Category: Medicare

Will Longer Life Expectancy Bankrupt Medicare?

Health Care Expenditures in the Last Two Years of Life

Health Care Expenditures in the Last Two Years of Life

As this graph shows, the total cost of nursing home care during a person’s last two years is extremely sensitive to that person’s longevity and rises steadily as that persons attained age increases. But the cost of that patient to Medicare during those final two years actually decreases. As the article concluded, “longevity after the age of 65 has a larger effect on the costs of nursing home care […] than on the costs of services covered by Medicare.” Thus, the increasing number of persons eligible for Medicare in the future will certainly increase that program’s costs, but their increasing longevity is itself a benign factor. Or as Harvard economist David Cutler concluded, “longer life in itself will not add to Medicare costs.”

Richard Kaplan at the Health Care Blog.

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May 24, 2013 | 15 comments | by

The Case against Universal Medicare

We are already hearing reports of doctors who do not take Medicare patients. In a 2010 survey of 9,000 physicians, the American Medical Association reported that 17 percent of doctors restricted the number of Medicare patients; among primary care physicians, a whopping 31 percent did. With universal Medicare, is the population really going to accept, and would Congress really allow, the continued reductions in prices?…

By some estimates, the Medicare program loses a staggering $60 billion to fraud each year. This amounts to 11 percent of the Medicare budget and would be enough to double Federal spending on primary and secondary education. No private company would ever tolerate this abuse. Imagine the fraud if Medicare covered 300 million Americans.

From Dana Goldman and Adam Leive at the Health Affairs Blog. Entire post is worth reading. See also, my Health Affairs Blog post with Tom Saving, Is Medicare More Efficient than Private Insurance?, and the NCPA study, Health Care Reform: Do Other Countries Have the Answers?

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May 23, 2013 | 11 comments | by

Insurance Matters

Medigap added to Medicare means more spending:

[E]mployer-sponsored and self-purchased supplemental coverage were associated with annual spending growth rates of 7.17 percent and 7.18 percent, respectively, compared to 6.08 percent for beneficiaries without supplemental coverage. In the first empirical study of the topic, the researchers found significantly higher rates of spending growth in all supplemental insurance categories compared to the category without supplemental insurance, even while controlling for sociodemographic, disease, disability, and health behavior characteristics. Golberstein and his colleagues suggest that policy efforts to restrict the generosity of Medicare supplemental insurance plans, and the anticipated lower levels and lower generosity of employer-sponsored supplemental Medicare coverage for future retirees, could slow the rate of spending growth for Medicare beneficiaries. (Health Affairs)

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May 20, 2013 | 10 comments | by

RAND: Premium Support Best Way to Reform Medicare

In 25 years Medicare spending is projected to reach one-quarter of all federal expenditures, about 6 percent of gross domestic product (GDP). Several proposals to reduce the growth of Medicare expenditures have been debated in recent years. These include:

1)    Mean-tested premiums for Medicare Part A Hospitalization.

2)    Premium support, providing seniors a credit to purchase private plans.

3)    Raising the Medicare eligibility age to 67.

Means testing Medicare Part A premiums only reduces Medicare expenditures by 2.4 percent through 2037. Increasing the age of Medicare eligibility to age 67 reduces the cost by three times that amount — 7.2 percent. The proposal with the most potential was premium support. If a tax credit was tied to the growth in the economy, the savings is equal to 5.4 percent. However, if the premiums credit was tied to the consumer price index (i.e. merely adjusting for inflation), the program would save 24 percent.

Medicare Spending

Source: Health Affairs.

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May 08, 2013 | 18 comments | by

Obama: $85,000 is Rich

Retired as a city worker, Sheila Pugach lives in a modest home on a quiet street in Albuquerque, N.M., and drives an 18-year-old Subaru.

Pugach doesn’t see herself as upper-income by any stretch, but President Barack Obama’s budget would raise her Medicare premiums and those of other comfortably retired seniors, adding to a surcharge that already costs some 2 million beneficiaries hundreds of dollars a year each.

More importantly, due to the creeping effects of inflation, 20 million Medicare beneficiaries would end up paying higher “income related” premiums for their outpatient and prescription coverage over time…

Currently only about 1 in 20 Medicare beneficiaries pays the higher income-based premiums, which start at incomes over $85,000 for individuals and $170,000 for couples. As a reference point, the median or midpoint U.S. household income is about $53,000…

The administration is proposing to extend a freeze on the income brackets at which seniors are liable for the higher premiums until 1 in 4 retirees has to pay. It wouldn’t be the top 5 percent anymore, but the top 25 percent.

