How Would Default Affect Social Security and Medicare?

The word from Washington is that the U.S. is hours away from defaulting on its public debt, because Congress is unwilling to raise the debt ceiling. If the debt ceiling is not raised, the Treasury Department will be unable to raise money to pay all of the government’s current obligations.

By some estimations, if the debt ceiling is not raised on August 2, the Treasury Department will have $306.7 billion in expenses in August but will receive only about $172.4 billion in revenue. The government will be forced to slash spending by as much as 40 percent.

America’s seniors must be especially worried. Will Social Security checks arrive next week? Will the Medicare program still pay for health care? Since most mesothelioma patients are in their seniors years, many must worry whether they will be able to continue mesothelioma treatment.

We do not yet know what might happen. But here is what some experts say might happen:

Social Security. The Social Security Administration appears to have enough funds to pay Social Security checks through August. The SSA also is still receiving money from payroll (FICA) taxes. As long as revenue from FICA is at least enough to cover current expenses, seniors should still receive their Social Security checks.

That said, it is possible that the government will be forced to divert some of the FICA revenue to pay for other needs, such as national security. That would probably be a last-resort move, but it is not out of the question. If that happens, Social Security checks would stop much sooner.

Assuming the Social Security Administration is still receiving its usual share of FICA taxes, what might happen when FICA income isn’t enough? When there is a shortfall, as there was for a time last year, the Social Security Administration normally would turn to the Social Security Trust Fund.

And what is the trust fund? When Social Security receives more money in revenue than it needs to meet current obligations, the “extra” money is invested in U.S. Treasury interest-bearing securities, such as bonds. These securities are the trust fund. When Social Security has a shortfall, it can redeem some bonds to make up the difference.

However, some experts warn that default could affect the value of those securities. In particular, the Treasury Department might stop paying interest on the bonds. If that happens, the Social Security Administration could be short the money it needs to issue checks. And if playing politics with the national debt brings the value of U.S. securities into question, the health of Social Security could be permanently impaired.

And if you are about to become eligible for Social Security, your application may have to wait on someone’s desk for a long time. The Social Security Administration may be forced to lay off employees or even shut down.

Medicare. Medicare appears to be a bigger question mark than Social Security. The Medicare programs also is funded by FICA taxes, and as long as those taxes are not diverted elsewhere, it ought to be able to continue for a time. But Medicare is in a bigger danger of future shortfalls than is Social Security.

In a worst-case situation, rising interest rates caused by default could drive companies out of business and increase unemployment, which would also mean a serious reduction in the amount of payroll taxes the government is receiving. Even if the programs do not shut down immediately, a default could cause both programs to be less secure in the future.

This entry was posted on Saturday, July 30th, 2011 at 10:22 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

Who Still Wants to End Medicare?

The last couple of posts reported some reassuring news about Medicare. But don’t get complacent. A new effort to cut or eliminate Medicare is in the works.

Medicare was created in 1965 because growing numbers of senior Americans had no health insurance and were going without medical care. Since then, Americans have depended on Medicare to see them through the health challenges of their senior years. These challenges include mesothelioma, which is nearly always diagnosed in people who are in or approaching their retirement years.

But several recent news stories say there is a new, organized effort to cut the program. See, for example, “Beware! The Tea Party Is Coming After Your Medicare” in the Washington Times and “Medicare Overhaul? The Tea Party Sees a Chance” in the Christian Science Monitor.

The conservative activist organization FreedomWorks, which helped form the Tea Party movement, is calling on its members to pack town hall meetings in August to demand that Medicare spending be put on the chopping block. This will be just a first move in an all-out effort to enact Rep. Paul Ryan’s budget plan. Among other things, the Ryan plan will “save” money by turning the Medicare program over to private insurance companies and requiring seniors to pay more of their own health care expenses.

The argument behind the Ryan Medicare plan is that since Medicare costs more and more money every year, the government has no choice but to stop paying for so many benefits. Instead, the government would give private insurance companies  a fixed amount of  money in the form of a voucher to help subsidize health insurance policies for seniors.

