By Robert E. Moffit, Ph.D. , Rea S. Hederman, Jr. and Alyene Senger
November 1, 2012
Today’s seniors are facing higher Medicare costs. Over the next five years, current law, as amended by the Patient Protection and Affordable Care Act (PPACA, also known as “Obamacare”), and President Obama’s budget proposals guarantee higher costs for today’s seniors.
Status Quo Hikes: The 2012 Medicare trustees report says that, over the period 2012 to 2017, seniors’ standard Medicare Part B monthly premiums will jump from $99.90 to $128.20, while their Part B deductibles will rise from $140 to $180. Seniors’ Medicare hospital deductible will increase from $1,156 to $1,336, while their daily hospital coinsurance will climb from $289 to $334. And for seniors in the hospital beyond 90 days (lifetime reserve days), the per diem coinsurance costs are estimated to reach $668 by 2017. In other words, under current law, anyone over 65 who fails to buy private catastrophic insurance coverage is taking a huge risk.
Obamacare Impact: Obamacare already mandates $716 billion in Medicare payment cuts over the next 10 years, but these cuts are not targeted at specific instances of “waste, fraud, and abuse.” Rather, they are across-the-board changes in Medicare payment formulas for hospitals, nursing homes, home health agencies, hospice agencies, and Medicare Advantage plans.
Moreover, as every responsible analyst has noted, one cannot simultaneously use that money to pay for Obamacare and extend the life of the Medicare trust fund. Notwithstanding the tiresome claptrap that Medicare payment cuts affect only providers and not beneficiaries, cuts in funding for services directly affect those persons who depend on those services.
Obamacare will also increase Medicare taxes. The law raises the Medicare payroll tax, which funds the hospital insurance (HI) trust fund, on high-income earners from 2.9 percent to 3.8 percent and also extends the 3.8 percent Medicare tax to investment income. Together, this is the largest tax increase in Obamacare, costing taxpayers $318 billion from 2013 to 2022.
However, the Medicare payroll tax revenue is again double-counted as paying for new spending and extending the life of the trust fund. As for the tax on investment income, Medicare trustee Charles Blahous explains, “Though termed an ‘Unearned Income Medicare Contribution’ (UIMC) under the law, this revenue would not come from Medicare’s traditional contribution base and it would not be allocated to a Medicare Trust Fund.”
Higher Premiums: President Obama has also proposed major Medicare changes in his fiscal year 2013 budget proposal. For Medicare Parts B and D, Obama’s budget plan would increase premiums by 15 percent for upper-income seniors. But by 2035, those premium increases would be expanded to cover 25 percent of all Medicare beneficiaries. Thus, President Obama’s proposed special premium increase on upper-income retirees would substantially increase the number of seniors paying the tax.
According to Heritage’s Center for Data Analysis calculations, an individual with an income of $85,000 in 2017 who is enrolled in Part B and Part D would have a combined premium increase of $874.44 for that year. For a married couple with an income of $170,000 in 2017 enrolled in Part B and Part D, the combined premium increase for the couple would be $1,748 for that year.
While there is a large and growing consensus among a variety of analysts on the need to expand the scope of “means testing,” a better approach is to reduce the government subsidy for upper-income seniors rather than foster the illusion of the subsidy by making seniors pay more.
New Fees: President Obama would also impose new fees on baby boomers joining Medicare beginning in 2017. His 2013 budget proposal introduces a $25 increased Part B deductible for new beneficiaries in 2017, 2019, and 2021 and a $100 copayment for home health services in certain cases.
While there is a broad consensus on the need to curb the “first-dollar” coverage that drives up Medicare costs, President Obama proposes a premium surcharge—a kind of “premium tax”—for new beneficiaries who choose a Medigap plan with first-dollar or near-first-dollar coverage. This approach would affect most new beneficiaries. A better approach would be to restructure Medicare’s cost-sharing arrangements rather than adding a new “tax” to seniors.
New Drug Costs: The Obama Administration’s proposed new out-of-pocket costs will be coupled with increased premiums for all Part D beneficiaries. Obamacare spends an estimated $48 billion closing the “donut hole,” the congressionally created gap in drug coverage in which beneficiaries must pay 100 percent of the total costs up to a specific “catastrophic” threshold ($4,750 in 2013). When that threshold is reached, the insurance resumes payment.
Obamacare closes the “donut hole” by 2020. While out-of-pocket costs for Medicare Part D will be reduced, the changes enacted under the new health law will come at a higher premium price. Thus, according to the Congressional Budget Office’s (CBO) 2010 estimate, “enacting those changes would lead to an average increase in premiums for Part D beneficiaries of about 4 percent in 2011, rising to about 9 percent in 2019.”
