Tag Archives: Medicare

See where Medicare costs are headed and what it means for federal deficits

19 Mar

 

The following is from the website of the Congressional Budget Office (CBO).  It very succinctly states the problem that is facing our government.  The problem is obvious, the cost of Medicare is unsustainable which means that the real problem we are trying to solve is the cost of health care.  It also means that saving money on Medicare by attacking “waste and fraud” and then spending that money on a new government entitlement that will also grow at unsustainable rates based on the cost of health care is not logical.

The federal budget is on an unsustainable path, primarily because of the rising cost of health care and the aging of the U.S. population.

Projected Federal Spending Under One Fiscal Scenario
(Percentage of gross domestic product)
This figure, an area chart, shows federal spending from 1962 through 2082 under one scenario for Medicare and Medicaid, Social Security, and all other programs (excluding debt service). Most prominently, net federal spending on Medicare and Medicaid rises from 4 percent of gross domestic product in 2007 to almost 20 percent in 2082.

Premiums are not the problem

11 Mar

 

According to the President, insurance company health insurance premium increases are the main problem with our system. Attacking premiums and profit is in his speeches and all over the White House blog, the President is attempting to stir up resentment against health insurance companies.  It is almost as if there is no connection between the cost of health care and premiums, only a connection with profit. So how does the federal government deal with rising health care costs and premiums.  Remember in these examples there is no insurance involved?

In short, it simply artificially caps the premiums and shifts the real costs someplace else. For example, if there is no increase in Social Security benefits because the COLA does not kick in the majority of Americans on Medicare see no increase on their Part B premium. The costs have gone up but not the premiums. Where did the costs go?

From the 2009 Social Security and Medicare annual report:

It is expected that about one quarter of Part B enrollees will be subject to unusually large premium increases in the next two years. This occurs because it is projected that the other three-quarters of Part B enrollees will not be subject to premium increases in those years due to low projected Social Security benefit COLAs and a “hold-harmless” provision of current law that limits premium increases to the increase in Social Security benefits.

Congressional Research Service

If there is no Social Security COLA, Medicare Part B premiums would be affected in two ways. For about three-quarters of Part B participants, the hold harmless provision would prevent their Part B premiums from increasing, and so their Social Security checks would remain flat. For the other one-quarter of beneficiaries, the hold harmless provision would not apply. These beneficiaries would shoulder the entire beneficiary share of the increase in Part B costs. In other words, their collective premium increase would be nearly four times greater than if there were no hold harmless provision.

There are three groups of beneficiaries to whom the hold-harmless provision would not apply:  

  • new enrollees (about 2% of beneficiaries),
  • high-income beneficiaries who are subject to income-related Part B premiums
  • low-income beneficiaries whose Part B premiums are paid by the Medicaid

    • The underlying cost of health care is what drives premiums and while the federal government may be able to simply pass legislation and avoid  necessary premium increases, that does not work in the real world (or for the government truth be told).  Unfortunately, that does not stop the President or the White House from aggressively making insurance companies the scape goats or deceiving the American people into believing that simply limiting premium increases solves any problem. Barack Obama’s Speech on March 3, 2010.

    The President’s proposal for health care reform requires that insurance companies spend 80-85% of premiums on health care with the remaining 15% or so covering all expenses and profit. Let’s say this one shot change is enacted, then what?  The premiums still continue to escalate beyond general inflation just as Medicare does. How is that solving the problem of escalating health care costs – and premiums?  In addition if you are one of the 70 million Americans covered by your employers self-funded health benefits plan, there is no impact whatsoever on your costs, your contributions and your employers costs will continue to rise each year at a substantial rate.

    Here are some recent trend rates for different types of health plans, trend rates are the anticipated increase in claims considering increasing costs for medical services and the frequency and type of services provided.  For a discussion on how trend rates are used to develop premiums click here. 

    • HMO = 10.5%
    • POS = 10.5 %
    • PPO = 10.9%
    • Indemnity = 12%
    • CDH (consumer driven health) = 10.7%

     

    With general inflation nearly nonexistent isn’t’ the real problem we need to solve the increasing cost of providing health care?  High premiums and high premium increases are the symptom not the illness, but to hear the White House tell it, insurance companies discriminate, ration care, make your health care decisions and make abusive profits.  You are being conned and your attention is being diverted from the real issues that underlie the need for health care reform.

    Applying for Social Security, are we having fun yet?

    30 Oct
    charlie_napping_couch_lw

    Now that's out of the way, I'm back to my Twitter account

    Government in action 

    Being the tech obsessed person that I am, I recently applied for my Social Security on line.  Frankly, it was easy.

    About a week later, I received a call from a representative of my local Social Security office.  She left a message that she had some questions and few things needed to be cleared up….oops.  I called and left a message.

