Asclepios
Which Way for Medicare?
March 27, 2008 • Volume 8, Issue 13
Two reports issued this week seem to point, at least for some policymakers, in opposite directions for the future of Medicare.
The first, the annual report from Medicare’s trustees released on Tuesday, paints a bleak picture of Medicare’s financial health. The trustees predict that, in 2019, the Hospital Insurance Trust Fund will not have enough money coming in from payroll taxes to pay for all the hospital care and other Part A services that people with Medicare will likely need. That means Congress will need to take some action to either raise more money or cut spending for Part A services. Some conservative policymakers want to cut spending by raising the eligibility age from 65 to 67, which will doubtless increase the ranks of uninsured older adults, a group that already has a difficult time finding quality, affordable insurance in the private market.
The second report, published in the journal Health Affairs, shows the importance that Medicare’s coverage for people with disabilities already provides for people approaching their 65th birthday. One in six persons receives Medicare coverage between ages 55 and 64, either because of disability or because of diagnosis of end-stage renal disease.
The study also showed that one-quarter of those who qualify for Medicare because of a disability went without health coverage during the two-year waiting period for Medicare. (The two-year waiting period is written into law and starts when an individual receives the first check for Social Security Disability Insurance.) More than half of those who went without health coverage during the two-year waiting period had no coverage even before they became disabled. These individuals in particular would be helped if Congress acted to eliminate the two-year waiting period, the authors conclude.
So what direction should Congress take? Should it restrict eligibility for Medicare and throw more older adults into the ranks of the uninsured? Or should it expand eligibility for Medicare so that people with disabilities no longer have to endure a two-year wait without health coverage before Medicare kicks in?
One thing that is clear from both reports is that the for-profit insurance companies will not get us out of this mess. In fact, these companies are largely responsible for getting us stuck here in the first place.
For example, the trustees report shows costs for Medicare private health plans growing much faster that any other service—inpatient hospital, home health, skilled nursing facilities—paid for by the Hospital Insurance Trust Fund. In 2007, for example, the costs to the trust fund for Medicare private health plans grew by 23.7 percent, more than 10 times faster than the rise in payments for inpatient hospital care. The cost of these plans, that is, the subsidies to the insurance companies providing these plans, are also rising much faster than average wages or the number of employed—the taxable payroll that determines funding for the trust fund. That means the surging enrollment in Medicare private health plans, which cost taxpayers on average 13 percent more than providing care under Original Medicare, is hastening the insolvency of the Hospital Insurance Trust Fund.
For the pre-65 population, the inability of insurance companies to constrain the rising costs of health care makes premiums for private coverage unaffordable. Nearly one-quarter are uninsured at some point during the 10 years before their 65th birthday, the same proportion of people with disabilities who go without coverage during their two-year wait for Medicare.
Expanding eligibility for Medicare—ending the two-year waiting period for people with disabilities and letting 55- to 64-year-olds buy into Medicare—is the way to provide coverage for folks who need it. Getting more of us into Medicare—both paying in and benefiting from coverage—is the way to shore up financial and political support for the program. Restricting Medicare coverage and relying on insurance companies to provide affordable coverage for the uninsured is the wrong way to go.
Medical Record
“‘Jim became eligible for Medicare in January 2007. When asked about the difficulties of being uninsured, he said, ‘I tried to put off medical care until I became eligible for Medicare, which complicated my condition.’ Jim added that asking for charity and constantly negotiating payment plans has been ‘humiliating and embarrassing.’ ‘I always had a good job with medical insurance, and never had to go through anything like this before,’ he said” (Too Sick to Work, Too Soon for Medicare: The Human Cost of the Two-Year Medicare Waiting Period for Americans With Disabilities, Medicare Rights Center, April 2007).
“In closing, we note that U.S. workers have a bigger stake in policy decisions involving the Medicare waiting period than annual estimates of Medicare enrollment might suggest. . . . [We] found that one out of six people alive at age fifty-five were on Medicare before age sixty-five (and, therefore, had to negotiate the waiting period). If they were aware of these odds, workers might be more interested in changing the Social Security disability program to guarantee immediate access to affordable health care” (“Transitioning to Medicare Before Age 65, Health Affairs, March 25, 2008).
“Under the intermediate assumptions, the [Hospital Insurance] trust fund is projected to be exhausted in 2019, the same year as in last year’s report but at an earlier point within the year, due to slightly lower projected payroll tax income and slightly higher projected benefits than previously estimated” (2008 Annual Report by the Medicare Trustees, March 25, 2008).
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