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Medicare Left & Right

The left’s solution

for the end of Medicare as we know it.

 

 

Center for Medicare and Medicaid Services (CMS)

Richard S. Foster, the Chief Actuary


And

The Congressional Budget Office (CBO)

on the President’s Medicare changes

(The Patient Protection and Affordable Care Act)

 

Click here for more details on Medicare and the new health care law

 

 

Even with the anticipated Medicare savings

 with the new health care law, according to CMS:


The projected date of Medicare’s Hospital Insurance (HI)

Trust Fund exhaustion is 2024,

five years earlier than estimated in last year’s report. 

Click here to verify and view in full context

 

 

Under current law (2012), the balance of the Medicare HI trust fund will be exhausted in 2022, CBO projects.

Click here to view in full context at Page 126


 

The March 2010 health care legislation

also established the

Independent Payment Advisory Board (IPAB),

which will be required to submit proposals to reduce

Medicare’s spending per enrollee if the growth

of such spending is projected to exceed certain targets.

Those proposals would go into effect automatically

unless blocked or replaced by subsequent legislative action.

Click here to verify and view in full context at Page 38

 

 

A related concern is posed by the

requirements that will be placed on

the Independent Payment Advisory Board. 

The Board will be charged with recommending changes

to certain Medicare payment categories in

an effort to prevent per-beneficiary Medicare costs

from increasing faster than the average of the

Consumer Price Index (CPI) and the CPI-medical for

“implementation years” 2015 through 2019.   The Secretary

of HHS is required to implement the Board’s recommendations

unless the statutory process is overridden by new legislation.

  Click here to verify and view in full context at Page 10

 

 

Health care providers for whom Medicare

constitutes a substantive portion of their

business could find it difficult to remain profitable

and, absent legislative intervention, might end

their participation in the program (possibly jeopardizing

access to care for beneficiaries).

  Click here to verify and view in full context at Page 10

 

 

Providers might tend to accept more patients

who have private insurance (with relatively attractive

payment rates) and fewer Medicare or Medicaid patients,

exacerbating existing access problems for Medicaid enrollees. 

Either outcome (or a combination of both) should be

considered plausible and even probable initially.

  Click here to verify and view in full context at Page 20

 

 

On the basis of the cuts in payment rates under

PPACA and the Reconciliation Act,

along with the effects of the sustainable growth

rate mechanism, CBO projects that

Medicare spending per beneficiary (adjusted for inflation)

will increase at an average annual rate of

less than 2 percent during the next two decades—

compared with the rate of roughly 4 percent that

has occurred over the past two decades

(a figure that excludes the effect of establishing the

Medicare prescription drug benefit). 

Click here to verify at Page 29, Para 3

 

 

We estimated that growth in such spending…

would drop from about 4 percent per year for the

past two decades to roughly 2 percent per year

for the next two decades; whether such a reduction

could be achieved through greater efficiencies

in the delivery of health care or would

reduce access to care or diminish the quality of care is unclear

It is unclear whether such a reduction can be achieved,

and, if so, whether it would be through greater

efficiencies in the delivery of health care

or through reductions in access

to care or to the quality of care.

  Click here to verify and view in context

 

 

 

Both the expansion of eligibility for Medicaid

and the provision of subsidies through new insurance

exchanges will increase federal spending.  

At the same time, the legislation contains various

provisions that will substantially

reduce spending on Medicare relative to what

would have occurred under prior law.

Click here to verify and view in full context at Page 8

 

 

 

The 2010 health care legislation places a

number of limitations on the actions available to the IPAB,

including a prohibition against modifying Medicare’s

eligibility rules or reducing benefits.

  Click here to verify and view in full context at Page 38

 

 

 

Total net savings in 2010-2019 from Medicare

provisions would offset about $575 billion

of the Federal costs for the national coverage provisions.

Click here to verify and view in full context at Page 21

 

 

 

Reductions in payment updates to health care providers,

based on economy-wide productivity gains,

are unlikely to be sustainable on a permanent annual basis. 

If these reductions were to prove unworkable within

the 10-year period 2010-2019 (as appears probable

for significant numbers of hospitals,

skilled nursing facilities, and home health agencies),

then the actual Medicare savings from these provisions

would be less than shown in this memorandum. 

Similarly, the further reductions in Medicare growth rates

mandated for 2015 through 2019 through the

Independent Payment Advisory Board may be difficult

to achieve in practice.

Click here to verify and view in full context at Page 20

 

 

For drugs covered by Medicare’s drug benefit,

CBO estimated that those provisions of the

legislation would raise the prices paid by pharmacies

less any rebates paid to insurers by manufacturers

by about 1 percent, on average.

Click here to verify and view in full context at Page 66

 

That increase in prices would make federal costs

for Medicare’s drug benefit and the costs faced

by some beneficiaries slightly higher

than they would be in the absence of those

provisions, while the new discounts would make

the costs faced by other beneficiaries substantially lower.

Click here to verify and view in full context at Page 66

CMS estimates that overall out-of-pocket

spending would be reduced significantly by the

PPACA (a net total decline of $237 billion

in calendar years 2010-2019).  

Click here to verify and view in full context at Page 18

 

Federal spending on mandatory programs

can be lowered by reducing the federal

government’s share of the programs’

spending and increasing the shares borne

by state governments, program participants,

and others.  Requiring people to pay more for

a service would decrease federal costs and might

lower the overall cost of providing that service

if people responded by using less of it.

Click here to verify and view in full context at Page 17

 

Spending on major mandatory health care

programs alone would grow from less than 6 percent

of gross domestic product (GDP) today to about

9 percent in 2035 and would continue to increase thereafter.  