But the amount of money the Ryan plan provides is far below the real cost of comprehensive coverage. According to the Congressional Budget Office, the subsidized policies would cover only about a third of seniors’ medical expenses. Under the Ryan plan, seniors might have to pay thousands of dollars per year for their own health care, or go without.

Supporters of this idea argue that private insurance companies would do a better job of providing benefits for less money than government bureaucrats. Also, they say, requiring seniors to spend more of their own money for health care will make them savvier health care shoppers, which would help keep down costs.

Opponents of the Ryan plan point out that there is no real-world evidence that private insurers would be more cost-effective at providing benefits than government. In fact, all the evidence says just the opposite is true. The per-person cost of private health insurance has risen much more in recent years than the cost of Medicare. Further, in spite of what you may have heard, countries that provide health care to most of its citizens through government programs have much lower costs than the U.S., and by many measures some are providing better health care overall than we are.

There is also plenty of real-world evidence telling us than people without adequate insurance go without necessary health care because they can’t pay for it. And then when they do go to a doctor, their health issues are harder, and more expensive, to treat.

The problem the U.S. has is not that Medicare is too expensive, but that health care is too expensive. Health care costs more everywhere on our planet, but in the U.S. costs have gone up much faster and much higher than anywhere else. This is not just a problem for federal and state budgets, but also is slowing business growth and job creation. Taking Medicare benefits away from seniors doesn’t solve the real problem.

This entry was posted on Monday, August 8th, 2011 at 7:32 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

Who Still Wants to End Medicare?

The last couple of posts reported some reassuring news about Medicare. But don’t get complacent. A new effort to cut or eliminate Medicare is in the works.

Medicare was created in 1965 because growing numbers of senior Americans had no health insurance and were going without medical care. Since then, Americans have depended on Medicare to see them through the health challenges of their senior years. These challenges include mesothelioma, which is nearly always diagnosed in people who are in or approaching their retirement years.

But several recent news stories say there is a new, organized effort to cut the program. See, for example, “Beware! The Tea Party Is Coming After Your Medicare” in the Washington Times and “Medicare Overhaul? The Tea Party Sees a Chance” in the Christian Science Monitor.

The conservative activist organization FreedomWorks, which helped form the Tea Party movement, is calling on its members to pack town hall meetings in August to demand that Medicare spending be put on the chopping block. This will be just a first move in an all-out effort to enact Rep. Paul Ryan’s budget plan. Among other things, the Ryan plan will “save” money by turning the Medicare program over to private insurance companies and requiring seniors to pay more of their own health care expenses.

The argument behind the Ryan Medicare plan is that since Medicare costs more and more money every year, the government has no choice but to stop paying for so many benefits. Instead, the government would give private insurance companies  a fixed amount of  money in the form of a voucher to help subsidize health insurance policies for seniors.

But the amount of money the Ryan plan provides is far below the real cost of comprehensive coverage. According to the Congressional Budget Office, the subsidized policies would cover only about a third of seniors’ medical expenses. Under the Ryan plan, seniors might have to pay thousands of dollars per year for their own health care, or go without.

Supporters of this idea argue that private insurance companies would do a better job of providing benefits for less money than government bureaucrats. Also, they say, requiring seniors to spend more of their own money for health care will make them savvier health care shoppers, which would help keep down costs.

Opponents of the Ryan plan point out that there is no real-world evidence that private insurers would be more cost-effective at providing benefits than government. In fact, all the evidence says just the opposite is true. The per-person cost of private health insurance has risen much more in recent years than the cost of Medicare. Further, in spite of what you may have heard, countries that provide health care to most of its citizens through government programs have much lower costs than the U.S., and by many measures some are providing better health care overall than we are.

There is also plenty of real-world evidence telling us than people without adequate insurance go without necessary health care because they can’t pay for it. And then when they do go to a doctor, their health issues are harder, and more expensive, to treat.

The problem the U.S. has is not that Medicare is too expensive, but that health care is too expensive. Health care costs more everywhere on our planet, but in the U.S. costs have gone up much faster and much higher than anywhere else. This is not just a problem for federal and state budgets, but also is slowing business growth and job creation. Taking Medicare benefits away from seniors doesn’t solve the real problem.

