The A – B – C (and D) of Medicare

1. The A – B – C (and D) of Medicare September 12, 2011 Grace-Marie Turner Galen Institute

2. The AEI, Galen, Heritage Health Policy Basics Series The main ground rule for the series: This is a “JARGON FREE ZONE” Policy in a packet: Get your pocket cards here! Our job is to make health care easy to understand…

5. What is Medicare? Medicare was created in 1965 as a “social insurance” program to help pay for hospital and physician visits, diagnostic tests, medical equipment, and many other medical goods and services.A prescription drug benefit was added 40 years later (decades after private plans integrated drug and medical coverage).

6. Who gets Medicare? Medicare will spend $555 billion this year on health benefits It covers 48 million people 40 million senior citizens age 65 and over 8 million disabled people They have a physical or mental condition that makes it impossible for them to work It also covers people with kidney disease (“End Stage Renal Disease”) receiving dialysis

7. Who are the “dual-eligibles”? Nearly 9 million people are “dual-eligibles.” That means they qualify for both Medicare and Medicaid because they are lower-income and either seniors or disabled or both.

8. A & B: Medicare’s Original Parts Part A helps pay for hospital, home health, hospice care and other institutional care for the aged and disabled Part B is an allegedly voluntary program that helps pay for physician, outpatient hospital, home health, and other services

9. C and D: Medicare’s newer parts Part C is an alternative to traditional Medicare. Beneficiaries can enroll in private “Medicare Advantage” plans that contract with Medicare to provide medical, hospital and sometimes drug coverage to those who choose these plans Part D is a voluntary program that provides subsidized access to prescription drug coverage for all beneficiaries and subsidies for premiums and cost-sharing for low-income people

10. Part D:Such a deal! In 2011, the Congressional Budget Office said that spending for the prescription drug benefit declined by 46% compared to its initial estimates of its 10-year cost It is saving seniors money as well. The average monthly drug premium is $30, far below the $53 forecast originally and only $1 more than the average premium in 2010 ― $29 a month.

11. Part D: A model for Medicare reform Chairman Ryan’s plan is based upon “premium support.” That means seniors would get an annual subsidy to purchase a Medicare-approved health plan. The plan, when it begins in the year 2022, would allow seniors to pick the health plan that meets their needs. The older they are, the bigger the payment they would get. Sicker people would get more.

12. “I paid for my Medicare!” Consider this… A couple retiring today with both spouses earning an average wage throughout their careers would have paid $109,000in total Medicare payroll taxes during their lifetimes. Yet the expected spending by Medicare on the couple will be $343,000.

13. Medicare is becoming a black hole, and we must start now to fight its gravitational pull

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15. Contact: Grace-Marie Turner Galen Institute www.galen.org (703) 299-8900 gracemarie@galen.org