These premium increases must be understood in terms of how the Part D donut hole actually affects today’s seniors. While the average premiums of all Part D beneficiaries will increase, note that of all 48.6 million Medicare enrollees in 2011, only 3.6 million actually fell into the donut hole. Moreover, approximately 11 million enrollees get low-income subsidies for drug coverage, including coverage in the donut hole. Today, most private health plans already provide additional coverage for beneficiaries who might find themselves in the donut hole. For 2012, 52 percent of all plans provide generic or some generic and some brand-name drug coverage in the donut hole.
Out of Options: Obama’s latest budgetary scheme for cost-shifting to seniors is just another indication that the Administration and its allies on Capitol Hill are running out of options. They have already cut the Medicare provider payments to achieve a 10-year “savings” estimated at $716 billion, but most of those “savings” will finance Obamacare. In a letter to Senator Jeff Sessions (R–AL), ranking member of the Senate Finance Committee, the CBO writes, “Unified budget accounting shows that the majority of the HI trust fund savings under PPACA would be used to pay for other spending and therefore would not enhance the ability of the government to pay for future Medicare benefits.”
Americans may differ on Medicare reform or the right future for Medicare, but one thing is certain: Under the Obama plan, seniors will pay more—a lot more—and they will pay this steep price in many different ways, including a loss of access to care from demoralized doctors and other medical professionals. Bottom line: Medicare “as we know it” is already a thing of the past.
—Robert E. Moffit, PhD, is Senior Fellow in the Center for Policy Innovation, Rea S. Hederman Jr. is Assistant Director of and Research Fellow in the Center for Data Analysis, and Alyene Senger is Research Assistant in the Center for Health Policy Studies at The Heritage Foundation.
Annual Enrollment Dates CHANGE in the Fall of 2011. There is only one time a year for 6 weeks that you can change and enroll into a different Medicare Advantage Plan or Part D prescription Drug Plan. This time is called - The Annual Enrollment Dates. The new Annual Enrollment dates begin in the FALL of 2011. The NEW Annual Enrollment will be from October 15th - December 7th. This will allow more time for processing your ID cards before the new year of January, 2012.
A new law protects seniors! The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law on July 21, giving priority status to the protection of consumers from predatory practices. With one out of every five people age 65 or older victimized by money-related crimes or questionable financial practices, the new law is especially beneficial to seniors. The house bill would teach seniors about scams and scam artists. H.R. 3040 would authorize $50 million over the next five years for the Federal Trade Commission to help seniors learn about financial fraud through educational programs and a new website. The measure passed 335 to 81. The Senate has yet to act on the companion bill, S. 3491.
What is the Donut Hole or Coverage Gap? The Donut Hole (or Doughnut Hole) is a term used to describe a gap in Medicare Part D prescription drug plan coverage or Medicare Advantage plan coverage where the Medicare plan member was 100% responsible for the cost of their prescription drugs - unless their plan provided them with some brand-name or generic drug coverage through the Donut Hole.
However, the good news is that starting with plan year 2011, Medicare Part D prescription drug plans and the pharmaceutical drug manufacturers share a portion of your medication expenses while you are in the Donut Hole. For instance, in plan year 2013, you may notice that your Medicare Part D plan will pay 21% of your generic medication costs in the Donut Hole and the pharmaceutical companies or Brand-name drug manufacturer will pay 52.5% of your brand-name drug purchases while in the Donut Hole.
Please note that the Donut Hole is also referred to as the Coverage Gap by your Medicare Part D plan. The Donut Hole is the phase of your prescription drug plan after the Initial Coverage Phase. The 2013 Donut Hole or Coverage Gap begins when the total retail costs of your prescription medication purchases exceeds $2,970.00 and the Donut Hole continues until your retail drug costs exceed $6,733.75 (again, this is for 2013 -- the Donut Hole limits change each year). The Donut Hole can also be said to end when your true out of pocket expense (or TrOOP) reaches $4,750.00. However, with the new Donut Hole Discount program, the discount you receive while in the Donut Hole is also counted toward your TrOOP. So if you purchase a brand-name medication with a $100 retail value and get a 52.5% discount, you still get credit for the full $100 retail cost toward your TrOOP.
This just in...from the Center for Medicare Advocacy Finally after YEARS of Insanity, a Victory for seniors!!! The Improvement Standard Settlement is a settlement in the class action lawsuit brought against the Secretary of Health and Human Services, Kathleen Sebelius, to eliminate the policy and practice of the illegal, harmful and unfair Medicare "Improvement Standard."
