• Let’s not forget Medicare is a good thing

    It’s hard to focus on anything but the debt ceiling right now. It’s hard to talk about anything but costs, either. So it was nice to see this from Paul Krugman today:

    The crucial thing to remember, when we talk about Medicare, is that our goal isn’t, or at least shouldn’t be, defined in terms of some arbitrary number. Our goal should be, instead, to give Americans the health care they need at a price the country can afford.

    Hear, hear. I’m not saying the deficit isn’t important, or that costs shouldn’t be controlled. But we should remember our goal. It’s not just to save money, no matter what. It’s to provide more cost-effective care. There’s more:

    While Medicare expenses per beneficiary have soared over the past 40 years, they’ve risen significantly less than private insurance premiums. And since Medicare-type systems in other advanced countries have much lower costs than the uniquely privatized U.S. system, there’s good reason to believe that Medicare reform can do a lot to control costs in the future.

    In that case, you may ask, why didn’t the 2010 health care reform simply extend Medicare to cover everyone? The answer, of course, is political realism. Most health reformers I know would have supported Medicare for all if they had considered it politically feasible. But given the power of the insurance lobby and the knee-jerk opposition of many politicians to any expansion of government, they settled for what they thought they could actually get: near-universal coverage through a system of regulation and subsidies.

    It is, however, one thing to accept a second-best system insuring those who currently lack coverage. Throwing millions of Americans off Medicare and pushing them into the arms of private insurers is another story.

    Worth keeping in mind.

    • Yes, but it will only be a good thing so long as the government doesn’t try to take it over.

      (Yes, I know….)

    • Aaron, hard to believe that you are publishing again this completely phony comparison by someone who knows nothing about health economics. See again, this post at my blog: Krugman Gets it Wrong Again.

    • I take it you and the NYT’s columnist are not talking about “Medicare as we know it.” 90% of seniors have already voted that “Medicare as we know it” is a failure with its high deductibles, high co-pays, lifetime limits and limited geographic coverage.
      — About 25% of them have chosen Part C instead of A and B, many at little extra cost above the “Medicare as we know it” monthly premium.
      — Another almost 25% have supplemented A and B with Medigap and D at very high cost for those on limited incomes.
      — The real old seniors and those that work for the government (33% of the total still but dropping) tell me that at one time employers provided pretty good insurance to seniors too.
      — For most of the rest, “Medicare as we know it” is so bad they also qualify for Medicaid.
      — Less than one in 10 thinks Medicare is a good thing; they probably own corporate jets too

      • Do you have any references for the above claims? I don’t mean to put words in your mouth but are you saying that that choosing to supplement medicare proves that people do not like medicare?

        • @ George Thomas

          The source of the data is MedPAC. Its latest databook is at the top of its web site right now but the data in that databook relative to this subject is actually based on the 2007 Medicare Beneficiary Survey. Other MedPAC or CMS releases have more current data that say, for example, that the Part C participation is up to 25% (from around 11% before the 2006 reform of Part C). That’s why I used weasel words such as “about” and “almost” and “less than one in 10” in the above post.

          You don’t have to put words in my mouth. Yes, I am saying that the fact that 90%-plus of Medicare recipients have to supplement Medicare means they don’t like vanilla Medicare. Can you blame us:

          — $1132 deductible per most hospitals stays (unless you go back within 60 days, even for a different reason–go figure, huh?)
          — large co-pays for skilled nursing after a few days
          — pretty onerous lifetime limits on both of the above (this is the primary problem with “Medicare as we know it”)
          — an annual deductible on physician services plus 20% co-pays thereafter
          — be careful of where you have need for a doctor anywhere near the Mexican or Canadian borders (don’t go to Bermuda or the Bahamas either)

          Or as Kaiser explains it in its recent report on Congress’ planned changes to Medigap

          “Medicare by itself has relatively high deductibles, and imposes coinsurance for most covered services. Moreover, Medicare does not have any limit on total cost sharing, exposing some beneficiaries to large out-of-pocket (OOP) costs.”

          A recent MedPAC report explains it this way:

          “The current FFS benefit design includes a relatively high deductible for inpatient stays, a relatively low deductible for physician and outpatient care, and a cost-sharing requirement of 20 percent for most physician care and outpatient services. Under this design, no upper limit exists on the amount of Medicare cost-sharing expenses a beneficiary can incur. If not supplemented with additional coverage, the FFS benefit design makes Medicare beneficiaries face substantial financial risk and may discourage the use of valuable care.”

