Medicare Watch

Decoding Deficit Reduction and Medicare

There has been much discussion over the past year about “deficit reduction,” but the complexity of the topic and the jargon that is used make it difficult to understand the impact that deficit-reduction proposals would have on real people. Over the next few weeks, the debate will intensify as Congress considers budget legislation that may incorporate or trigger many of these proposals.

Most discussions about deficit reduction go hand in hand with discussions about how to slow spending in “entitlement programs” such as Social Security, Medicare and Medicaid. However, there is a difference between slowing spending, as the Affordable Care Act attempts to do through delivery system reforms, and achieving savings by cutting the funding for these programs and shifting higher costs to consumers. Many of the deficit reduction proposals do exactly that, and while proponents use terms such as “flexibility” and “reform” to describe them, many would result in higher costs for consumers, fewer benefits and decreased access to care. This is especially problematic for people with Medicare, nearly half of whom have annual household incomes of $20,000 or less, and who already spend about 16.2 percent of their annual incomes on health care.

The following materials act as a guide to the deficit reduction debate and serve to help readers interpret the terms that will be used in the coming months. While some proposals sound promising in name, in reality they would have serious effects on Medicare consumers’ access to quality, affordable health care, and some would even replace the current Medicare program altogether. 

Read Medicare Rights Center’s “Painting a Grim Picture: Deficit Reduction Proposals that Hurt People with Medicare.”

Read the Center for Medicare Advocacy’s chart on health care reform, deficit reduction proposals, and repeal efforts and their effect on the Medicare program.

Read the Kaiser Family Foundation’s “Comparison of Medicare Provisions in Deficit-Reduction Proposals.”

Higher Medicare Age Would Equal Higher Costs for Consumers

Raising the Medicare eligibility age from 65 to 67 would increase the out-of-pocket costs of three-fourths of affected 65- and 66-year-olds, according to a new report released by the Kaiser Family Foundation. “Raising the Age of Medicare Eligibility” examines proposals that aim to save the federal government money by increasing the age at which people can enroll in Medicare, using a model in which the age increases from the current level, 65, to 67 in 2014. While consumers’ pocketbooks would certainly be affected by such changes, the report also demonstrates that employers, especially small employers, would also face increased costs under the proposal because they would be required to provide and pay for primary coverage to Medicare for an increased number of their employees. These costs would reach about $4.5 billion in 2014.

Furthermore, the report finds that raising the Medicare eligibility age under this model would save only about $7.6 billion in 2014. Although the report estimates gross federal savings of $31.1 billion under the proposal, those savings would be offset by a combined $15.8 billion of federal outlays because many of those who would need to wait to take Medicare would turn to plans offered in health exchanges or the expanded Medicaid program established in the Affordable Care Act (ACA). Federal savings would be further counteracted by approximately $7 billion in lost Part B premium revenues.

In addition, raising the eligibility age not only affects 65- and 66-year-olds, but also individuals under 65 who would purchase coverage through the exchange. The introduction of an older population into exchange plans would increase premiums by 3 percent (approximately $141 per enrollee) for those under 65 who purchase coverage through an exchange. Lastly, Medicare Part B premiums would also increase by 3 percent in 2014 because of the loss of a younger and comparatively healthier population in Medicare.

Read the Kaiser Family Foundation’s report.

Medicare Reminder

Medicare covers some vaccines and immunizations. The way Medicare covers them depends on which vaccine you need.

Your Medicare health coverage (Part B) will cover vaccines to prevent:

• Influenza (the flu); 
• Currently, the seasonal flu shot includes both a seasonal flu shot and an H1N1 (swine flu) vaccination.
• Pneumonia; and
• Hepatitis B (if you are at medium to high risk).

Part B will cover other immunizations only if you have been exposed to a disease or condition. For example, if you step on a rusty nail, Medicare will cover a tetanus shot; if you are bitten by a dog, Medicare will cover your rabies shots.

If you have a Medicare prescription drug plan (Part D), you may be able to get coverage for other types of vaccines, such as the vaccine for shingles (herpes zoster). Any commercially available vaccine that is not covered by Part B should be covered by your Medicare prescription drug plan. Your Part D plan will pay for the vaccination itself and for your doctor or other health care provider to give you the shot (administration). However, you will need to make sure you follow your particular plan’s rules in order for the vaccine to be covered. Before you get a vaccination, you should check coverage rules with your Part D plan and see where you should get your shot so that it will be covered for you at the lowest cost.

Learn more about Medicare coverage of vaccines and immunizations at www.MedicareInteractive.org.

Spotlight

Last week, the Chicago Tribune published an article on the Medicare “potholes” that people new to Medicare should watch out for. The article featured Medicare Rights Center President Joe Baker.

Read the article.