The Improvement Standard has harmed thousands of older and disabled Medicare beneficiaries who need Skilled Nursing Facility care to maintain their conditions, but who have been denied coverage on the grounds that they are "not improving". A settlement has been reached and will create a smoother road for beneficiaries to receive the health care they need.
CMS will revise the Medicare Benefit Policy Manual and other Medicare Manuals to correct suggestions that coverage is dependent on a beneficiary "improving," and add provisions stating that skilled services necessary to maintain a person's condition can be covered by Medicare.
After the policy revisions are completed, CMS will conduct an education campaign to inform providers, Medicare decision-makers, and adjudicators of the new skilled maintenance provisions.
Volunteer for the Senior Medicare Patrol. The Senior Medicare Patrol (SMP) is a group of highly trained volunteers who teach about Medicare health care fraud. Senior Medicare Patrol volunteers show Medicare and Medicaid recipients how to protect against, detect and report many types of Medicare fraud. Senior Medicare Patrol Volunteers serve at least 8 hours a month. They must first complete 30 hours of Medicare training and 20 hours of internship to be able to become a Certified Health Insurance Counseling & Advocacy Program (HICAP) Volunteer Counselor. They also complete an additional 2 hours of SMP training in Medicare fraud. Monthly SMP webinars are also available for the needed continued training and updates on current fraud issues. As ObamaCare kicks into full gear in 2014, the enrollment dates will be the same as Medicare Advantage Plans and Part D Drug Plans, October 15 - December 07 2013. HICAP will need MANY Senior volunteer counselors for that busy and confusing time. The Fresno office will not work will Insurance Agents or Insurance Brokers, but I believe they would need MANY more volunteer counselors.
HICAP: Fresno County
3845 N. Clark, Ste. 201
Fresno, CA 93726
More information: http://valleycrc.org
BE ADVISED: There are many scams going on right now from people calling seniors saying they are from Medicare or an Insurance Company trying to get your Medicare Number. They know that your Medicare number is a social security number. They can cause great financial hardship for you if they have your social security number and can steal your identity. Make sure you get the phone number of the person claiming to be from Medicare or Insurance Company so that Medicare can deal with the situation.
IT IS ILLEGAL UNDER MEDICARE REGULATIONS FOR AN AGENT TO CALL YOU ABOUT MEDICARE ADVANTAGE PLANS, UNLESS THEY ARE YOUR CURRENT AGENT, OR YOU SIGNED A SCOPE OF APPOINTMENT FORM PRIOR AND REQUESTED FOR THEM TO CALL YOU.
PLEASE NEVER GIVE YOUR MEDICARE NUMBER TO ANYONE OVER THE PHONE!
Social Security Finally Announces 1.7 Percent Benefit Increase for 2013! Monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 62 million Americans will increase 1.7 percent in 2013, the Social Security Administration announced today. The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 56 million Social Security beneficiaries receive in January 2013. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2012.
Below is a look at five highlights from the 2012 Medicare Trustees Report:
1) Medicare will run out of money to pay full benefits in 2024, the same estimate as 2011, when the trustees moved up its prediction by five years from earlier projections.
2) The average benefit per enrollee in 2011 was $12,042.
3) The total number of Medicare beneficiaries approximately doubled over the last 35 years, and the trustees expect the total to double again over approximately the next 35 years.
4) Medicare spending represented 3.7 percent of GDP in 2011, or $549 billion. That's up from 3.6 percent of GDP in 2010, or $523 billion. Total income in 2011 was $530 billion from taxes and interest.
5) From the 75-year budget perspective, the present value of the additional resources needed to meet unfunded projected expenditures, at current-law levels, is $38.6 trillion. That represents 4.3 percent of the present value of projected GDP, estimated to be $907 trillion, over the same period. In total, by 2085 Medicare expenditures are expected to equal 6.7 percent of GDP.
However, if Congress continues to override the statutory decreases in physician fees and adherence to the ACA cost-saving measures also erodes, then Medicare spending would instead represent roughly 10.3 percent of GDP in 2085.
More than $200 billion will be cut from the Medicare Advantage programs through the new health reform law. The recently passed funding reduction is the largest the program has ever seen: more than $200 billion in cuts. Non-partisan government agencies, such as the Congressional Budget Office and the Center for Medicare and Medicaid Services, have acknowledged that the magnitude of these cuts will cause significant changes to programs. Benefits could be slashed, premiums increase and many could even see their Medicare Advantage health plans eliminated.
New California Website for seniors: www.seniors.ca.gov. The Senior Gateway website is intended to provide seniors, their families, and caregivers with information they need to connect to services and resources, to find answers and solve problems. Information on such topics as:
Avoiding and Reporting Abuse & Neglect
Financial Abuse & Common Scams
Health Care Information
Health Insurance Authorized agent