This entry was posted on Monday, August 8th, 2011 at 7:32 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

How Would Default Affect Social Security and Medicare?

The word from Washington is that the U.S. is hours away from defaulting on its public debt, because Congress is unwilling to raise the debt ceiling. If the debt ceiling is not raised, the Treasury Department will be unable to raise money to pay all of the government’s current obligations.

By some estimations, if the debt ceiling is not raised on August 2, the Treasury Department will have $306.7 billion in expenses in August but will receive only about $172.4 billion in revenue. The government will be forced to slash spending by as much as 40 percent.

America’s seniors must be especially worried. Will Social Security checks arrive next week? Will the Medicare program still pay for health care? Since most mesothelioma patients are in their seniors years, many must worry whether they will be able to continue mesothelioma treatment.

We do not yet know what might happen. But here is what some experts say might happen:

Social Security. The Social Security Administration appears to have enough funds to pay Social Security checks through August. The SSA also is still receiving money from payroll (FICA) taxes. As long as revenue from FICA is at least enough to cover current expenses, seniors should still receive their Social Security checks.

That said, it is possible that the government will be forced to divert some of the FICA revenue to pay for other needs, such as national security. That would probably be a last-resort move, but it is not out of the question. If that happens, Social Security checks would stop much sooner.

Assuming the Social Security Administration is still receiving its usual share of FICA taxes, what might happen when FICA income isn’t enough? When there is a shortfall, as there was for a time last year, the Social Security Administration normally would turn to the Social Security Trust Fund.

And what is the trust fund? When Social Security receives more money in revenue than it needs to meet current obligations, the “extra” money is invested in U.S. Treasury interest-bearing securities, such as bonds. These securities are the trust fund. When Social Security has a shortfall, it can redeem some bonds to make up the difference.

However, some experts warn that default could affect the value of those securities. In particular, the Treasury Department might stop paying interest on the bonds. If that happens, the Social Security Administration could be short the money it needs to issue checks. And if playing politics with the national debt brings the value of U.S. securities into question, the health of Social Security could be permanently impaired.

And if you are about to become eligible for Social Security, your application may have to wait on someone’s desk for a long time. The Social Security Administration may be forced to lay off employees or even shut down.

Medicare. Medicare appears to be a bigger question mark than Social Security. The Medicare programs also is funded by FICA taxes, and as long as those taxes are not diverted elsewhere, it ought to be able to continue for a time. But Medicare is in a bigger danger of future shortfalls than is Social Security.

In a worst-case situation, rising interest rates caused by default could drive companies out of business and increase unemployment, which would also mean a serious reduction in the amount of payroll taxes the government is receiving. Even if the programs do not shut down immediately, a default could cause both programs to be less secure in the future.

This entry was posted on Saturday, July 30th, 2011 at 10:22 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

Medicare, Social Security Safe for Now

Seniors who were worried about their next Social Security checks or Medicare benefits can rest easy, for now.  The debt ceiling is raised, and the Treasury Department will be able to pay the nation’s bills at least to the end of 2012. Americans in their retirement years, which include most of the nation’s mesothelioma patients, will continue to receive benefits for the foreseeable future.

Many lawmakers had refused to vote for the debt ceiling increase without a package of spending cuts attached to it. Will Social Security and Medicare be affected by those cuts? Maybe.

The deal spells out $1 trillion in spending cuts, but none of these cuts are to Medicare or Social Security.

In addition, the deal provides for a special commission to identify another $1.5 trillion in spending cuts. This commission must report to Congress by November 23. Congress will not be allowed to change the recommendations and must give this package of cuts an up-or-down vote by December 23. Obviously, there is no way to know what the commission will recommend.

The deal includes a “trigger” in case Congress cannot agree to pass the recommended cuts. If the cut package fails, $1.2 trillion in spending cuts automatically go into effect. Half of these cuts would come from the defense budget. The non-defense cuts come from several parts of government. Social Security, Medicaid, unemployment insurance, military retirement pay, and some other programs are off the table and will not be cut.

