Is “Medicare for All” Affordable?

Sen. Bernie Sanders’ “Medicare for all” plan would increase government health care spending by $32.6 trillion over 10 years, according to a study by a university-based libertarian policy center.

That’s trillion with a “T.”

The latest plan from the Vermont independent would require historic tax increases as government replaces what employers and consumers now pay for health care, according to the analysis being released Monday by the Mercatus Center at George Mason University in Virginia. It would deliver significant savings on administration and drug costs, but increased demand for care would drive up spending, the analysis found.

Sanders’ plan builds on Medicare, the popular insurance program for seniors. All U.S. residents would be covered with no copays and deductibles for medical services. The insurance industry would be relegated to a minor role.

“Enacting something like ‘Medicare for all’ would be a transformative change in the size of the federal government,” said Charles Blahous, the study’s author. Blahous was a senior economic adviser to former President George W. Bush and a public trustee of Social Security and Medicare during the Obama administration.

Responding to the study, Sanders took aim at the Mercatus Center, which receives funding from the conservative Koch brothers. Koch Industries CEO Charles Koch is on the center’s board.

“If every major country on earth can guarantee health care to all, and achieve better health outcomes, while spending substantially less per capita than we do, it is absurd for anyone to suggest that the United States cannot do the same,” Sanders said in a statement. “This grossly misleading and biased report is the Koch brothers response to the growing support in our country for a ‘Medicare for all’ program.”

Sanders’ office has not done a cost analysis, a spokesman said. However, the Mercatus estimates are within the range of other cost projections for Sanders’ 2016 plan.

Sanders’ staff found an error in an initial version of the Mercatus report, which counted a long-term care program that was in the 2016 proposal but not the current one. Blahous corrected it, reducing his estimate by about $3 trillion over 10 years. Blahous says the report is his own work, not the Koch brothers’.

Also called “single-payer” over the years, “Medicare for all” reflects a long-time wish among liberals for a government-run system that covers all Americans.

The idea won broad rank-and-file support after Sanders ran on it in the 2016 Democratic presidential primaries. Looking ahead to the 2020 election, Democrats are debating whether single-payer should be a “litmus test” for national candidates.

The Mercatus analysis estimated the 10-year cost of “Medicare for all” from 2022 to 2031, after an initial phase-in. Its findings are similar to those of several independent studies of Sanders’ 2016 plan. Those studies found increases in federal spending over 10 years that ranged from $24.7 trillion to $34.7 trillion.

Kenneth Thorpe, a health policy professor at Emory University in Atlanta, authored one of those studies and says the Mercatus analysis reinforces them.

“It’s showing that if you are going to go in this direction, it’s going to cost the federal government $2.5 trillion to $3 trillion a year in terms of spending,” said Thorpe. “Even though people don’t pay premiums, the tax increases are going to be enormous. There are going to be a lot of people who’ll pay more in taxes than they save on premiums.” Thorpe was a senior health policy adviser in the Clinton administration.

The Mercatus study takes issue with a key cost-saving feature of the plan — that hospitals and doctors will accept payment based on lower Medicare rates for all their patients.

The study found that the plan would reap substantial savings from lower prescription costs — $846 billion over 10 years — since the government would deal directly with drugmakers. Savings from streamlined administration would be even greater, nearly $1.6 trillion.

But other provisions would tend to drive up spending, including coverage for nearly 30 million uninsured people, no deductibles and copays, and improved benefits, including dental, vision and hearing.

After taking into account current government health care financing, the study estimated that doubling all federal individual and corporate income taxes would not fully cover the additional costs.

Original Article By: RICARDO ALONSO-ZALDIVAR, ASSOCIATED PRESS
Article Originally Published By abcNews
Link: https://abcnews.go.com/Health/wireStory/study-medicare-bill-estimated-326-trillion-56906940

Medicare Deadlines for Older Workers

Many workers are staying on the job — and on their employer’s health insurance — beyond the age of 65, when retirees usually sign up for Medicare .

If you’re among them, once you retire, you will be eligible for a special enrollment period to sign up for Medicare. If you don’t enroll during this period, you could face penalties and gaps in coverage. Here are the deadlines:

Part A (if you haven’t already enrolled) and Part B

The first covers hospitalization; the second covers doctor visits and outpatient services. If you’re older than 65 and have been covered by an employer plan, you have up to eight months after the month you leave your job or the month you lose health coverage from your employer (whichever comes first) to sign up. After that, you’re subject to a late-enrollment penalty of up to 10 percent of your Part B premium for every year you should have been enrolled.

Only health insurance from your current employer is considered primary coverage for the purpose of determining whether you’ve had any gaps. Retiree health insurance, which some employers provide, or coverage under COBRA, the law that allows you to temporarily extend your employer’s benefits, doesn’t count. Give yourself plenty of time, because you’ll need to go to a Social Security office and show that you had creditable coverage from your employer after you turned 65. Ideally, you should start the process a month before you leave your job, says Casey Schwarz, senior counsel for the Medicare Rights Center.

Medicare Advantage

These plans (also known as Part C) are offered by private insurers that contract with Medicare and pay for some expenses not covered by Medicare. You have 63 days to enroll in a Medicare Advantage plan after your employer-provided coverage ends. For more information about Medicare Advantage plans, go to www.medicare.gov/find-a-plan.

If instead of Medicare Advantage you sign up for medigap — supplemental insurance that pays for some expenses Medicare doesn’t cover — you should enroll within six months after you sign up for Part B. Otherwise, you could be charged more or denied medigap insurance altogether because of preexisting health conditions.

