published Thursday, March 31st, 2011

When Medicare goes broke

Many Americans on Social Security will be upset when they do not see their monthly benefit checks increase next year — just as they were upset when this year’s and last year’s checks did not increase.

Technically, a slight cost-of-living adjustment — averaging perhaps $10 to $13 per month — is expected in Social Security benefits next year. Unfortunately, rising Medicare Part B premiums — which cover doctor visits — have to be deducted from the Social Security checks of the 45 million Americans who get both. And the increase in Medicare premiums is likely to be greater than the increase in Social Security benefits.

That means most Social Security recipients’ checks will not increase. The only silver lining is that the law forbids Social Security benefits actually to be reduced as a result of higher Medicare premiums. But those who were expecting a bigger Social Security check next year are likely to be disappointed.

And that raises a troubling question: What is going to happen to Medicare premiums — and therefore to any chance of higher Social Security benefits — later this decade when Medicare can no longer meet its obligations?

The Obama administration claims that “savings” from the ObamaCare law will safeguard Medicare until 2029, instead of the earlier estimate that the program will be insolvent by 2017. But as The Heritage Foundation points out, that is based on an accounting trick. In effect, the administration is saying it will use ObamaCare savings to extend Medicare’s solvency — but it also plans to use ObamaCare savings for new spending!

As Heritage notes, ObamaCare “increases Medicare taxes and imposes cuts in Medicare that are double-counted as offsets for new programs, but are also pledged to extend Medicare’s solvency. They cannot do both.”

In fact, the administration may not be able to use the savings even once, let alone twice. The savings themselves are doubtful, according to Douglas Elmendorf, director of the Congressional Budget Office. He says the savings rely on long-term cuts that “might be difficult to sustain ... .” Meanwhile, Medicare’s actuary says lower compensation to Medicare providers “might end their participation in the program (possibly jeopardizing access to care for beneficiaries).”

So what is likely to happen when Medicare becomes insolvent? Several things: Premiums are likely to increase even more than they are rising now. Benefits may be further reduced. Our already too-high tax rates may rise, harming the very economic growth needed to sustain Medicare and Social Security. And our nation is apt to borrow even more money, on which we must pay hundreds of billions of dollars in interest.

It would be wiser for Congress to stop spending money that the United States does not have.

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EaTn said...

The right-wing idea for Medicare is a box full of antacids, preparation H, shoe inserts and a bottle of aspirin with a note to take one and call back in the morning (to a disconnected 800 number).

March 31, 2011 at 8 a.m.
holdout said...

Who is going to pay for the antacids, preparation H, shoe inserts, and bottle of aspirin? Where is the money coming from for any of this stuff? The economy is crashing faster and faster and if you can't see that you are willfully blind. Both parties spent us into bankruptcy and to pay for what is on the table now will require a tax rate so high that most businesses will go under. The few people who made the arrangements necessary to not have to depend on social security and medicaid cannot now bail the rest of the population out. It isn't about rich vs poor or republican vs democrat or even conservative vs liberal. It's about people living beyond their means and then expecting someone else to catch them before they fall. It worked for a while but we are now out of money and we can't "magic" anymore to pay for it. I never in my life made more than 45K in a year but I can retire and never draw a dime of social security or medicare, unless the government now screws me because I planned for the future.

March 31, 2011 at 8:57 a.m.
librul said...

Holdout - a candidate for president of the local "I've got mine club", who is fortunate to be among those who "planned for the future" but wasn't forced to liquidate his savings because of a layoff, medical costs, caring for elderly parents or a handicapped child, or any number of all too common disasters that can strike good people and wipe out their finances; is apparently satisfied with the capitalist vasmpires that have sucked the nation's financial lifeblood into their coffers and are happy to sit on bags of cash sneering at people who no longer have jobs because of the offshoring of our manufacturing infrastructure. When the masses wake up, the real consequences of that "hard right turn" will dwarf a toppled auto.

March 31, 2011 at 11:10 a.m.
holdout said...

I was forced to liquidate more than once and do care for an elderly mother. We don't have much. We simply live within our means. I hardly have bags of cash. Neither do I have expensive cell phone, new car, pool, big television,or high speed internet service. I rarely eat out and I make the payments for something new before I buy rather than after. I have worked at least two jobs and sometimes three since I was 14. Many of them part time minimum wage jobs. I paid my own way through college. Because of that you think I should have to give up more of what little I have to support someone who spent every dime they made in addition to many dimes they never made? That is what the masses are waking up to.

March 31, 2011 at 11:38 a.m.
Plato said...

Medicare returns over 90 cents on the dollar for health care delivery. That compares much more favorably to private sector insurance which returns less than 80 cents on the dollar. Clearly Medicare by that metric is a much more efficient system. Therefore the most logical approach to help keep medicare solvent without breaking the bank is simply expand medicare into a "medicare for all" system. Obviously the politics at present don't favor that and the insurance lobby can always purchase enough votes in congress to maintain the status quo.

Beyond that the only hope is to find ways to reduce the overall cost of health care delivery and to face up to the fact that health care cannot be an open ended system with unlimited benefits. The vast majority of medicare payments are paid out in the last couple of years of life.

I advocate a national law that would allow the regulated practice of euthanasia. If euthanasia is considered human for suffering, terminal animals why not humans as well?

March 31, 2011 at 12:21 p.m.
nucanuck said...

As a nation divided, we cannot solve even obvious problems.

Defunding or abandoning Medicare creates more problems than it solves, and Plato is right that Medicare is a logical vehicle through which to reorganize health care. If we were to cap medical expendatures at, say ,13% of GDP, we could create a good and fair system that was on a fundable budget. That, of course, will not happen and we will continue to lob salvos back and forth as our country slides lower and lower.

