Taking place at town hall meetings and on editorial pages, these battles were mostly waged in fiscal terms. Medicare's sustainability, the fiscal slope and the cost of insuring the Baby Boomers are hot topics for debate. Attention will now turn from the candidates' promises to their actual proposals.
Yet, the more important conversations about Medicare are not always featured on the nightly news. In Ohio, a woman asks her husband: Will your mother need to move in with us if she cannot afford her hospital bills? In Wisconsin, an 85-year-old man ponders: My prescriptions are just too expensive this month, should I skip some of my pills or let the heating bill go unpaid? In Florida, a wife worries about her husband who has cancer: What will happen if we cannot afford the tests the doctor orders this month?
For the almost 25 million Medicare beneficiaries who live on incomes of $22,000 or less, conversations like these are commonplace. We know this is true, because we counsel nearly 15,000 people with Medicare on our helpline each year. Most of our calls are from those who simply cannot afford their health care costs.
Proposals That Fail: Forcing People to Pay More for Less Health Security
We believe that Medicare proposals should be tested by two measures. First, does the plan force people with Medicare to pay more? And second, does it address the real problem—rising health care costs overall? Despite pervasive economic insecurity among Medicare families and widespread agreement about the need to control health care spending, the most discussed Medicare proposals fail on both counts.
The privatization scheme championed by Rep. Paul Ryan (former candidate for vice president) and passed by the House of Representatives, is one example of this. Under the Ryan Plan, people with Medicare would receive a voucher to purchase private health insurance or traditional Medicare. Because these vouchers would not keep pace with rising health care costs, beneficiaries would be forced to pay more, no matter what coverage they choose. While this election cycle focused almost exclusively on voucher plans, other lesser known ideas would also come at the expense of people with Medicare.
Raising the Medicare eligibility age is one such plan. One analysis found that increasing the Medicare eligibility age from 65 to 67 would force 5 million 65- and 66-year-olds to find coverage elsewhere and 66% of these seniors would pay more. Even worse, some near retirees with modest incomes who are not quite eligible for Medicaid and yet unable to afford insurance would be without coverage entirely.
Significantly restructuring Medicare cost sharing is another proposal worth noting. Proposals to redesign the Medicare benefit would streamline deductibles, standardize coinsurance rates, and implement an out-of-pocket spending cap. While simplifying Medicare is a worthy goal, a recent study finds that redesigning benefits in this way would increase costs for almost three-fourths (71%) of beneficiaries.
Similar proposals would prohibit or limit first dollar coverage in Medigap plans—a widely used form of supplemental coverage to Medicare. Proposals to undo first dollar benefits would increase cost sharing for one in five people with Medigap. Most startling about these plans is who will be the hardest hit—the sickest Medigap beneficiaries, who will pay the highest price.
Taken separately or in combination, what people must understand about cost sharing, coverage and redesign proposals is this: cost savings to the federal government will be achieved by forcing people with Medicare to pay more; just how much more will depend on the seldom-discussed and hard-to-explain details embedded in these proposals.
Health Care Costs Are the Problem—Medicare Is a Solution
Unlike cost shifting, building efficiencies in Medicare and pursuing delivery system reforms are promising solutions that can reduce health care spending without causing harm. The Affordable Care Act (ACA) affords many opportunities to test these innovations. Examples include lowering reimbursements rates for hospitals with high readmission rates and establishing provider teams, known as Accountable Care Organizations (ACOs), with financial incentives to keep costs down and better coordinate care.
Medicare is the testing ground for many of these reforms. Thanks to the ACA, Medicare will lead the market in providing better quality care at a lower price. Already, Medicare does a better job than private plans at controlling health care costs. Over the next ten years, Medicare costs are expected to rise 3.1% per person per year compared to 5% for private health plans. Medicare, after all, is not a problem, it is a solution.
The results of this election will undoubtedly affect which Medicare proposals are taken up for consideration. Many who weighed in on this election, from pundits to policymakers, would do well to listen in on the Medicare conversations happening at kitchen tables nationwide as they sort through proposals. No matter the results, our message to decision makers trolling for Medicare savings is simple: instead of cost shifting to people with Medicare, find cost savings by looking to Medicare as a solution.