          So yes, having to choose to supplement Medicare means seniors don’t like it. Think of it this way
          — You sell a service that applies to people over 65 (i’m leaving out Medicare SSDI and ESRD cases for sake of a simple example)
          — Everyone is forced to pay for your service by law their whole working lives (including after enrolling if they keep working)
          — In return, everyone is enrolled in your service when they turn 65 (in reality, those that aren’t automatically enrolled in A when they turn 65, should pro-actively sign up just to get in the system)
          — And yet 90% of the people using your service pay more money (not always the case for C and D) because your service is so bad

          Does that sound like your service is “a good thing.”

      • Perhaps you don’t understand how Medicare works. You say people have supplemented Parts A and B with medigap – and you are correct. But you also say they have supplemented with Part D – which is incorrect.

        Part D is drug coverage and people with low incomes get a low income subsidy through which they get the Part D premium paid and they pay no more than $6.30 for brand drugs. This is a great deal! Of course, I meet plenty of people who make a bit too much money to get help with their Part D costs and they struggle to afford their prescriptions. But before Part D, they couldn’t have afforded expensive brand prescriptions at all.

        You say Medicare is so bad “for the rest” that they qualify for Medicaid. Huh?

        Medicaid supplements Medicare coverage for people with incomes less than $908 per month. So Medicare pays first and Medicaid pays the co-pays and deductibles that come with Medicare. It is a very good deal for people with very low income. And these folks also get help with their Part D costs as I described above.

        And where did you get the idea that only one in ten people think Medicare is a good thing???

        Recent opinion polls show a large majority of Republicans and Democrats think Medicare IS a good thing and should not be gutted.

        As an insurance agent I can’t recall meeting one person on Medicare who thought it was a bad thing. Seniors love their Medicare and they realize they have to share in the cost of their medical bills. 85% of seniors are generally pretty healthy and don’t struggle with their medical co-pays. But for those who have chronic illnesses and modest (but not low) income, are struggling to pay the bills.

        Your comment seems to be YOUR opinion. Or perhaps you are a Fox News viewer who is badly misinformed.

        • Yes, I am a Medicare enrollee so I understand how it works. . The source of the 90% number is explained in the reply to George. You say you’re an insurance agent, probably making a lot of money from people like me, so I won’t try to correct the other errors in your reply.

          • Medicare was designed with co-pays and deductibles because, even back in 1965, the government believed seniors should not have 100% coverage. Medigap insurance was created to fill those gaps so seniors would have a choice: Live with the risks of co-pays and deductibles, or get more insurance to fill the gaps. That doesn’t mean Medicare is bad.

            New proposals for Medicare and medigap plans include requiring everyone to pay a $500 deductible. Other suggestions include capping out-of-pocket expenses for people on original Medicare. This could make medigap policies less attractive as Medicare beneficiaries would be protected from the high costs associated with things like cancer treatment and chronic illnesses.

            As for high co-pays: Skilled nursing is covered with no co-pay for days 1-20, which is a pretty generous benefit. Home health care is covered with no co-pay. Again, very generous. These are benefits some in Washington think are too generous and want to change.

            You say my previous comments have errors, yet your understanding of Part D and skilled nursing benefits show you could use a review of your own Medicare benefits. If you have a medigap plan and you’re paying $200 – $300 per month for it, you probably have 100% coverage for your medical bills. Adding in your Medicare premium, you are paying $300 to $400 per month for 100% coverage. That is a good deal.

            • Denise, You’re basically selling Medigap insurance on this site, which is something I prefer not to be involved with. However, your Medigap sales pitch has to be countered by the Medigap buyer perspective in case some unsuspecting senior citizen (or one of the 15% of the Medicare population that is not a senior citizen) comes across your forever on the Internet claims that:

              — Medicare is a good deal and seniors love it
              — Supplements cover people “completely” (a few places you say “100%”)…
              — …”at a reasonable premium cost”
              — Part D is not a supplement

              1. Is it a good deal and do seniors love it? Your anecdotes are not useful although a typical sales technique. Instead I specifically listed the co-pays, deductibles and lifetime limits; let readers/seniors decide if they think that’s a good deal. (The statistics I provided show that 90% of Medicare recipients have said “no.”) In my reply to George I also gave the quotes from Kaiser and MedPAC noting “Medicare as we know it’s” major flaws. Basically “Medicare as we know it” is lousy insurance. Insurance with high copays and deductibles is OK if the premium is low but Medicare plus its supplements is very expensive insurance (you never mention the tens of thousands of dollars the senior has prepaid via a payroll tax during his or her working life). Most people will tell you that insurance without dental and vision assistance is not good insurance. And no one will argue that insurance with lifetime limits is good (it’s the opposite of what you need in insurance). But that’s “Medicare as we know it.”