As we move toward destruction of the US dollar's value,only the financial and armaments sectors will be funded.


holdout,your savings and/or pension money will be devalued to near zero. You have done everything right,but you will not be spared the agony of a government for the few.

March 31, 2011 at 1:14 p.m.
Sailorman said...

The only ones who think Medicare is the answer are those who don't understand the question. I'll direct this to Plato as I've learned over time that NC is immune to facts.

Sorry Plato but you're confused. What actually happens is Medicare reimburses 90 cents and Medicaid reimburses 89 cents for EVERY DOLLAR SPENT caring for these patients. I'll assume you see the difference. Guess who eats the difference.

As far as insurance companies go (the same ones CMS hires to administer Medicare claims), until a few years ago, they routinely reimbursed more than Medicare. They have since learned to play the game and the vast majority follow the payment schedules set by CMS.

Here's some information for you.

http://www.aha.org/aha/research-and-trends/health-and-hospital-trends/2010.html

http://www.aapsonline.org/brochures/myths.htm

Medicare works well for the recipient and not so well for the provider. It is an immensely expensive bureaucratic morass of unending depth. In a related note, earlier this afternoon a Republican (might have been Kantor) was talking about possible changes to Medicare in the future - the far future - along the lines of those proposed by the debt commission. He was followed by a Democrat from California (don't remember his name) who complained that Republicans wanted to take away seniors healthcare. Idiocy reigns supreme. In this instance it's a dem, tomorrow it will be a repub - and the beat goes on.

March 31, 2011 at 6:29 p.m.
Sailorman said...

NC

While I disagree with your medicare solution, I'm afraid you're probably right in your gloomy assessment of the dollar. I can't do much about the financial sector as Washington seems to have it well in hand (or the in the toilet) but I'll do what I can to aid the armaments business in some small way - guess I'll go to the range this evening and kill some targets.

March 31, 2011 at 6:33 p.m.
nucanuck said...

SM,

I don't care if the provider is public or private. My preference though, is for a single provider with a budget, probably linked to GDP. All medical proceedures would be ranked and catagorized. Basic health care coverage would then be limited to, say, the top 400 items on the list. Coverage could be expanded or contracted based on available funds.

For better coverage, buy an add-on policy, but cover everyone with basic and don't tie coverage to employment. Clearly that causes too many problems.

Health care is a problem we can solve, but won't.

March 31, 2011 at 6:59 p.m.
Sailorman said...

NC

I would have no objection at all to an approach like you describe. It is unfortunate we're not likely to see it. We would have to adress the cost issue as well though and that's even less likely.

March 31, 2011 at 7:40 p.m.
Plato said...

Sailorman said..."Sorry Plato but you're confused. What actually happens is Medicare reimburses 90 cents and Medicaid reimburses 89 cents for EVERY DOLLAR SPENT caring for these patients. I'll assume you see the difference. Guess who eats the difference."

I think we are talking about two different things. I'm referring to the percentage of revenue collected by Medicare from payroll taxes that actually is spent on health care delivery - 90%. Your talking about how much of the providers "costs" are actually paid by Medicare - two different things.

IMO Medicare nor private insurance for that matter should simply pay without discretion, whatever the provider wishes to bill. If the provider cannot perform the services for the established rates maybe they need to take a look at their own operations to look for inefficiencies and abuses that can be corrected. For example I recently had a nerve conductive study done at a local hospital by a nerve specialist. It's a simple test that took less than 30 minutes - I was in and out in 45 minutes. When I got the bill the physician charged about $750 which is probably in line with what they get, but the hospital submitted a bill to my insurance company for $4000 which the insurance company discounted to $2500 as a preferred provider. That's $2500 for using a room for a half hour.

So it comes as no surprise to me that the hospitals are in a constant fight with medicare as they are also with private insurers over billings.

I can appreciate your point regarding the complexities of medicare and the additional burden it places on providers. However instead of dumping Medicare I would seek ways of streamlining the process to make it more efficient and effective. That would seem to be a better route to take

March 31, 2011 at 8:05 p.m.
Sailorman said...

Plato

You're right - I was talking about something different. Having said that, I wouldn't take that 90% number to the bank.

Just as a point of interest, they all pay without discretion. Especially medicare. But then there are the audits. We have four going on at any one time - all the time. It's constant, it costs us a fortune (which we have to pass along), none of them have recouped anything significant, and it's always over some paperwork nitpick.

It has to be attacked from both ends and I don't think that's in the cards. I can tell you that our practice has squeezed out every last dime of cost to the point that our ability to provide a quality service is sometimes hampered. One of our largest costs? Staff required to comply with the myriad regulations, audits, and general bs foisted on us by the fed, state, and insurance companies. Any provider who accepts Medicare, or most private insurance plans, really has no say in the price. A practice can charge whatever it wants - it receives what Medicare deems the appropriate reimbursement to be. Your example doesn't surprise me a bit. I see it every day. I'll see your example and raise you one: For years we have done a procedure in our office at a cost of $450.00. We calculate our profit on that procedure to be a whopping &7.00. Recently, CMS (medicare) instructed that this procedure can no longer be done in the office but must be done in a hospital. No reason was given probably because there isn't a factual one. The hospital bills over $7,000. Our doctor still provides the service, at the hospital using their OR, and we are now reimbursed $150. Believe me when I say the patient does not benefit.

Streamlining medicare would indeed be one of the paths to take. It is criminal that the legislation passed not only didn't do that but arguably made the situation worse by a large degree.

As with most things, it's one thing to yak about a subject from an ideological perspective. It's quite another to see the ugly innards.

Go back and read the myths again. Lot of truth there.

March 31, 2011 at 9:48 p.m.
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