Married to Medicare For Better or For Worse?
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Transcript of Married to Medicare For Better or For Worse?
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Married to MedicareFor Better or For Worse?
Walter Tsou, MD, MPH
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All
Ages
18-24 25-29 30-39 40-49 50-64 65+
Pleased 20% 15% 12% 21% 25% 23% 16%
Disappointed 25% 11% 12% 17% 22% 33% 51%
Not sure/Don’t know enough
54% 73% 77% 61% 53% 44% 33%
Congress has passed a new Medicare bill that includes a new prescription drug benefit. Which of the following best describes how you feel about the new Medicare bill?
Wall St. Journal, Dec 15, 2003
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Medicare facts 40 million beneficiaries Over $240 billion dollars Eligible
65+ End Stage Renal Disease Chronically disabled under 65
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Hospital and Physician care Part A - Hospital care
usually no premium Deductible - $840
Part B - Medical insurance for doctors, durable medical equipment Premium - $58.70 per month (25% of cost) Deductible $100/yr Copay - 20% on approved care
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Medicare HMOs Called Part C Also called Medicare + Choice Now renamed Medicare Advantage
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Prescription Drugs New benefit is called Part D
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What do we like about Medicare? Universal program for elderly No means testing National program Free choice of doctors, hospitals
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What needed improvement in Medicare? No prescription drug coverage Very limited nursing home coverage No dental coverage Increasing amount of
copays/deductibles Enrollment limited to Jan-March
annually
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Campaign Promise
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Political philosophy on gov’t Republicans - limit the size and role of
government Democrats - maintain or expand the
role of government
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Political philosophy in Medicare Republicans
expand HMOs Offer Rx drugs
through private agencies
Offer “choice” Limit federal dollars
Democrats Strengthen
traditional Medicare Offer Rx drugs as
part of Medicare Oppose vouchers for
Medicare Subsidy for the poor
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What should a Rx benefit look like vs. what we will get?Ideal drug benefit Universal benefits
for all in Medicare Affordable, even for
low income Available for all
drugs Costs largely
covered
What we will get Benefits vary from
private plan to plan Less than 25% of drug
costs covered Drugs limited to
formulary “Front end” and
“catastrophic” coverage
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Prescription Drug Plan is a small part of what passed Conservative legislators would not pass
without the creation of: Health savings accounts Increased payments to rural hospitals Major subsidies to large companies to
continue to cover prescription drugs Privatization of Medicare
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Major change in Medicare Means tested
Special subsidies for low income Additional costs for high income
Administratively very complex Major shift toward HMOs
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Eligibility Anyone with Medicare Part A or B
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Prescription discount card Marketing in April Starts in May, 10-25% off retail $30 annual fee Benefits decided by pharmacies, HMOs,
PBMs, Medigap insurer Low income (<135% of poverty) beneficiaries
get $600 added to card, but still pay 5-10% copay for each prescription
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How does the prescription benefit work? Starts in 2006 Will create Medicare Part D It is “voluntary”, but if you don’t join in
2006, your premiums will rise at least 1% per month. It is assumed if you waited to join, you
must be ill and therefore more costly to insure
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Monthly premium Premiums set by the HMOs On average, it will be $35/month On average, it will be $58/month in 2013 It will rise higher in areas with no competition
or high prescription costs Payment can be paid directly from:
SS check Electronic deduction from your bank acct
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Very low income seniors Determined by Medicaid/SSA Less than 135% of poverty and Earn less than $6000 singles Earn less than $9000 couples
No premium
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Low income seniors Less than 150% of poverty Earn less than $10,000 single Earn less than $20,000 couple
Sliding scale discount of the premium
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Deductible $250 in 2006 Will rise annually based on growth of
Medicare prescription spending Estimated to be $445 in 2013
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Very low income seniors Determined by Medicaid/SSA Less than 135% of poverty and Earn less than $6000 singles Earn less than $9000 couples
No deductible
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Low income seniors Less than 150% of poverty Earn less than $10,000 single Earn less than $20,000 couple
$50 deductible, 15% copay
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Part D Rx benefits Private plans provide benefit (premium support) Pharmacy benefit managers/HMOs Formulary created There will be higher copays based on generic vs.
trade names Around $35/month in year one If you don’t sign up in year one, premiums rise
considerably
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Stop Loss Threshold $3,600 in 2006 Rises to $6,400 in 2013 After threshold, you pay 5% copay for
drugs.