However, the “trigger” includes significant cuts to Medicare. These cuts are not supposed to reduce benefits. However, Medicare providers would see their payments reduced 2 percent across the board. Some health care experts fear that such cuts could cause health care providers to cut back Medicare services or even eliminate Medicare patients entirely.

The “trigger” was set up to cause politicians of both parties to think hard before voting no on the commission’s recommended spending cuts. The theory is that Republicans will not want to cut defense spending and Democrats will not want to cut Medicare. Of course, it’s possible that politicians will decide whatever the commission wants to cut would be worse.

The debt ceiling deal as signed leaves a lot of details to be worked out. There could be many unintended consequences. But Social Security and Medicare won’t disappear just yet.

This entry was posted on Tuesday, August 2nd, 2011 at 9:39 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

Good News About Medicare

With the frightening economic news we could all use some cheering up. It might surprise you to learn there really is some good news out there, and some of that good news is about the Medicare program.

In 2010, about 47 million Americans were enrolled in Medicare. This number probably includes the majority of people diagnosed with mesothelioma, since symptoms often don’t develop for decades after exposure to asbestos. If you don’t receive Medicare yourself, you very likely are close to someone who does.

So what is the good news? First, the average cost of Part D prescription drug premiums will be slightly lower in 2012. This is an average cost, mind you, which means that not every Part D plan will be lowering premiums. But seniors who shop around during the open enrollment period in the fall may find some bargain prices. This is a little ray of good news for taxpayers, also.

Here’s another cheerful thought for the taxpayers — a study published recently in the Journal of the American Medical Association found that the prescription drug program actually offsets costs in other parts of Medicare. In particular, hospital and nursing home costs are reduced because seniors stay healthier when they take the medications their doctors prescribe.

This week the U.S. Department of Health and Human Services announced good news about seniors who hit the infamous Part D “doughnut hole,” the benefits gap that that leaves some seniors paying all of their out-of-pocket prescription drug expenses.  This year 900,000 Medicare beneficiaries who fell into the “hole” received a 50 percent discount on their medications.  They saved a total of more than $461 million, HHS said.

HHS also announced that millions of American seniors have taken advantage of the new provision that lets them receive preventative services without a co-pay. These preventive services include annual flu shots, check-ups, and many kinds of cancer screenings. It is hoped that this benefit will save money by catching health problems earlier, when they are easier to treat.

The lesson we might learn from these news stories is that sometimes you have to spend money to save money. It’s less expensive to fix a small hole in your roof than a big hole in your roof. It’s less expensive to maintain a bridge than to build a new one. Often it’s less expensive to treat a disease when you catch it early than if you put off seeing a doctor.

The idea behind a lot of proposals to “save” Medicare is that seniors should be spending more of their own money on health care instead of less. This is supposed to make them “smarter” consumers. But in the real world, many people simply put off getting care, or they stop taking medicine they can’t afford, and the result is that more money comes out of the health care system, not less.

So, don’t let politicians take any of these benefits away from seniors because they’re “too expensive.”

This entry was posted on Friday, August 5th, 2011 at 2:47 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

The Future of Medicare Part D

If you’re growing anxious about what kind of deal will be struck over the debt ceiling, join the club. And you should be anxious. At the moment, it appears the “deal” will result in either not raising the debt ceiling — which most economists believe could cause a financial disaster of unprecedented proportions — or that President Obama will be forced to accept steep cuts in Medicare, Medicaid, Social Security, and many other programs to appease Republicans into raising the debt ceiling.

Interestingly, the one part of Medicare many Republicans seem to want to keep as it is, is Medicare Part D. But others argue that Medicare Part D is one part of Medicare that easily could be less costly without cutting benefits.

Medicare Part D is the prescription drug benefit. It was signed into law by President George W. Bush in 2003, and it went into effect in January 2005. In 2010, 27.6 million Americans were enrolled in Medicare Part D, and most of these beneficiaries tell pollsters they are satisfied with the program. Seniors have come to rely on all parts of Medicare to help them face the health challenges of the senior years, which includes higher rates of cancers such as mesothelioma and other devastating diseases.

