Medicare Changes Increase Costs, Move Closer to Privatization
The Bush administration’s Medicare prescription drug plan has been inadequate to cover the needs of millions of America’s seniors--requiring beneficiaries to pay large amounts out of pocket for necessary medications.
But now it appears that changes taking place this month in the Medicare program could push the program closer to privatization and further away from fulfilling the needs of seniors. According to Dianna Porter, policy director at the Alliance for Retired Americans which represents more than three million seniors, changes authorized by the legislation could further dismantle the Medicare program, which provides health care for 42 million senior and disabled Americans.
Not only will some people find their benefits have changed, but others may find they are no longer eligible for the level of coverage they received this year. Many Medicare Part D plans—the prescription drug benefit—will be changing which drugs they cover, their pharmacy networks, premium amounts, deductible amounts and how much they will pay when recipients reach the donut hole. The deadline for signing up for the prescription drug plan was Dec. 31.
The biggest change, though, is in the monthly premium for Medicare Part B, the section that provides coverage for doctor and other outpatient services. The Part B premium will increase by 5.6 percent from $88.50 to $93.50 a month—or even higher, if Congress does not implement a reduction in Medicare payment rates for doctors. If Congress does not, which is likely, then the monthly premium will be even higher. With this increase, the monthly premium will have doubled since 2000.
Porter says the combined cost of the premiums for those seniors who participate in both Parts B and D will take about 11 percent of the Social Security benefit the average beneficiary receives in 2006. The costs of the premiums are increasing more rapidly than Social Security benefits, leaving seniors with less to spend on other non-health care necessities.
Another major threat to the future of Medicare is the new means test, Porter says. In addition to the premium increase in 2007, the Part B premium will be linked to income for the first time. As a result, high-income individuals will pay more in premiums than those with lower incomes.
It sounds like a good thing. But Porter warns that it is only good if the high-income seniors—those with incomes over $80,000 for a single person or $160,000 for couples—stay in the program.
If wealthier and healthier seniors decide to opt out of Part B and seek inexpensive private insurance, it could drive up costs for Medicare and jeopardize public support for the program.
Once means testing is in place, there is no guarantee that the income limits won’t be lowered if Medicare needs additional funding.
If middle-income beneficiaries, confronted with paying more, also leave the program, Medicare then could devolve into a welfare program providing only for the poorest and sickest in the older population.
The Bush administration also is using Medicare to push one of its favorite privatization schemes: health savings accounts (HSAs), which are strongly backed by Big Business. The Medicare version of HSAs, the Medicare savings accounts, will become a permanent option for seniors in January. To give them a jump start, the Bush administration is launching a demonstration program in 2007 that waives some of the current requirements and permits Medicare providers to offer the plans next year.
When the lame-duck Republican Congress left Washington, it left intact a provision for HSAs in the private sector. HSAs do nothing to make health care affordable for working families. A report issued in September 2006 from the Government Accountability Office (GAO) shows that HSAs are being used disproportionately by high-income individuals, many of whom indicate that they are choosing HSAs as a “tax-advantaged savings vehicle.” The GAO also reported that HSAs and high-deductible health plans reduce costs for the healthy, but raise them for the less healthy. Moreover, few enrollees research the cost of care before obtaining health care services. In short, none of the claims of HSA proponents have been borne out, yet the anticipated dangers are being realized.
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