    As promised, she called me back right on time, 8:00 am to be exact.

    She said there was a problem with my name, apparently when I applied for my original Social Security card 50 years ago I did not add the 3rd on to my name which is my legal name.  They could not go forward I was told until this was corrected and that I would have to bring my birth certificate to the office to prove I was in fact the 3rd.  Ok, no big deal.

    We then talked about the effective date of my benefit, which appeared as October.  She asked me why I selected October on my application as my full benefit birthday was in November.  I informed her that I did not select October, but rather checked the box on the Web that said, “Earliest month possible without an age-related reduction.”  The system put in October and I thought I was going to get an extra months benefit, silly me.

    She noted that my wife was already collecting a Social Security benefit but probably wanted half of my benefit instead of the amount on her own earnings.  I said sure but since they already had all the info on my wife, I thought the change would be automatic.  Oh no, she has to apply for that benefit, I was told.  Ok, so how do we do that?

    “We can do it now if you like, you can apply for her.” The nice woman said.  “Eh, well sure let’s do it.”  “Where were you married, when where you married, are you still married?”   Yup, sure am and I even remembered my anniversary.  I didn’t bother to tell her all that information was provided on the form I filled out online the week before. Ok, that’s it.

    We just have to clear up your name.  I happened to mention that sometimes I use the 3rd and sometimes I don’t.  “Oh,” she said you do not care if the 3rd is on your check (actually direct deposit)?  “Not one bit,” said I.  “In that case you don’t have to worry about the birth certificate.”  Yikes, more red tape avoided.

    “You checked that you don’t want Medicare Part B, are you still working?”  “Yes, I am.”

    “You didn’t indicate if you are enrolled in a group health insurance plan.”  Actually, I did check yes to still working and enrolled in group health benefits and my printout of the online application shows both.  Has the Social Security system caught the H1N1?

    Finally, I asked about the income tax withholding form I had completed.  The instructions on the form say to mail the form or bring it to the local SS office. Can I just drop if off on Friday I asked?  “You don’t have to do that just tell me what percentage you want withheld and I will take care of it.”   Now we have circumvented the IRS procedures as well.  I’m in bureaucratic heaven.

    So that’s my tale, the lady representing Social Security was very nice, very friendly, very helpful and so far as I know very efficient.  Thank goodness for that, because apparently the system is not sure what it is telling people or what it is doing.

    Oh, how I dread that first Medicare claim…However, I suspect I can’t file on line.  Actually never filing a claim would be just fine.

     

    blogsurfer.us

    Optional confusion, confusing options or perhaps no option

    27 Oct

    Public option, no public option, sort of a public option, a public option the states can opt out of, a public option if this or that happens. A public option that is called something else. Are we having fun yet…just wait.

    I have a public plan and I don’t even have an option to take it or not. While I can choose among some alternative designs, I can’t opt out (and still have coverage) and people in Congress and the federal bureauocracy can take away my choices at any time, determine my benefits and what I pay.

    In fact, I have been paying for that option since 1965 and so have you. Because part of my pension is not from a qualified trust I even had the priviledge of writing a check for $16,000 to cover my Medicare tax for the rest of my expected life even though I am retired.

    There must ber a better way to do this

    There must ber a better way to do this

    So now Congress wants to lower the government’s cost for my public option so it can start another public option one paid for with premiums even though my public option is paid for with payroll taxes and premiums and is going broke. And many in Congress want a STRONG public option meaning the payments are based on my public option’s payments which are set by Congress irrelevant to the cost of services. How does that work again?

    Does the UAW represent workers in insurance companies? What jobs are we saving or creating this time?

    I know, we need a $4,500 credit for anyone who buys an efficient health insurance plan before December 31. Ah nuts, that plan will never meet the new minimum benefits package standards.

    How long will it take to reform the reforms?

    blogsurfer.us

    I wish I were wrong in this somewhat negative assessment of the current state of affairs, but my experience, history and even a touch of common sense tell me otherwise.

    22 Oct

     

    As we continue the rush toward health care “reform” – a misnomer in the making, perhaps it is time to recap where we have been.  Frankly, I am a bit confused myself. After reading so many versions of this concept, participating in numerous conference calls and meetings and speaking with the staff of a dozen members of Congress, I can’t remember who told me what, but I do remember they told me conflicting “facts” and they were all Democrats.

    Yes I remember now, they all told me they were going to save the Country from certain crisis if health care costs were not controlled, but they were unclear as to who was going to benefit.  On the other hand, I have been hearing that same song since 1978 or so and I am still waiting for that universal health care ID card that Bill Clinton held up in his first State of the Union speech.  However, I must admit that when GM lamented over the $700 per car that represented their health care costs back in the 1970s they were on to something, but they too failed to do anything to correct the problem and you know who ended up paying for that.  One has to wonder if nobody can fix a problem, is there a problem to fix?  Perhaps Americans like paying a lot for what they believe is good health care.