Very simply, Medicare Part D is a program in which the government pays private insurance companies to design and administer prescription drug insurance plans for seniors. Seniors may choose among a variety of plans they believe best fit their needs. Taxpayers pick up about two-thirds of the cost of the plans, and seniors also pay premiums.

Critics of the Medicare Part D program say it costs more than it should. By law, the government may not negotiate with pharmaceutical companies to lower prices, as other federal agencies do. For example, in 2007 the Department of Veterans Affairs paid 58 percent less for the same drugs than Medicare Part D. A year’s supply of Lipitor cost the VA $520, but when purchased through Medicare Part D the same number of the same pills cost $785.

But others want the program to stay the way it is. They argue that the current program gives seniors a wide variety of plans that fit many budgets and needs, which probably would not be true if it were administrated by the government.

To claims the program is too expensive, proponents say Medicare Part D is costing less than the Congressional Budget Office originally estimated. When the law first passed in 2003, the CBO projected that it would cost $552 billion in its first ten years, from 2004 to 2014, but right now it appears the cost will be closer to $385 billion. Some politicians attribute this $167 billion “savings” to the miracle of competition and private free enterprise.

The critics say the difference between estimated and actual cost is not a “savings”; it only means that the CBO made faulty assumptions in its original estimates. Meanwhile, the program has become hugely profitable to the pharmaceutical industry. Several of the lawmakers who crafted the original legislation have left Congress and are now lobbyists for Big Pharma. Their chief assignment is to keep Medicare Part D in the hands of private insurance.

This entry was posted on Friday, July 8th, 2011 at 7:59 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

Medicare, Social Security Safe for Now

Seniors who were worried about their next Social Security checks or Medicare benefits can rest easy, for now.  The debt ceiling is raised, and the Treasury Department will be able to pay the nation’s bills at least to the end of 2012. Americans in their retirement years, which include most of the nation’s mesothelioma patients, will continue to receive benefits for the foreseeable future.

Many lawmakers had refused to vote for the debt ceiling increase without a package of spending cuts attached to it. Will Social Security and Medicare be affected by those cuts? Maybe.

The deal spells out $1 trillion in spending cuts, but none of these cuts are to Medicare or Social Security.

In addition, the deal provides for a special commission to identify another $1.5 trillion in spending cuts. This commission must report to Congress by November 23. Congress will not be allowed to change the recommendations and must give this package of cuts an up-or-down vote by December 23. Obviously, there is no way to know what the commission will recommend.

The deal includes a “trigger” in case Congress cannot agree to pass the recommended cuts. If the cut package fails, $1.2 trillion in spending cuts automatically go into effect. Half of these cuts would come from the defense budget. The non-defense cuts come from several parts of government. Social Security, Medicaid, unemployment insurance, military retirement pay, and some other programs are off the table and will not be cut.

However, the “trigger” includes significant cuts to Medicare. These cuts are not supposed to reduce benefits. However, Medicare providers would see their payments reduced 2 percent across the board. Some health care experts fear that such cuts could cause health care providers to cut back Medicare services or even eliminate Medicare patients entirely.

The “trigger” was set up to cause politicians of both parties to think hard before voting no on the commission’s recommended spending cuts. The theory is that Republicans will not want to cut defense spending and Democrats will not want to cut Medicare. Of course, it’s possible that politicians will decide whatever the commission wants to cut would be worse.

The debt ceiling deal as signed leaves a lot of details to be worked out. There could be many unintended consequences. But Social Security and Medicare won’t disappear just yet.

This entry was posted on Tuesday, August 2nd, 2011 at 9:39 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

Good News About Medicare

With the frightening economic news we could all use some cheering up. It might surprise you to learn there really is some good news out there, and some of that good news is about the Medicare program.

In 2010, about 47 million Americans were enrolled in Medicare. This number probably includes the majority of people diagnosed with mesothelioma, since symptoms often don’t develop for decades after exposure to asbestos. If you don’t receive Medicare yourself, you very likely are close to someone who does.

So what is the good news? First, the average cost of Part D prescription drug premiums will be slightly lower in 2012. This is an average cost, mind you, which means that not every Part D plan will be lowering premiums. But seniors who shop around during the open enrollment period in the fall may find some bargain prices. This is a little ray of good news for taxpayers, also.

