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MEDICARE: PAST, PRESENT AND F UTURE. James G. Anderson, Ph.D. Department of Sociology & Anthropology. MEDICARE PART A. Federal heath insurance for persons over 65 years of age Covers acute care hospitalization Covers limited nursing home care and other institutional services
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MEDICARE: PAST, PRESENT AND FUTURE James G. Anderson, Ph.D. Department of Sociology & Anthropology
MEDICARE PART A • Federal heath insurance for persons over 65 years of age • Covers acute care hospitalization • Covers limited nursing home care and other institutional services • The permanently disabled were covered at a later date • In 1973, the end-stage renal disease program was added to Medicare
MEDICARE PART B • Requires financial contributions from enrollees • Covers professional fees for medical and surgical services
PROBLEMS WITH MEDICARE • Impending insolvency of the hospital insurance trust fund • Favors acute care over chronic care • Does not cover most long term care services • Omits prescription drug coverage • Permits medical costs to impoverish older adults and their families
REFORM PROPOSALS • Gradually raise eligibility age to 70 • Raise direct payments by recipients by higher premiums for MD insurance or raise co-payments for services • Provide incentives for Medicare beneficiaries to join HMOs • Offer Medicare beneficiaries more choice in their health care plans • Institute a means test for Medicare • Enact an annual budget for Medicare • Authorize medical savings accounts
MEDICARE PRESCRIPTION DRUG BENEFIT • New drug benefit begins in 2006 • Premiums are estimated to be $35/month, $420/year • After the premium is paid and a $250 annual deductible the plan will pay 75% of drug costs until the enrollee reaches $2,250. The coverage stops and the enrollee pays for the next $2,850 in drug expenses. At this point the enrollee has spent $3,600 0n drugs plus $420 on the premium. • For the rest of the year the enrollee pays $2 for every generic drug prescription and $5 for every brand name prescription or 5% which ever is greater. • Before the program starts in 2006, seniors will be able to purchase a drug discount cared for $30/year
MEDICARE PRESCRIPTION DRUG BENEFIT • Low income enrollees will be able to obtain drugs at $1-2 per generic drug and $3-5 per brand-name drug • The drug benefit will be provided through private prescription drug plans that contract with the Medicare program. Private plans can charge different premiums. • Premiums, deductibles and the “doughnut hole” will grow with the cost of the plan. • Financial incentives would be given to employers who continue retiree health coverage if it provides a prescription drug benefit.
PRESCRIPTION DRUG BENEFITAdvantages • Prescription drug prices are out of control • More than 1/3 of Medicare beneficiaries lack coverage • Price discrimination against the elderly • Drugs are now routinely used to treat heart disease, cancer, arthritis, etc.
PRESCRIPTION DRUG BENEFITDisadvantages • The bill does virtually nothing to moderate drug costs. • The legislation prohibits Medicare from negotiating lower drug prices for beneficiaries • Drugs can only be re-imported from Canada if the Secretary of DHHSA certifies that they are safe and will significantly reduce costs. • Drug cost will rise significantly under this program.
Long Term Care BenefitArguments For • (1) Long-term custodial care accounts for 81% of catastrophic costs for the elderly. • (2) Over half of those 65 years and older will need some kind of long-term care (LTC). • (3) Over 70 % of single elderly patients spend down to the poverty level after 13 weeks in a nursing home. • (4) 5% of Medicaid recipients in nursing homes consume 43% of the Medicaid budget. • (5) The most equitable policy would be a universal mandatory LTC health insurance program financed by the federal government. • (6) There are a number of ways of financing universal LTC.
Long Term Care BenefitArguments Against • (1) Family members should not be allowed to shift the cost of LTC onto the government and thus, onto taxpayers. • (2) A government sponsored LTC health insurance program would be enormously costly. • (3) Such a program would enormously increase both the demand for and the cost of LTC. • (4) A tax supported program would be regressive - taxing younger working people to provide benefits for elderly persons with substantial resources. • (5) The government should only provide assistance to those who do not have the resources to pay for long term care. • (6) Instead of a government sponsored program the government should provide incentives for private insurance and savings to finance LTC. Outline.
DISCUSSION QUESTIONS • Should we regulate drug prices like other countries do? • How would regulation affect development of new drugs? • Should Medicare cover prescription drugs? For all enrollees? For only the poor? • Should Medicare purchase drugs at a discount and sell them to the elderly?
DISCUSSION QUESTIONS • Should we extend Medicare to provide for Long Term Care? • Should Medicare cover Long term care for all enrollees? For only the poor? • How would we pay for Long Term Care? Increase the general payroll tax? Require the elderly to pay part or all of the premium for LTC?