Spending on major mandatory health care programs

and Social Security would grow from roughly 10 percent

of GDP today to about 15 percent of GDP 25 years from now.  

(By comparison, spending on all of the federal

government’s programs and activities,

excluding payment on debt, has averaged

about 18.5 percent of GDP over the past 40 years).

  Click here to verify at Summary Page

 

 

Click here for Fast Facts on Federal Spending and Debt

 

The right’s solution

for the end of Medicare as we know it.

 

 

The Congressional Budget Office

Analyses of Chairman Paul Ryan’s
Proposals

Individuals who are age 65 or older in 2020 as well as disabled

Medicare beneficiaries receiving benefits in 2020 would continue

in the current Medicare program for the rest of their life,

although some higher-income enrollees would pay higher

premiums, and some program payments would be reduced. 

  Page 10

(see link to full report below)


Starting in 2021, new Medicare enrollees

would no longer receive coverage through

the current program but instead

would be given a voucher with which

to purchase private health insurance. 

Page 21

The Roadmap specifies income thresholds

to determine whether an elderly person

would receive 100 percent of the voucher amount,

50 percent, or 30 percent.

People in the top 2 percent of the income

distribution would receive 30 percent

of the voucher amount, and people in the next top

6 percent income distribution would receive

50 percent of the voucher amount.  The remaining

92 percent would receive the full voucher amount.  

Page 21

Federal spending on mandatory programs

can be lowered by reducing the federal

government’s share of the programs’

spending and increasing the shares borne

by state governments, program participants,

and others.  Requiring people to pay more for

a service would decrease federal costs and might

lower the overall cost of providing that service

if people responded by using less of it.

Click here to verify at Page 17

Under the Roadmap, the value of

the voucher would be risk-adjusted

so that less healthy people

received a larger voucher to cover

their greater expected costs while

healthier people received a smaller voucher

to reflect their lower expected costs. 

Page 28


The voucher would be adjusted to reflect the age

and health status of enrollees; thus, in the

initial years of the new program, the average

value would be lower to reflect the lower

expected costs for health care of

individuals who had recently turned age 65. 

Page 21

It would institute a premium for higher-income

enrollees under Medicare’s drug benefit

similar to that used in Part B. 

Page 20

It would increase the fraction of

beneficiaries who pay an income-related

premium for Part B of Medicare

(Supplementary Medical Insurance).  

beneficiaries would face higher premiums

in the private market for a package of benefits

similar to those under Medicare. 

In response, beneficiaries would probably

purchase less comprehensive health plans

or plans that were more heavily managed

than traditional Medicare.  

Additionally, over time,

the value of the voucher would grow more

slowly than baseline spending would, with

implications like those discussed for

the tax credit. 

Pages 27-28

Federal spending on mandatory programs can be lowered

by reducing the federal government’s share of the

programs’ spending and increasing the shares borne

by state governments, program participants, and others. 

Requiring people to pay more for a service would

decrease federal costs and might lower the

overall cost of providing that service if people responded

by using less of it.

Click here to verify at Page 17

 

 

For people enrolled in the Medicare program prior to 2023, net

Medicare spending – including offsetting receipts, which are

mostly payments of premiums – would grow at the same rate as

under the extended baseline scenario. 

Click here to verify at Page 3

 

 

For people born in 1958 or later (that is, people who turn 65 in

2023 or later) or for those who otherwise become eligible for the

program in 2023 or later:  Total spending for those beneficiaries

in 2023 would be set to a total that works out to be $7,500 (in

2023 dollars) for each new 65-year-old beneficiary on a full-year

equivalent basis.  Total spending would grow in subsequent

years with nominal growth in per capita GDP plus 0.5 percentage

points per year, and with an adjustment for the health status

and number of beneficiaries who entered the program in 2023

or later.
Click here to verify at Page 3

 


 The eligibility age for Medicare would increase by two months

per year beginning in 2023 until reaching age 67 in 2034.

Click here to verify at Pages 3-4

 

 

 

Under the specified paths, by 2030, 39 percent of Medicare

beneficiaries would be subject to the spending constraints

established for the program (that is, they will have entered the

program in 2023 or later); that share would rise to

91 percent by 2050.

Click here to verify at Page 5

 

 

 

 

A final factor affecting Medicare outlays

is the proposed increase in the

program’s eligibility age, from 65 for people born

before 1956, as it is under current law,

to 69 and 6 months for people born in 2022 and later. 

Page 22

 

 

The Roadmap would put the federal budget

on a sustainable path, generating an

annual budget surplus of about

5 percent of GDP by 2080.  The economy would be

considerably stronger under the proposal

(as analyzed by CBO) than it would be

under the alternative fiscal scenario. 

Real gross national product per person would be

about 70 percent higher in 2058 under the

proposal than under the alternative fiscal scenario. 

Page 14-16

 

 

Much less uncertainty about future

federal spending on Medicare would

exist under the Roadmap than exists today. 

After 75 years, annual Medicare spending

under the Roadmap would be less than

one-quarter of that projected under

the alternative fiscal scenario.

Under the proposal, national health

expenditures would almost certainly be lower

than they would under the alternative fiscal scenario. 

Federal spending for health care would be

substantially lower, relative to the amount

in that scenario, for working-age people and

the Medicare population. 

Page 13


Click here to read full report

 

 

 

 

 

 

 

 

 

Question:

Do you think that a program with $37+ trillion dollars in unfunded liabilities can remain the way we have always known it?

 

 

 

 

 

 

 

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