Here’s another cheerful thought for the taxpayers — a study published recently in the Journal of the American Medical Association found that the prescription drug program actually offsets costs in other parts of Medicare. In particular, hospital and nursing home costs are reduced because seniors stay healthier when they take the medications their doctors prescribe.

This week the U.S. Department of Health and Human Services announced good news about seniors who hit the infamous Part D “doughnut hole,” the benefits gap that that leaves some seniors paying all of their out-of-pocket prescription drug expenses.  This year 900,000 Medicare beneficiaries who fell into the “hole” received a 50 percent discount on their medications.  They saved a total of more than $461 million, HHS said.

HHS also announced that millions of American seniors have taken advantage of the new provision that lets them receive preventative services without a co-pay. These preventive services include annual flu shots, check-ups, and many kinds of cancer screenings. It is hoped that this benefit will save money by catching health problems earlier, when they are easier to treat.

The lesson we might learn from these news stories is that sometimes you have to spend money to save money. It’s less expensive to fix a small hole in your roof than a big hole in your roof. It’s less expensive to maintain a bridge than to build a new one. Often it’s less expensive to treat a disease when you catch it early than if you put off seeing a doctor.

The idea behind a lot of proposals to “save” Medicare is that seniors should be spending more of their own money on health care instead of less. This is supposed to make them “smarter” consumers. But in the real world, many people simply put off getting care, or they stop taking medicine they can’t afford, and the result is that more money comes out of the health care system, not less.

So, don’t let politicians take any of these benefits away from seniors because they’re “too expensive.”

This entry was posted on Friday, August 5th, 2011 at 2:47 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

How to Save Medicare Cost Without Reducing Benefits

For all the complaining some politicians make about the cost of Medicare, you’d think they’d be open to any plan to cut costs without cutting benefits. But if you think that, think again.

The last post discussed Medicare Part D, the prescription drug program. Drugs purchased through Medicare Part D cost taxpayers a lot more than the same drugs purchased by, say, the Veterans Administration, because the law that implemented Medicare Part D specifically forbids the government from negotiating with pharmaceutical companies for the best prices.

Allowing the government to negotiate to save money ought to be a no-brainer, but many politicians are resisting this idea, tooth and nail. In a nutshell — instead of looking for ways to cut Medicare cost without cutting benefits, some politicians are looking for ways they can save money by cutting benefits, while keeping subsidies going to the private health insurance industry.

As we go into another presidential election year, it is especially critical to stay informed about these issues. The future of Medicare could very much depend on which politicians control Congress and the White House in 2013.  This is a vital interest  to mesothelioma patients, since most patients are in or approaching their Medicare years when they are diagnosed.

Now another proposal is on the table that would also save money, but which is being fought by conservative organizations such as the Heritage Foundation. To explain this, let’s go back to 2006, when Medicare Part D first went into effect.

In January 2006, prescription drug benefits became available to all seniors eligible for Medicare. These benefits also were extended to about 6.5 million low-income elderly and disabled citizens who were receiving Medicaid benefits. The 6.5 million were called “dual eligibles,” because they were automatically transferred to Medicare Part D but continued to receive the rest of their health care through Medicaid.

Under the Medicaid program, drugs are purchased by the federal government and by state agencies. The pharmaceutical companies are required by law to sell their drugs to the governments at the “best price,” meaning the government pays no more than the lowest price negotiated with private insurance companies or any other purchaser.

These drug prices are closely monitored, and sometimes drug companies are required to rebate some of the taxpayer’s money back to government if the government finds someone else got a better deal.

But that cost control ended for the 6.5 million patients who transferred to Medicare Part D. The New York Times reported in July 2006 that the pharmaceutical industry was enjoying a windfall of up to $2 billion because of the switch of 6.5 million “customers” from Medicaid to Medicare Part D.

That’s $2 billion additional taxpayer dollars to pay for the same benefit these people were receiving under Medicaid.

Since then, lawmakers have occasionally proposed applying the Medicaid “best price” policy to Medicare, or at least  shifting the “dual eligibles” back to Medicaid instead of Medicare Part D for their prescription drugs. This year the Congressional Budget Office projected that such a shift would save taxpayers $112 billion over ten years (see page 54).

