings, and other sources of retirement income.

    the medicare means testing that had been stealthfully placed in the prescription drug bill was implemented for the first time on january 1, 2007. the part b premium is "means tested," meaning the government determines the medicare part b premium based on a person’s income. seniors with incomes of $80,000 per year or higher pay more for services than lower-income seniors. it also introduced a sliding scale of premiums which goes up as income rises. starting in 2007 the premium for medicare part b increased substantially for high income individuals. this has affected about 2 million people. the increase is in the form of a premium surcharge that is to be paid in addition to the normal part b premium. this surtax is owed even if the individual medicare recipient has not signed up for prescription drug coverage.

    means testing radically changes the nature of medicare, since this program was originally designed as universal social insurance with participants paying a uniform premium and receiving standard benefits. proponents of means testing argue that it's needed to cut medicare costs and make the program solvent and sustainable. estimates from government sources, however, indicate that higher premiums for some will not save medicare, since its costs are rapidly outpacing inflation and increases in cost of living. in 1965, when it was first enacted, medicare spent a little more than $3 billion. today, it spends an astonishing amount - more than $500 billion each year. as a result, medicare already faces a shortfall. last year, medicare paid out $516 billion in reimbursements, while program income was only $486 billion.

    finally, these proposals raise the ugly specter of healthcare rationing for the elderly, by discouraging the medicare beneficiary from seeking needed healthcare services or tests with an increased burden of surcharges, deductibles, and co-payments. nearly two thirds of reimbursements go to hospitals, where acute and pricey high-technology care is often provided. if health care rationing on the grounds of age were ever initiated, it would most likely take place within medicare - specifically in the dominant portion of medicare concentrated in hospitals. this is exactly what we see happening with these new proposals.

    although medicare expenditures have climbed dramatically, medicare still covers only about half of the out-of-pocket expenses of older people - roughly the same percentage as when the medicare program was launched in 1965. this is partially due to the fact that medicare b reimburses 80% of providers’ “reasonable charges.” actually, the amount reimbursed may or may not reflect actual charges in a specific geographic area. because of the limits on what medicare will pay, around 30% of medicare beneficiaries also have private medigap insurance policies to cover the remainder of their healthcare costs. the proposed surcharge on private insurance policies would penalize prudent seniors who wish to protect their assets by purchasing the medigap policies.

    what do you think about these new proposals? do they really fix the root causes of the medicare solvency issues or just make matters worse? what do you think about more cuts to providers, increased use of means testing, and healthcare rationing on the basis of age?


    medicare: a primer

    medicare and you 2011 guide

    medicare basics

    moody, h. r. (2010). aging: concepts and controversies (6th ed.). thousand oaks, ca: pine forge press.

    pratt, j. (2010). long term care: managing across the continuum (3rd ed.). sudbury, ma: jones and bartlett publishers, inc.

    president obama's medicare proposals

    the 2011 annual report of the boards of trustees of the federal hospital insurance and federal supplementary medical insurance trust funds
    Last edit by VickyRN on Oct 18, '11
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  3. by   VickyRN
    I believe these proposals are dangerous, as they are certain to bring on unintended consequences - small community hospitals declaring bankruptcy and closing their doors with entire communities being without a local hospital as a result, and doctors and other practitioners simply refusing to see Medicare patients.
  4. by   azhiker96
    Interesting discussion of physician pay US versus France.

    Pay me like a French doctor. You know you want to.
  5. by   FranEMTnurse
    He also froze the incomes of those on Social Security for 4 long years. And he says he's for helping people? Give me a break.
  6. by   toomuchbaloney
    Quote from FranEMTnurse
    He also froze the incomes of those on Social Security for 4 long years. And he says he's for helping people? Give me a break.
    Who are you talking about Fran, and please provide a source reference for that statement. Are you talking about the COLA? Is Congress responsible for determining these sort of things?
  7. by   heron
    Unfortunately, beneficiaries and providers are the only avenues he has, legally, along with increased enforcement against fraud, for controlling costs.

    We all know what's been happening to the costs of drugs, DME and supplies. CMS is legally prohibited from controlling drug costs. That's why epi-pens now cost $600 and the price of one vial of Lantus has gone from $85 to almost $300 in the last 5 years.

    Attempts to lower those costs or limit the futile care we all bemoan are met with howls of outrage from the free market crowd and those worried about so-called "death panels.

    So ... What would you like him to do, instead?
  8. by   FranEMTnurse
    ipoMaybe it was Congress so legislators can up their wasteful spending