    From the start, the health care debate has been more about expanding coverage to the uninsured than truly reforming the health care system.  In fact, along the way, the debate became reforming health insurance and as I write this, the insurance companies have managed to make themselves the villains again drawing the rath of the White House before providing Pelosi and friends more fuel to push a public option. 

    Competition among who, could it be among health care providers? Nah, that would be too logical

    When there is talk of saving money is it about the federal budget, when there is talk about making something affordable it is about subsidizing premiums to lower the cost to the individual or expanding Medicaid.  Even when there is talk of changing the system, such as comparative effectiveness studies it is in the context of Medicare.  The Senate Finance Committee bill calls for a new Medicare panel to manage costs without lowering benefits or cutting payments.  Translate that to some form of rationing as that is the only option left.

    If you among the people who believe that we can have all what we want, when we want it and that any expense can be justified in some manner, I ask you to simply take a look at the federal and state budgets, the deficits and the collective taxes you pay.  If you like what you see…stop reading Quinnscommentary.com

    Members of Congress and large segments of the population see insurance premiums as the cost of health care and the cause of our woes.  In fact, premiums reflect true costs not the other way around. Large emploeyrs, including state govenrments are seeing double digit incrases in their health care costs for 2010 and they don’t even use isnruance companiens…how can that be, no CEO pay to blame and costs still out of control?  Ask Nancy.

    When there is talk about the need for a public option, the failures of Medicare are ignored.  In fact, one commentator recently noted that Medicare “our most successful public option, is going broke”.  GM was successful too, until it went broke.  Again, we define success in health care reform as coverage for more and more people.  I am not sure that is all we are looking for.

    My point is that we are missing the point.  We should be talking about the ills of fee for service medicine, the incentives to render more rather than the most efficient (or best) care, and the lack of clear definitions and application of quality health care. We should be curtailing the advertising in health care services that misinform and encourage utilization, the practice of defensive medicine and many of other real issues largely ignored by Congress in large part because they fear losing political contributions.

    (more…)

    Hey, it’s all coming from the same pot

    19 Oct

     

    Let us see if we can get this right, for 2010, there is no increase in Social Security benefits, and  Congress is considering legislation to stop the scheduled increase in Medicare premiums.  Inflation is low so there is no increase in Social Security, but health care inflation is high so there should be no increase in Medicare premiums despite the fact there failing to increase premiums in 2010 will add to the Medicare financial problem and may cause higher increases in subsequent years.

    More Congressional math. 

    Sooner or later they are coming home to roost

    Sooner or later they are coming home to roost

    It seems to me that a 5.8% increase in Social Security in 2009 should be good enough for two years at a time when there is virtually no inflation and workers are seeing no pay increase or worse.  On the other hand, I have been unable to convince my wife who is receiving Social Security of my logic so I suspect the AARP has the same problem.  We seniors are a greedy lot. 

    Now, because there is no inflation the amount you can place in your 401(k) or receive from a qualified pension plan is not increasing either from 2009 levels. This should not matter much as pensions are disappearing, people are not getting raises, they cannot afford to save and probably are not motivated to save because their employer match is gone from the 401(k) as well.   

    However, my favorite is the pending legislation that will stop the cuts in Medicare payments to physicians (again) to appease the AMA while adding to the deficit to the tune of a quarter billion dollars or so.  Now, to avoid confusing us Congress insists that this is not part of health care reform so the planned “saving” from Medicare of $404 billion are unaffected by spending half of it.   

    Hey, it’s only money…yours.

     

    blogsurfer.us

    Overuse of Medicare services…who knew?

    30 Sep

    A new report released by the Senate Finance Committee and conducted by the Government Accountability Office says many Medicare services are being overused. Imagine that.

    Senate Committee  Press Release

    Interesting that the press release comes from the Senate Finance Committee just hours after it rejected a public option within it’s health care reform bill.

    The good news is that such revelation may also point out the real problems with health care in America.

    Pssst, that groan you hear is coming from the AARP office. Yikes, they’re going to cut health care for seniors.

    Fixed income aint no joke

    26 Aug

    For the first time in a generation the Social Security monthly check will not increase next January, the victim of low inflation. This should not be a surprise to anyone, but wait. I can just see the critical response team at AARP figuring out to make the case for an exception – economic stimulus and all that you know. Hey, we can help people buy cars, why not food? I suspect the Medicare premium will increase and well it should as cost rise and financial trouble looms.

    The hard reality of retirement as I a learning after only a year in this state is that the fixed income deal is real and if you plan on retiring…ever, you better figure a way to cope. As we now know you can’t even rely on your uncle any more.

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