              2. Do the various supplements cover people “completely” (a few places you say 100%)…? Supplements vary by geography. Premiums vary by supplement and by geography. I only know my geography well but reading the CMS Medigap guide quickly, I see no Medigap policy anywhere in the country that elminates lifetime limits “completely” (I admit I read it quickly.)

              3. Do supplements cover people …”at a reasonable premium cost?” As for whether the premiums are reasonable, reasonable is debatable given cost of living in various areas of the country. But with incomes for couples in retirement averaging around $30,000 today according to the Social Security Administration (which includes some of the poor retirees still having to work), I don’t think your estimate of $7200 to $9600 per couple per year in premium costs (25%-30% of income) is reasonable. Adding in the true value of all the money prepaid over a working life and it is almost impossible to get to an argument that the cost of “Medicare as we know it” plus the supplements that nine out of ten realize they need is reasonable. Retirement income for boomers will be higher but so will costs; the proportion will probably stay the same. It is what it is. But the people I talk to at the senior drop-in center know a sales pitch when they hear one.

              4. Is Part D a “supplement?” I’m not sure what you think I don’t understand about Part D. I suspect it is the salesperson in you using the word “supplement” in the terms of what you sell. I am using the word “supplement” in its English language sense. The most important thing seniors should know about Part D is that anyone that does not have Part C or minimum creditable drug coverage from another source (typically a former employer or union) should at least sign up for a zero- or low-cost D plan in your county as soon as you are eligible, even if you are among the lucky few not taking some prescriptions or are just getting generic prescriptions through Walmart, Target, etc. This will help you avoid a big lifetime premium penalty down the road when you do need the insurance.

    • Or perhaps Goodman is correct, but Americans are stupendously bad managers compared to, well, pretty much everyone else.

    • To Dennis: Just because Medicare beneficiaries have chosen a Med supp or Medicare Advantage does not mean Medicare is no good. In fact, a person with Medicare and a Med supp can get complete coverage for a very reasonable premium cost – and they think it is great!

      For those in Part C, Medicare Advantage, they are given a choice – and we Americans like choice. It doesn’t mean they think Medicare is bad. These folks have been marketed to and decided the lower premiums and co-pays for care are a good option for them.

      I am an insurance agent dealing with Med supps and Medicare Advantage and I am amazed that so many folks over 65 have no concept of what their coverage is. All they know is that it works for them. Medicare Advantage now limits out-of-pocket expenses for seniors. And most of the Medicare supplements limit out-of-pocket expenses to the monthly premium or just a bit more. Seniors who can afford the monthly premium (which really isn’t that bad) are very happy with their Med supp. Though I understand that these folks are getting blamed for going to the doctor too often because they have “first dollar coverage”.

      I love Medicare! I hate under-65 individual insurance! Medicare is so easy to work with, gives people choice, and provides excellent coverage. I hate under-65 individual insurance because I meet too many people who do not qualify for insurance. Or I have to tell them to jack up their deductible to $5,000 so they can afford the premium.

      Long live Medicare!

    • One more time, Dennis:

      I think I understand your perspective on Medicare. You think seniors should pay less for their medical costs and coverage rather than more. If this is the case, then I agree with you – but that is not how our system works and it won’t get any less expensive for seniors in the future.

      Yes, I am in insurance sales, and I can tell you that, compared to the under-65 market, Medicare and Medicare supplements are a good deal. I would like to see it be a better deal, but I don’t think that’s going to happen.

      You said that Medigap plans vary across different parts of the country and this is only correct when talking about Massachusetts and Wisconsin where they have their own rules for Medigap. A plan F in Florida is exactly the same as a plan F in Arizona – the only difference being the premium. And a plan F fills all the gaps in Medicare, meaning a senior should have no co-pays for medical services that are covered by Medicare.

