to 64 and will transition into Medicare over the next 15 years. These people will likely pay higher out-of-pocket costs in a voucher system.
“Their premiums could also rise as younger and healthier people enroll in the separate voucher system, leaving an older and more expensive pool of people covered by Medicare.”
Stanton added “Seniors with chronic health conditions or who have a disability rely on Medicare for needed health care services. Many Hawaii residents with Medicare already pay substantial out-of-pocket costs and would have difficulty absorbing higher health care costs that would likely accompany a voucher system, making it more difficult for them to access necessary care.”
In 2014, about 69,504 (or 33%) of Medicare beneficiaries in Hawaii had two or three chronic health conditions; 45,054 (or 21%) had four or five: and 21,876 (or 10 %) had six or more.
People with limited financial resources may be forced to enroll in less expensive plans under a voucher system, with limited benefits and restrictive provider networks. These lower-priced plans could also have high deductibles and other cost-sharing requirements that would put people at risk for not receiving needed care due to costs they cannot afford.
Other possible Medicare changes
To lower the cost Medicare spends on prescription drugs, congressional Republicans are considering restricting access to some medicine for mental illness. Certain treatments for depression, schizophrenia, bipolar disorders and other mental illnesses could be dropped from Medicare Part D. Or patients could be forced to try older treatments that are less costly for insurers but also less effective medically.
Another proposed change to Medicare is cutting home health reimbursement by $80 million in 2018 and a whopping $950 million in 2019.
Senate Finance Committee Chairman Orin Hatch (R-Utah) who heads the committee that oversees Medicare, has called for “real reforms” to ensure the program is not “condemned to bankruptcy.”
House Minority Leader Nancy Pelosi (D-Calif) blasted Republican plans and vowed to block an overhaul.
Jon Ann Jenkin, AARP CEO said “Older Americans strongly believe that we must protect and strengthen Medicare for seniors and future generations. It’s imperative that the Centers for Medicare & Medicaid develop and test new ways to deliver care that both reduce cost and improve health outcomes. Congress should continue investing in preventing waste, fraud, and abuse to help maintain the integrity of Medicare.
“AARP remains strongly opposed to any health care proposal that reduces the tax credits to help people afford coverage, increases costs for older Americans, or that weakens protections for people with pre-existing conditions,” said Jenkins.
Fate of Medicare tied to Obamacare
One policy strategy that could jeopardize Medicare benefits is if changes to Medicare is tied to the repeal and replacement of Obamacare. Even though Trump’s American Health Care Act failed in 2017, consumer advocates warn of its future passage.
“AARP calls on Congress to move away from talk of repeal and instead focus on stabilizing the insurance market. Committing to paying for cost-sharing reductions for consumers and improving risk mitigation programs, such as through reinsurance, are two options that will help strengthen the ACA (Obamacare) markets and reduce premiums,” said Jenkins.
Stanton said “We want to make sure the age rating established in the ACA is not raised. It’s a 3 to 1 ratio now. That means a 64-year-old who is not yet Medicare eligible cannot be charged more than three times the premium of a 21-year-old with the exact same health insurance plan. The ACA repeal and replace bills would have raised that ratio to 5 to 1 or higher and tax credits to help low income people pay for higher premiums would have been reduced for many, leading to what we called an Age Tax.
“People with pre-existing conditions should also be protected and still be able to get insurance. AARP will fight to ensure that any legislation to change the ACA protects Medicare, lowers prescription drug prices, stops insurance companies from overcharging older Americans and protects older Americans’ ability to live independently,” said Stanton.
Arre shared a story of one of AARP Hawaii’s volunteers. “Anna Filler had a health scare recently. A mammogram revealed a lump in her breast. Medicare helped pay for a biopsy, which thankfully came out negative. Because of changes in Medicare through the Affordable Care Act, preventive tests like mammograms are free. Those mammograms are especially important to Anna and people in similar situations. Because of her scare, she’ll need to make sure she gets regular mammograms.”
On preserving parts of the Affordable Care Act, Arre said “We also need to preserve changes in the Affordable Care Act that helped extend Medicare solvency rather than repealing them. These include savings from provider payments and Medicare Advantage plans, the 0.9% Medicare Part A payroll tax on earnings of higher-income workers (incomes more than $200,000/individual and $250,000/couple), and the fee for the Part B trust fund on the manufacturers and importers of branded drugs. Together, these provisions of the health law have improved Medicare’s fiscal outlook without harming beneficiaries.”
Savings by Reducing Prescription Drug Costs
Opponents of Ryan’s plan say one option that would reduce the cost of Medicare is giving the program the authority to negotiate prescription drugs directly with drug companies. This could save the federal government $1 out of every $6 Medicare spends. Lowering high drug prices is one of the biggest cost-savings measures to keeping Medicare costs down.
“Drug prices are a major factor in health care inflation. The rising costs for drugs that are needed for people to survive also take a bite out of the budgets of seniors,” said Arre.
Stanton said “We would like to see further reductions in prescription drugs costs by continuing to close the Medicare Part D donut hole and taking further steps to reduce costs, which are out of control (in 2015, retail prices for 268 brand name prescription drugs widely used by older Americans increased by an average of 15.5 percent); and maintaining a strong combination of insurance market reforms, broad risk-pooling, restrictions on gender discrimination, subsidies, and cost-sharing limits are needed to make coverage affordable and accessible.”
AARP’s Jenkin agrees that giving the Secretary of Health and Human Services negotiating power on behalf of Medicare could reduce costs.
Jenkins also supports other changes: “Any discussions on improving the health care law must include solutions to the problem of unsustainable prescription drug costs. AARP supports a range of steps to achieve this goal.
“Allowing safe importation of lower-priced drugs, reducing the amount of market exclusivity for biologic drugs, prohibiting pay-for-delay deals between brand and generic drug manufacturers, and demanding greater transparency in prescription drug pricing,” said Jenkin.
The cost of prescription drugs is increasingly becoming too high even for seniors on Medicare. An AARP survey found that “19 percent of us (Medicare recipients) using prescription drugs are skipping taking drugs or cutting it in half to reduce cost.”
While drug companies defend their high prices to financial investments, research and development of drugs, critics say drug companies spend far too much on lobbying and marketing. Drug companies spend more than $24 billion annually on lobbying and marketing compared to $2.6 billion over 10 years for the development of a new drug. Drug companies enjoy some of the highest profit earnings of all industries. An example: Amgen's operating profit margin is 42.6 percent and Johnson & Johnson is 29.4 percent, while the average S&P 500 company operating profit margin is 10.4 percent.
Still Too Expensive
While the Ryan-Republican overhaul is not an acceptable choice to Americans knowing they would shoulder a larger burden of Medicare costs and pay more, a growing number of Americans are finding that Medicare, as it is now with slow incremental increases, is already becoming unaffordable.
The monster of rising healthcare costs ultimately will devour even Medicare if the entire health care system is not changed dramatically. One seemingly radical approach that some experts are starting to think is unavoidable is a single-payer system or Medicare-for-All to drive down costs through massive buy-ins of every American into the health system. Sen. Bernie Sanders recently introduced a Medicare-for-All bill in the Senate. Increasingly more progressive Democrats are jumping on this bandwagon and some political forecasters see this issue as being one of the major platforms for Democrats wanting to retake the White House in 2020.
Medicare-for-All or a single-payer system is still perceived as a far-fetched idea to many in the medical establishment that they haven’t formulated a public opinion on it this early.