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Medicare Debate Talking Points

July 21, 2011 By Aaron Sinner, Hindsight Community Fellow

This month marks the 45th anniversary of Medicare, which took effect on July 1, 1966. If Tea Partiers influenced the conservatives’ agenda in the mid-60s, we’d probably be calling it “Johnsoncare.”

After all, this truly is a government-run health insurance program for Americans over 65 years and older, unlike the Patient Protection and Affordable Health Care Act, which conservatives call “Obamacare,” a mostly free market solutions to health insurance coverage.

Medicare is a sterling example of a successful government program. Recent polls show 72 percent of Americans consider Medicare “extremely” or “very” important for their financial security in retirement, and 87 percent believe funding should be “increased” or “kept the same” while 0 percent want the program eliminated (putting Michele Bachmann in the significant minority).

Beyond its broad popularity, Medicare demonstrates success by other measures as well: According to Think Progress, the number of seniors living in poverty shrank from 30 percent to 7.5 percent following Medicare’s inception, while the number without health insurance dropped from 51 percent to virtually none.

Minnesota includes 791,566 Medicare beneficiaries, or 15 percent of residents. Only 10 percent of Medicare beneficiaries in Minnesota fall below the poverty line. Furthermore, the federal government spends $6,435 per Minnesotan enrolled in Medicare annually, less than the $7,439 spent on the average Medicare beneficiary.

The difference is likely due to Minnesota’s more cost-effective health care system. However, Minnesota is losing our edge: in-state Medicare spending has been increasing at a rate of 6.3 percent per enrollee per year since 1995, outpacing the national average of 4.8 percent growth. That’s a Minnesota problem, though, not a Medicare problem.

What will Medicare’s next 45 years look like?

Anyone following the news knows changes to Medicare are on the table. Ranging from Paul Ryan’s proposal to privatize Medicare to President Obama’s recent call for “means testing” the program—granting benefits based on beneficiaries’ financial means—there’s no shortage of politicians clamoring for reform.

Perhaps that’s not surprising: projections show Medicare as a major driver of the national debt in coming years. Or, to be fair, projections show health costs as the major driver of national debt in coming years; it’s not that government will overspend on health care, but that health care will grow drastically more expensive.

Unfortunately, Medicare’s status as a successful and popular program has led many progressives to demand the program continue in its present form. Admittedly, progressive fears about reforms—especially those involving cuts—are justified in the face of conservatives bent on altering the program to something unrecognizable.

But that doesn’t mean the phrase “Medicare reform” should frighten away progressives. If done right, Medicare could be revamped in ways that strengthen rather than undermine the program.

Here are five points progressives should remember in reforming and strengthening Medicare:

1. Medicare is not going bankrupt. As the Center on Budget and Policy Priorities explains, “Although Medicare faces major financing challenges, the program is not on the verge of bankruptcy or ceasing to operate.” Medicare will have the money to pay 100% of its costs through 2024, and from then through the end of the century, revenue will cover 83% of the program’s costs. Those numbers point to a program ripe for reform and strengthening, not dismantlement.

2. We have plenty of room to improve. This graph says it all: The United States vastly overspends on health care given our outcomes. That’s cause for optimism, as it indicates we can reduce costs without hurting—and possibly while improving—quality of care. The fact that Medicare insures so many Americans means its effects on the market are more immediate, making it the place to lead with reforms intended to close this gap.

3. Spread the word: “Death Panels” are back. You no doubt remember Sarah Palin’s pants-on-fire lie that the Affordable Care Act included “death panels” of government bureaucrats who would decide whether the elderly lived or died. What you might not remember is the basis for that claim, which was removed from the final bill as part of the damage control. In reality, a “death panel” was a voluntary consultation with a doctor to discuss living wills and other end-of-life wishes. Before the language’s removal, Medicare would have for the first time paid for these end-of-life consultations. Newsweek reports, “A study by the Archives of Internal Medicine shows that such conversations between doctors and patients can decrease costs by about 35 percent—while improving the quality of life at the end.” When you consider that a third of all Medicare dollars go to the last two years of life, end-of-life discussions amount to a major opportunity for Medicare savings while also better honoring patients’ wishes.

The good news is beginning January 1 of this year, new federal regulations have restored Medicare’s payments for end-of-life counseling. The bad news is all the hubbub about “death panels” means most Medicare beneficiaries don’t realize they have this option. If seniors take advantage of such counseling en masse, it will reduce costs considerably and better ensure doctors’ actions correspond to patients’ wishes.

4. Fraud and payment errors are costing Medicare tens of billions of dollars each year. These mistaken payments to doctors and insurers cost $60 billion annually. Modernizing through better technology should reduce this number significantly. Recent legislation co-sponsored by Minnesota Senator Amy Klobuchar takes steps in the right direction and must be a priority.

5. Drug companies have received a sweetheart deal since 2006. The Center for American Progress describes how prior to 2006, drug companies paid a rebate to the government in exchange for all the extra business the government made possible through the money it provided low-income seniors for prescription drugs. However, when this program moved from Medicaid to Medicare in 2006, those rebates shrank dramatically. Restoring this government rebate would bring in $112 billion over 10 years.

Happy birthday, Medicare. May you live long and prosper.

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  • Bernice Vetsch says:

    July 26, 2011 at 8:00 pm

    Thanks for this nice article. 

    Minnesota has one advantage for low-income seniors that other states may or may not have.  No matter what a provider bills, Medicare pays 80% of its “approved” amount.  Seniors purchase gap insurance that pays 80% of the remaining 20% of the approved amount. 

    Over 500 physicians and clinics will accept Medicare’s payment as payment in full for low-income seniors who cannot afford to buy gap insurance and will not bill the seniors.  The names of these providers are available from Volunteers of America.

  • W. D. (Bill) Hamm says:

    July 27, 2011 at 11:57 am

    At least you called it honestly Aaron, “talking points”. Now let’s look at you rhetoric. Interestingly missing is any figure from these same polsters on how many folks want the fraud aspect of this 45 year old program fixed. Your figur of only $60 billion is a guestimate that you are not being honest about. Those who secretly support this transfer of our wealth to criminals tend to down size this number as you have. Both PBS and 20/20 or 60 Minutes have provided better estimates than you. Much like abortions before “Roe-v-Wade”, we have no real figures on fraud in this program, but we do have a 45 year record of progressives like you opposing any fix. Even at your punny nuber of $60 B a year that’s $2.7 Trillion dollars your kind has cost we the taxpayers. Our party created this problem and therefor has an obligation to fix it while taking credit for not having done so until now.