      I don’t know what you are referring to when you talk about “lifetime limits” because Medicare and Medigap plans have no lifetime limits on how much money can be spent on behalf of a patient.

      Perhaps you are referring to the fact that there is no limit on the 20% co-insurance for Part B services, which is what gets seniors into financial trouble if they only have Medicare. But a plan F Medigap will cover that 20% and there is no limit on what the Medigap plan will pay out for a person.

      So a person with a $200 per month Plan F medigap would spend $2,400 per year on premiums. Add that to the cost of Medicare part B premiums and (rounded off) let’s use $100 per month as the cost. That’s $1,200 per year for Medicare plus $2,400 for the medigap = $3,600 for a persons medical cost covered at 100%. Yes, 100%.

      I agree with you that this is a lot of money for people on fixed incomes and this is why many people choose Medicare Advantage, thinking they will save money. Some do and some don’t, depending on their health.

      Unfortunately, our country has an expensive health care system and seniors pay the price for this. Unfortunately, things are only going to get more expensive for seniors going forward.

      And one more thing: I’m not selling insurance here, I’m just sharing my thoughts and my knowledge gained from working every day with Medicare and Medicare supplements. You may find that I think a lot like you do if you read my blog. Click on my name and it should take you to my blog.

      • I just realized what you meant about “lifetime limits” and that is the maximum number of days for hospital stays. But it is hard to imagine that someone would go over the limit for hospital days because, while a benefit period is 60 days, a person gets an unlimited number of benefit periods according to the Medicare guide I just read.

    • Okay, just one more thing: I was reading the New York Times and there is an article from July 13 on opinion polls about Medicare that says it is very popular with seniors.

      Here are some excerpts from the article:

      …examined this issue through an analysis and review of 21 opinion polls for a project supported by the Robert Wood Johnson Foundation (see Opinion Polls on Medicare).

      The polling results suggest four reasons for this impasse. First, Medicare remains very popular with the public and its beneficiaries 46 years after its enactment.

      ….In addition, Medicare is rated highly by those who use it. Fifty-one percent of seniors, most of whom are covered by Medicare, rate their health insurance coverage as “excellent.” This is a significantly higher proportion than the 32% of insured Americans under the age of 65 who give their health insurance an “excellent” rating (KFF, August 2009).

      The full article can be found at this link:

    • @ Denise

      No, sorry but you do not understand my perspective. What I am saying ad nauseum is that “Medicare as we know it” (original A and B Medicare) is terrible insurance. The mishmash of additional insurance policies that seniors need to buy to make up for the fact that “Medicare as we know it” is terrible insurance is an administrative nightmare. The whole system needs to be changed. Ryan’s plan is a basis for discussion but it has its problems too.

      Since we know from MedPAC and the CMS that nine out of 10 people feel the need to supplement their A and B, the opinion polls you are citing are clearly not measuring the popularity of “Medicare as we know it.” They are measuring the combination of “Medicare as we know it” plus the supplements (unless your sources took some special steps to find just the one in 10 that take A and B only).

      (By lifetime limits I am referring to the fact that page 11 of the CMS Medigap brochure says all Medigap plans provide limited Part A coverage — not unlimited coverage — above the coverage paid by Part A itself. Perhaps insurance salespeople call that something different than a limit. That is true for Massachusetts as well. I can’t speak to Wisconsin and I believe Minnesotta also has unique Medigap policies different than the rest of the country.)

      • I know I should give up but….I think you are confusing Medicare Part A with the Medigap Plan A. Medigap Plan A (which every Medigap company must offer in every state) fills the fewest gaps of all the Medigap plans and so has the lowest medigap premium.

        Plan A does not cover the Part A deductible ($1,132).
        Plan A covers the Part A co-pay for days 61 to 90.
        Plan A covers 365 additional hospital days after 60 lifetime reserve days are used. The standardized medigap rules says “When your Medicare Part A hospital benefits are exhausted, the insurer stands in the place of Medicare and will pay whatever amount Medicare would have paid for up to an additional 365 days provided in the policy/certificate’s “Core Benefits”.

        Medigap plan F fills all the gaps in Medicare above, including the Part A deductible.

        Beyond these details of medigap, I guess I now understand that you think there should be a very different Medicare model. It would be nice if Medicare were simpler and did not require supplemental insurance, but it is very much like the health insurance market in general – very complicated.