Part D

Here, it’s even more important to avoid any gaps in coverage. For every 63 days you go without creditable prescription drug coverage, you’ll pay a penalty equal to 2 percent of the “national base beneficiary premium” ($35.02 in 2018). That penalty will be added to your Part D premiums for as long as you participate in the program. You can get prescription drug coverage from a stand-alone Part D plan (search for one at www.medicare.gov/part-d) or through a Medicare Advantage plan that provides prescription drug coverage.

(Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.)

(c) 2018 Kiplinger’s Personal Finance; Distributed by Tribune Content Agency, LLC.

Article By: Sandra Block, Kiplinger’s Personal Finance
Article Originally Published in the Chicago Tribune
Link: http://www.chicagotribune.com/business/sns-201807251524–tms–kplngmpctnkm-b20180725-20180725-story.html

Middle Class Seniors May Be At Highest Financial Risk

Pam Holt, a teacher and school administrator in Granger, Indiana, was looking forward to her retirement. After her husband died when she was 40, she raised three children alone. She paid into a pension, made Medicare and Social Security contributions, accumulated some savings, and was only three years away from paying off her mortgage when, at age 66, she was diagnosed with multiple myeloma, a cancer that originates in bone marrow. Fortunately for her, taking a pill called Revlimid, made by Celgene, can hold the disease at bay. But its cost began eating her up.

In January of 2017, Holt, facing a monthly list price of $12,837 for Revlimid, discovered how incomplete Medicare’s drug coverage benefits can be. She quickly blew through the initial phases of Medicare’s drug benefit, in which she spent about $3,000 out of pocket on her medicine. At that point, despite the fact that it was still only the first month of the year, she entered Medicare’s catastrophic coverage, in which she had to pay 5 percent of the list price. Even with that seemingly small responsibility, she would owe another $7,000 before the year was out. Her retirement income was only $45,000 a year, so she used credit cards and savings to make the payments. Then she refinanced her house. At 69, her cancer therapy was steadily impoverishing her.

Holt felt she had no choice but to stick with the pills. Revlimid was working. “I need it to stay alive,” she told us.

Holt is among the one million Americans who have discovered that their Medicare drug insurance is not the protection they expected. Unlike Medicare Part A and Part B — the hospital and doctor programs, where supplemental plans can be purchased to cap costs — no such option exists for Part D, which covers drugs. Although Medicare Advantage plans are required to have an out-of-pocket cap for services covered under Parts A and B, even they do not provide a cap on out-of-pocket spending for prescription drugs covered under Part D.

People with lower incomes can qualify for Part D subsidies — 2.6 million who reached catastrophic coverage received these subsidies in 2016 (the last year with complete statistics) — that put a ceiling on their drug costs. But Holt and other middle class seniors, particularly those with chronic conditions, face high and growing out-of-pocket spending on prescription drugs year after year.

The catastrophic phase of Part D is frequently an afterthought in discussions of Medicare because the co-insurance seems so modest. But in a study we recently published in the journal Health Affairs, we found that rapidly increasing list prices for drugs helped drive the catastrophic proportion of total Part D spending (including federal and insurer contributions) from 18 percent in 2007 to 38 percent in 2016. The number of Medicare beneficiaries who aren’t eligible for subsidies who needed catastrophic coverage, such as Holt, doubled in number in that period, and the proportion of their total spending that occurred in catastrophic coverage increased threefold. Though co-insurance is only 5 percent in that phase, the considerable growth in catastrophic spending exposes beneficiaries to higher out-of-pocket costs.

The absence of a cap on that spending is a constant source of anxiety for seniors living on fixed incomes. Unlike the vast majority of beneficiaries in employer-sponsored plans or those available as part of the Affordable Care Act — all of which are required to place a cap on out-of-pocket spending for essential health benefits, including prescription drugs — middle-income enrollees in Part D can see their personal wealth sucked away if they are hit with a costly illness. This defeats the purpose of insurance and undermines its financial protection.

It wouldn’t cost much to fix. We estimated that implementing a cap on out-of-pocket spending in Part D would result in a monthly premium increase of between 40 cents and $1.31 per member, depending on how policymakers chose to handle subsidies for low-income members. That would represent about a 1 to 4 percent increase in the average monthly $30 Part D premium to reduce costs for the more than one million Medicare beneficiaries like Holt who don’t qualify for subsidies, and protect all beneficiaries should they need an expensive drug.

The issue has support from both sides of the aisle. The Trump administration recently proposed a cap in conjunction with broader Part D reforms, which had also been suggested by the Medicare Payment Advisory Commission, a nonpartisan agency that makes policy recommendations about the Medicare program to Congress. Democratic Senator Ron Wyden of Oregon has made such a cap a centerpiece of legislation called the Reducing Existing Costs Associated with Pharmaceuticals for Seniors Act (RxCAP).

So why is there no action? Despite the general agreement, a Part D cap is a low priority in Washington. It is caught in the broader debate over health care and entitlement reform, which is fraught with political drama.

That isn’t fair to Holt and the other seniors whose retirement is in jeopardy. Holt is now getting some financial help from a private foundation, but that isn’t a solution for the million-plus Medicare Part D beneficiaries like her who face rising and uncontrolled drug costs. They deserve solid coverage against catastrophe, not insurance in name only.

Erin E. Trish is the associate director of health policy and Geoffrey F. Joyce is director of health policy at the Leonard D. Schaeffer Center for Health Policy & Economics at the University of Southern California. Pam Holt kindly allowed us to use her story as an example of the pitfalls of Medicare’s current catastrophic coverage system.

Original Article By: ERIN E. TRISH and GEOFFREY F. JOYCE
Originally Published On: STAT News on JULY 23, 2018
Link: https://www.statnews.com/2018/07/23/medicare-catastrophic-insurance-a-catastrophe-for-some/