Perspective               

Medicare Costs Underestimated

For the next 20 years, Medicare is in sound financial shape. After that, it is not clear. A new advisory panel has recently concluded that health costs will grow faster than the government now assumes. The advisory panel now estimates that the trust fund for Medicare Part A, or hospital insurance, will run out of money in 2021.

Advances in medical technology are significantly contributing to rising health care costs. New technology includes medical devices, diagnostic products, drugs, and surgical procedures-basically everything ranging from hip replacement to radioactive "seeds" used to treat prostate cancer. But as medical technology improves, so does the cost. According to David Cutler, a professor of economics at Harvard who is on the panel, "Technology accounts for half to two-thirds of the growth in medical spending that is not attributable to inflation in the economy as a whole."

Medicare experts have been discussing ways to improve Medicare's financial condition. Some believe that the government should be doing more analysis of Medicare spending and trends. The advisory panel, however, believes that managed care is not a solution to the problem. Michael Charnew, a health care economic at the University of Michigan, states that managed care may make Medicare more efficient and can reduce some health care costs, but it does not slow the rate of growth in costs to a sustainable rate. He believes the effect of managed care on slowing the adoption of medical technology is unclear.

If your health care costs are growing and you are having trouble paying for your bills, there is help available. Contact your State Health Insurance Assistance Program, or SHIP, to see if you qualify for Medicare Buy-In Programs that help pay for Medicare premiums or deductibles. The number is listed in the Medicare & You handbook. You can also call 1-800-MEDICARE for the phone number of your local SHIP.

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