So far, lobbyists from the pharmaceutical industry have managed to shoot this down. A provision to shift dual eligibles back to Medicaid was written into the House version of the health care reform act passed last year, but it was taken out of the final version because of pressure from lobbyists.

Recently the shifting of dual eligibles back to Medicaid was proposed in Congress. The reaction from right-wing think tanks like the Heritage Foundation and the American Enterprise Institution was swift, and shrill. Such a shift would cost too much, Heritage cried (huh? saving $112 billion costs too much?). The think tankers argued also that such a shift would mean seniors would get poorer quality care, as if Lipitor works better if you pay more money for it. I don’t think so.

This entry was posted on Friday, July 15th, 2011 at 2:17 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here

How to Save Medicare Cost Without Reducing Benefits

For all the complaining some politicians make about the cost of Medicare, you’d think they’d be open to any plan to cut costs without cutting benefits. But if you think that, think again.

The last post discussed Medicare Part D, the prescription drug program. Drugs purchased through Medicare Part D cost taxpayers a lot more than the same drugs purchased by, say, the Veterans Administration, because the law that implemented Medicare Part D specifically forbids the government from negotiating with pharmaceutical companies for the best prices.

Allowing the government to negotiate to save money ought to be a no-brainer, but many politicians are resisting this idea, tooth and nail. In a nutshell — instead of looking for ways to cut Medicare cost without cutting benefits, some politicians are looking for ways they can save money by cutting benefits, while keeping subsidies going to the private health insurance industry.

As we go into another presidential election year, it is especially critical to stay informed about these issues. The future of Medicare could very much depend on which politicians control Congress and the White House in 2013.  This is a vital interest  to mesothelioma patients, since most patients are in or approaching their Medicare years when they are diagnosed.

Now another proposal is on the table that would also save money, but which is being fought by conservative organizations such as the Heritage Foundation. To explain this, let’s go back to 2006, when Medicare Part D first went into effect.

In January 2006, prescription drug benefits became available to all seniors eligible for Medicare. These benefits also were extended to about 6.5 million low-income elderly and disabled citizens who were receiving Medicaid benefits. The 6.5 million were called “dual eligibles,” because they were automatically transferred to Medicare Part D but continued to receive the rest of their health care through Medicaid.

Under the Medicaid program, drugs are purchased by the federal government and by state agencies. The pharmaceutical companies are required by law to sell their drugs to the governments at the “best price,” meaning the government pays no more than the lowest price negotiated with private insurance companies or any other purchaser.

These drug prices are closely monitored, and sometimes drug companies are required to rebate some of the taxpayer’s money back to government if the government finds someone else got a better deal.

But that cost control ended for the 6.5 million patients who transferred to Medicare Part D. The New York Times reported in July 2006 that the pharmaceutical industry was enjoying a windfall of up to $2 billion because of the switch of 6.5 million “customers” from Medicaid to Medicare Part D.

That’s $2 billion additional taxpayer dollars to pay for the same benefit these people were receiving under Medicaid.

Since then, lawmakers have occasionally proposed applying the Medicaid “best price” policy to Medicare, or at least  shifting the “dual eligibles” back to Medicaid instead of Medicare Part D for their prescription drugs. This year the Congressional Budget Office projected that such a shift would save taxpayers $112 billion over ten years (see page 54).

So far, lobbyists from the pharmaceutical industry have managed to shoot this down. A provision to shift dual eligibles back to Medicaid was written into the House version of the health care reform act passed last year, but it was taken out of the final version because of pressure from lobbyists.

Recently the shifting of dual eligibles back to Medicaid was proposed in Congress. The reaction from right-wing think tanks like the Heritage Foundation and the American Enterprise Institution was swift, and shrill. Such a shift would cost too much, Heritage cried (huh? saving $112 billion costs too much?). The think tankers argued also that such a shift would mean seniors would get poorer quality care, as if Lipitor works better if you pay more money for it. I don’t think so.

This entry was posted on Friday, July 15th, 2011 at 2:17 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

View the original article here