Medicare & Medicaid. 2 Medicare – Medical Care for the Elderly l Institutional features – Part...
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Transcript of Medicare & Medicaid. 2 Medicare – Medical Care for the Elderly l Institutional features – Part...
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Medicare – Medical Care for the Elderly
Medicare – Medical Care for the Elderly
Institutional features– Part A—Hospital insurance– Part B—Physician, Outpatient
hospital, diagnostic and lab testing, PT, and durable equipment insurance
– Part D—Outpatient prescription drugs
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Medicare FeaturesMedicare Features
Part A Features: (2007)– $992 deductible– Coinsurance (days 2-60, zero; days 61-90,
25% of the deductible per day; days 91+, no coverage unless 60 lifetime reserve days are still available)
Part B Features: (2007)– Voluntary participation w/ $93.50 monthly
premium– Deductible of $131 per year & Medicare
pays 80% thereafter– 50% MDs accept assignment, so patient
only pays 20%. Max bill = 115%
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Medicare coverage gaps– Pays 87% of inpatient charges,
67% of physicians’ services, 8% of outpatient drugs (Part D changes this percentage), and 0.5% of nursing home
Does not provide catastrophic coverage, custodial nursing home care, preventive services or routine physical examinations.
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Part D – The donut holePart D – The donut hole
About 8 million seniors get drug coverage through Medicare Advantage
Premiums vary (basic plan - $27.35 monthly) Annual deductible - $265
Drug Spending Plan Pays Patient Pays Zero to $265 Zero 100% or $265 $266 to $3,465 75% or $2,4000 25% or $800 $3,466 to $6,250 Zero 100% or $2,785 More than $6,250 95% 5% or $2 generic, $5 brand
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FinancingFinancing
Overall funded by individuals < 65 years old – 90%
Part A funded by a payroll tax of 2.9% Part B premium pays 25% of expenses Part D premiums pay 25% of expenses Financing is Inequitable Part A Trust Fund insolvent by 2020 – need
to increase tax from 2.9% to > 10% Part B & D subsidy will need to double from
$350 billion today to $700 billion by 2015.
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Financing InequitiesFinancing Inequities
Part A payroll tax has low income workers subsidizing high income retirees
Parts B & D financed by income tax, which is progressive
Intergenerational transfer – retirees receive $5 in benefits per $1 contributed
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Medicare Payment Allocations, 2002
Medicare Payment Allocations, 2002
Payment Range
Number of beneficiaries
(millions)
Percent of total
Spending (billions)
Percent of total
Average per
enrollee Over $25,000 2.4 5.9 $114.2 53.0 $48,324 $20,000-$24,999 0.7 1.7 15.8 7.3 22,384 $10,000 $19,999 2.4 5.9 34.7 16.1 14,924 $5,000-$9,999 3.0 7.4 21.3 9.9 7,083 $2,000-$4,999 5.4 13.3 17.1 7.9 3,197 $1,000-$1,999 4.9 12.1 7.1 3.3 1,438 $500-$999 4.7 11.6 3.4 1.6 729 Less than $500 8.3 20.4 1.8 0.8 219 Zero 8.7 21.5 0 0 0 Total 40.5 100.0 $215.4 100.0 $5,319 Source: Centers for Medicare and Medicaid Services, Medicare Program Payments 2004, Table 16.
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Suggested Liberal ReformsSuggested Liberal Reforms
Increase eligibility age to 67 Decrease provider
reimbursements Increase payroll tax &
premiums (already done for high income retirees)
Ban Medigap policies to decrease moral hazard
Reduce subsidy to Medicare Advantage (Part C) plans
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Suggested Conservative Reforms (Ryan Proposals)Suggested Conservative
Reforms (Ryan Proposals)
Phase out Medicare, convert to private voucher program (start in 2022)
Voucher amounts tied to income: $11,000 for < $80K, $5500 for $80-200K, and $3300 for >$200K individual $
Those turning 65 by 1/1/2021 keep Medicare but premiums for Part D tied to income
If payroll taxes pay <55% Medicare costs, provider payments decrease 1%
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MedicaidMedicaid
Institutional features– State administered– Federal cost-sharing– Eligibility standards
SCHIP expansion
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Medicaid SpendingMedicaid Spending
Year
Total Enrollment Year End (millions)
Total Spending (billions of current
dollars) 1
Annual Rate of Change in Spending2
(in percentages) 1966 10.0 $ 1.7 - 1970 - 4.9 30.3 1975 22.0 12.1 20.8 1980 21.6 24.0 13.8 1985 21.8 39.4 10.4 1990 25.3 69.8 11.8 1995 36.3 151.7 17.2 2000 34.5 195.5 5.2 2001 37.9 216.2 10.6 2002 41.1 246.6 13.9 2003 43.6 262.6 6.6 2004 44.6 281.8 7.3 2005 45.7 300.7 6.7 2006 45.2 303.9 1.1 Source: Medicaid Financial Management Reports available at
http://www.cms.hhs.gov/MedicaidBudgetExpendSystem/Downloads/2004to1997.pdf. 1. Includes payments made to "disproportionate share hospitals;” does not include administration. 2. Average annual change from the previous entry
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Economic ConsequencesEconomic Consequences
Nationwide, 50% of poverty population covered. Eligibility differs by state (for family of 3 in AL $3048 and MN $40,224 in 2002)
Nursing home care and home health care constitute over 70% of outlays- just 30% to nonelderly and nondisabled
Payments per capita for children and adults only $1454 and $2067 in 2001.
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Expansion of Medicaid ImpactsExpansion of Medicaid Impacts
10% expansion leads to a 2.8% decrease in infant mortality and 3.4% decrease in child mortality
Decreases enrollment in private insurance (employers & persons)
Decreases labor supply for fear of losing Medicaid
Decreases willingness to marry Decreases willingness to save due to
asset test