A New Twist in the Medicare Saga

The latest segment of the continuing Medicare saga began on Monday, Sept. 19, in an article by Robert Pear, published by the New York Times. The article describes what President Obama calls "savings" in the Medicare program. The proposals are many and the article covers them well, but the most interesting part for our purposes comes in the third, fourth and fifth paragraphs. Here they are:

"The proposal would require new beneficiaries to pay higher deductibles before Medicare coverage of doctors' services and other outpatient care kicks in. The deductible, now $162 a year, is already adjusted for inflation. Mr. Obama would increase it further by $25 in 2017, 2019 and 2021."

"In addition, the White House would increase Medicare premiums by about 30 percent for new beneficiaries who buy generous private insurance to help fill gaps in Medicare."

"Many beneficiaries choose these private Medigap policies because they want the financial security they get from the extra insurance. But the White House said this protection 'gives individuals less incentive to consider the costs of health care and thus raises Medicare costs.'"

A new twist

So, here we go again with the same old misinformation in the third paragraph, but with a new twist in the second paragraph. "Thirty percent more for new beneficiaries who buy generous private insurance …" This part hadn't surfaced in previous changes recommended to the committee regarding Medicare Supplement. As if that wasn't enough, the proposal is to increase the Part B Deductible (which is already adjusted upward each year) further — yes, further — in 2017, 2019 and 2021. As I later saw in the actual plan, linked from an article in Medicare Watch, a service of the Medicare Rights Center, this proposal is predicted to save our country $2.5 billion over 10 years.

So now, we have two attacks for Medicare beneficiaries. First, "Don't you people go buy a generous Med Supp because if you do, we are going to raise your Medicare Part B deductible by 30 percent." And second, "In addition to adding this 30 percent, we are going to ding you another $25 if you persist."

What's really going on

As you might expect, I have some comments on all of this.

First, some of our members agree with this approach, and it probably has some merit. But what is actually taking place here is an attempt to put a stop to Med Supp policies C and F. Okay, maybe that's not a big deal, but when you consider that $2.5 billion is a pretty small number for 10 years — a mere $250 million a year — it is a really dirty excuse to add billions in Part B premiums to those who find value in plans C and F. Also, which 10 years do they mean? 2017 to 2027?

Second, nothing in the plan addresses the dozens of first dollar Part B coverages that have been layered on by CMS and Medicare itself over the past half dozen years. These "freebies" — including "Welcome to Medicare" physicals and "Preventive" physicals, which combined have been utilized by about 18 million beneficiaries so far this year — were not demanded by beneficiaries, but were added as vote-getting measures by politicians and administrations, and of course to make CMS look heroic. If they want to talk about savings, rolling back these freebies (or placing a deductible and co-insurance requirements on these features, as many proponents suggest for Medicare Supplement Plans) is the place to start. Rather than attacking Medicare Supplement plans for picking up the Part B deductible, the committee could address some of the silliness of first dollar Part B coverages of the Medicare program itself. That is where the bleeding of Medicare money exists–and it would save a lot more than the paltry $250 million a year.

Ron Iverson is president of the National Association of Medicare Supplement Advisors Inc. He can be reached at 406-442-4016. This article was adapted from a piece that ran in the Sept. 26th edition of the NAMSA newsletter.

Past Medicare articles from ASJ:

Medicare Producer Alert!

Changes to Medicare Part D for 2011

The Medicare Maze

5 Reasons to Be Optimistic About Medicare – and 5 Reasons to Worry

The End of Medicare Advantage?