This is from the Associated Press.

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Apr 15, 2013 | 13 comments | by

Medicare FFS Cut by 2 Percent

You may have been under the impression that the sequester cuts were aimed solely at defense and discretionary spending and that entitlements such as Social Security and Medicare would be unaffected. CMS recently issued this notice that Medicare will cut two percent from provider payments in its fee-for-service (traditional Medicare) program starting April 1 –

This listserv message is directed at the Medicare FFS program (i.e. Part A and Part B). In general, Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent reduction in Medicare payment. Claims for durable medical equipment (DME), prosthetics, orthotics, and supplies, including claims under the DME Competitive Bidding Program, will be reduced by 2 percent based upon whether the date-of-service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013.

HT: Donna Kinney.

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Apr 10, 2013 | 11 comments | by

How Medicare Wastes Money

Genentech…makes an anti-cancer drug called Avastin. It also makes Lucentis, a closely related drug that is used to treat macular degeneration. Both drugs work equally well for macular degeneration, but Lucentis, which is FDA approved for this condition, costs $2,000 a dose compared with $50 for the same amount of Avastin. The FDA can’t approve Avastin for macular degeneration unless the company requests it, and Genentech has no financial interest in doing so. This leaves Medicare with no choice but to pay top dollar for Lucentis. Other than to save their patients money, doctors have no incentive to prescribe Avastin, even though they can do so “off label.” The difference in price costs Medicare, and taxpayers, hundreds of millions of dollars a year.

And because Medicare beneficiaries must absorb one-fifth of the cost of each treatment, Lucentis costs the patient $400 a dose, compared with $11 for Avastin. Medicare can do nothing about it…

Medicare can’t require proof that an expensive new product is any better than the one it’s replacing; it’s explicitly prevented from doing so by law. Medicare can’t even encourage patients and doctors to select a less-expensive option that works just as well. With few exceptions, neither CMS nor the Food and Drug Administration can take a new product’s price or its performance into consideration when making coverage decisions. And once Medicare starts writing checks, private health plans generally fall into line.

More from Art Kellermann at RAND.

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Apr 05, 2013 | 13 comments | by

A Win for Health Insurers

And also for seniors. Sarah Kliff reports:

The Obama administration reversed a proposed 2.3 percent pay cut for private Medicare plans, replacing it with a 3.3 percent raise…

Wait, how exactly does a pay cut become a pay raise? When I asked Medicare acting administrator Marilyn Tavenner about the proposed pay cut, back in February, she said it was due to a slowdown in Medicare cost growths…

Medicare costs haven’t changed in the past two months — but two other things did.

First, political pressure ratcheted up. As my colleague Sandhya Somashekar reports, over 100 legislators pushed Medicare to reverse the cuts. America’s Health Insurance Plans, which lobbies for the industry, aired television ads titled “Drastic” and “Too Much.”

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Apr 02, 2013 | 9 comments | by

Socking It to the Poor

On February 15, the Centers for Medicare and Medicaid Services announced its intention to reduce payments to Medicare Advantage (MA) plans by 7 to 8 percent in 2014…

More than 14 million beneficiaries enrolled in MA plans will be affected in some way by this cut. Low-income beneficiaries have the most to lose. According to America’s Health Insurance Plans, the insurance industry trade association, 41 percent of MA enrollees in 2011 had incomes of $20,000 or less. Medicare Advantage is attractive to those with low incomes because private plans offer a better deal.

Joseph Antos at RealClearMarkets.

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Mar 14, 2013 | 12 comments | by

Goldhill: Medicare Is the Problem, Not the Solution

In 10 years, the number of CT and MRI scans per beneficiary more than doubled; hip replacements increased by 36 percent between 1997 and 2007. One out of three Medicare beneficiaries now has at least one surgery in the year of his or her death; even 20 percent of 90-year-olds do! The average 75-year-old is on five prescription drugs. Here’s a fact you rarely hear about Medicare: Annual spending just on those in excellent or very good health was an astonishing $5,437 per person in 2008.

View entire editorial in the Washington Post.

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Mar 12, 2013 | 16 comments | by
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