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Who Is Medicare For?
November 1, 2007 • Volume 7, Issue 43
Last month, Humana, the second largest sponsor of Medicare private health plans, reported record profits of $302 million from July through September, largely on the strength of its Medicare business. Around the same time, Humana put $6.8 million in the retirement account of Mike McCallister, its CEO, on top of the nearly $7 million in salary, bonuses and other compensation he earned last year.
Further down the economic ladder, a person with Medicare getting by on just over $1,170 per month is considered too wealthy to receive financial assistance paying their Medicare Part B premium. That monthly premium will rise to $96.40 next year. A retirement nest egg of $12,000 disqualifies an individual—no matter how low their income—for financial help getting through the doughnut hole—the coverage gap built into the Part D drug benefit.
All of which raises the question: Who is the Medicare program for?
Is it for older adults and people with disabilities struggling to cope with ever rising health care costs? Or is it for the executives and shareholders of insurance companies?
Medicare is a major profit center for health insurance companies because Medicare private health plans are overpaid. It costs taxpayers on average 12 percent more—some plans cost much more—per person to provide coverage through a private insurance company than it would cost under Original Medicare.
Earlier this year, the House of Representatives took steps to right this imbalance. It passed legislation to put payments to Medicare private health plans on par with costs under Original Medicare and expand eligibility for programs that help low-income older adults and people with disabilities pay the out-of-pocket costs of Medicare, which are rising three times faster than incomes for people with Medicare, according to a recent study. Specifically, people with Medicare earning up to $1,296 per month ($1,731 for a couple) could qualify for help paying their Part B premium. People with Medicare with incomes below that threshold could have up to $17,000 in savings ($34,000 for a couple) and still qualify for help with both their Part B premium and their drug expenses, including coverage through the doughnut hole.
Now it is up to the Senate to act. Most observers do not expect that the Senate will equalize payments between Medicare private plans and Original Medicare. But there is hope that the Senate will take steps to help older adults and people with disabilities struggling to afford health care on low, fixed incomes.
The steps taken in the House to help low-income people with Medicare cost $41 billion over 10 years. The Senate could pay for that simply by holding payment ceilings, or benchmarks, for Medicare private health plans to 20 percent above the comparable cost of care under Original Medicare. That still pays Medicare private health plans a lot more than they are worth, but it takes an important step toward again making the health care of people with Medicare the top priority of the Medicare program.
Please write to urge your senator to put low-income older adults and people with disabilities first.
Medical Record
Health insurer Humana Inc. said Monday its third-quarter profit nearly doubled from a year ago, as income from its government segment surged, aided by a one-time gain and improvements in its commercial business (“Humana Earnings Up on Government Segment,” Associated Press, October 29, 2007).
The financial burden of health care spending in 2003 was greater for beneficiaries with low incomes than for those at higher income levels. That year, the median beneficiary with income below 200 percent of poverty ($17,960 single and $24,240 couple) spent about 22 percent of income on health care, while those at 400 percent of poverty or more spent less than 8 percent of their income on health care (“How Much ‘Skin in the Game’ Do Medicare Beneficiaries Have? The Increasing Financial Burden of Health Care Spending, 1997–2003,” Patricia Neuman, Juliette Cubanski, Katherine A. Desmond and Thomas H. Rice, Health Affairs, November/December 2007).
I am on disability. My medications are very expensive—over $500 a month—and I had to start paying retail price for them since I reached the doughnut hole in July. I don't know what to do. I am on a set income and I have lupus, which caused stage three chronic kidney disease, vacuities and other problems. I am in pain all the time, but sometimes I can't get my prescriptions filled because I don't have the money. My pain management doctor wanted to put me on a prescription that cost $565 per month, but I had to refuse it because of the cost. I have to keep taking money out of savings to get by each month because my medical expenses are so high. It is impossible to live on what I make and pay all my bills plus all the medical bills. I can't get Medicaid or any other assistance because I have an IRA, which doesn't even have a lot of money in it. I wish they would do away with the doughnut hole; it's not fair. Just because I saved money while I was able to work all those years means I now have to use every bit of it for medication and pay retail price (Story submitted to the Part D Monitoring Project, Medicare Rights Center, September 18, 2007).
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Medicare Private Health Plan Monitoring Project
The Medicare Rights Center (MRC) would like to hear about your experience, or that of someone you know, enrolled in a private health plan. With information about what the issues are with Medicare Advantage plans, we will be able to demand that those problems be fixed.
Submit your story at www.medicarerights.org/maplanstories.html.
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The Louder Our Voice, the Stronger Our Message
Asclepios—named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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The Medicare Rights Center (MRC) is the largest independent source of Medicare information and assistance in the United States. Founded in 1989, MRC helps older adults and people with disabilities get good, affordable health care.
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