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Could you lose money? Yes, let’s say you spend $650 in drugs
annually Your cost = deductible + copay +
monthly premium You pay $250 +25% of $400+$35/mo x
12 =$770
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Who provides the drugs? Prescription drug plans (PDPs)
Pharmacy benefit managers Mail order houses Retail pharmacists
HMOs Medicare “Advantage” e.g. Senior Partners, US Healthcare, etc. Based on HMOs formulary
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HMOs must share risk If enrollees spend too much on
prescription drugs HMO must bear the additional cost May raise their premiums May limit brand name drugs
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HMO can create formulary May restrict their formulary
Senior may appeal if drug is necessary Physicians are prohibited from appealing Drug must not have a formulary equivalent
Formulary may have as little as two drugs for each therapeutic class
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HMOs vs. traditional Medicare From 2010-2016, traditional Medicare
will have to compete with the HMOs in six regions in the United States
HMOs get $14 billion subsidy to skim off the healthy leaving traditional Medicare with the sick.
Medicare HMOs will probably grow from 15% to 40%
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HMOs vs. traditional Medicare
Traditional Medicare will probably raise premiums because they insure the sicker seniors.
If HMOs prove cheaper, Congress will end traditional Medicare and have every senior go into an HMO.
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Major agenda Very complicated Privatize Medicare “Consumer oriented” health care Cut federal role in health care
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Who wins? Private plans
Despite evidence that Medicare HMOs overcharge Medicare
Pharmacy benefit managers Drug companies($91 million lobby) Lawyers (Tom Scully left after bill passes) Rep. Billy Tauzin (Chair of Energy and
Commerce hired by Pharma for $2+ million?)
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As an aside . . . Elderly members of Congress will
continue to get their generous drug benefit and not from Medicare
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Who loses? Traditional Medicare
Means tested Non uniform benefits Home for the sick and poor
Federal deficit will worsen Most Medicare beneficiaries will be
confused Your grandchildren
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Six Problems with the Bill It means tests Medicare It makes Medicaid seniors pay more It will probably destroy traditional Medicare It prohibits Medigap insurance from covering
the “gaps” It creates health savings accounts which will
destroy traditional health insurance It prohibits Medicare from negotiating better
prices for seniors
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Medigap insurance Any Medigap insurance that pays for
prescription drugs will be stopped in 2006.
All other Medigap insurance plans may continue
In short, you cannot buy Medigap insurance to cover the “gaps” in Part D
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Health savings accounts Tax favored savings accounts which
give tax breaks to the healthy. Will skim off the healthy leaving
employers with higher health costs for those remaining.
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Medicare is handcuffed Cannot use its purchasing power from
from negotiating lower prices with drug manufacturers
Prohibits importation of drugs from Canada
Strongly influenced by the pharmaceutical lobbyists
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Cost of Prescription Benefits Estimated cost of Rx drugs over the
next 10 years is 2 trillion dollars During Medicare debate, Rx plan over
the next 10 years was to be $400 billion New estimate AFTER passage of the
bill is $534 billion
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Analyst forced to lie about true cost of Medicare
Source: Phila Inquirer, March 13, 2004
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Medicare Part A bankrupt by 2019? Seven years sooner than 2003 estimate
Rising health care costs Prescription drug benefit Inadequate funding
Surpasses Social Security in cost by 2024
Medicare trustee report, March 23, 2004
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Who pays for the Rx drugs?“The money comes from the public. Not today's public, but the public you have just sired and that's lying in your bassinet.”
James A. Lebenthal, chairman emeritus of Lebenthal &Company, the Wall Street bond dealer, NY Times, Aug 18,2003
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Could a Rx drug benefit pass? In non election year, 0% chance In election year, it passed but will we be
better off?
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Questions?