Covering Medicare for the man on the street

By Sonya Collins

As our population ages and health care costs rise faster than inflation, health policy experts fear that Medicare costs will outpace funds.

At the 2012 meeting of the Association of Health Care Journalists, panelists addressed the future of Medicare during the session “Will Medicare Survive the Decade?” moderated by Trudy Lieberman, a fellow at the Center for Advancing Health and a contributing editor at Columbia Journalism Review.

“Medicare is going to be a major political, legislative and local story for all reporters to deal with. As a press critic, I see almost a complete lack of reporting on Medicare. It’s almost as if our profession just wants to shove it aside and not have to deal with it, and I kind of understand that because it’s an incredibly complicated program,” Lieberman said.

Panelists tried to simplify the subject for journalists by providing an overview of Medicare Parts A through D and of the proposals to save Part A. Lieberman closed the session urging journalists to put people, not policy, at the forefront of their stories.

“You’re going to have to translate what’s going on in Washington for the man on the street, and he needs to be the focus of your story,” she said.

Medicare from A to D

Medicare’s four parts, A through D, each cover different services.  Part A covers hospital care; B doctor’s office visits, outpatient hospital services, and lab tests; and D prescriptions. Part C, the Medicare Advantage Program, offers private insurance plans, like HMOs or PPOs, that cover Parts A and B services and often prescription drugs. 

Because each part is funded differently, only Part A services, which are covered by payroll taxes, are in jeopardy. Part B, for example, is paid for through the treasury’s general fund and premiums paid by beneficiaries.

“Since Part A is financed by an earmarked tax, it is possible that expenditures grow faster than revenues. Through history, revenues have typically exceeded expenditures. Part A now has a surplus in the trust fund – a relatively modest one, that’s projected to turn into a deficit,” said panelist Henry Aaron, senior fellow in economic studies at The Brookings Institution.

Several proposals to save Medicare Part A are on the table in Washington. Each of these proposals, to some degree, would increase costs for beneficiaries, according to panelist Tricia Neuman, senior vice president of Kaiser Family Foundation. 

Neuman emphasized that beneficiaries are not only older than the general population, but they also have more cognitive impairments, permanent disabilities and chronic conditions. “They use a lot of services when they get sick, and they’re more likely to get sick,” she said.

Most manage these health care needs on a tight budget.  Half of all Medicare beneficiaries live on an annual income of $22,000 or less and have less than $53,000 in total retirement savings, Neuman said.

“Think of what it means to manage a budget, health expenses, premiums, and your mortgage or rent with that kind of income,” she said.  “If you need long-term care, [which Medicare does not cover], that’s not going to go very far.”

Rescue plans

The most talked-about proposal for reforming Part A is premium support, also known as a Medicare voucher. Currently beneficiaries are guaranteed coverage for a fixed set of benefits. Premium support would mean that beneficiaries instead receive a fixed payment to help cover their health care expenses. They would have to pay the rest out of pocket.

Supporters of this option believe it will push insurance plans to compete for Medicare beneficiaries’ business, thereby lowering the burden of cost for the federal government and encouraging innovation, said panelist Bob Moffit, senior fellow in domestic and economic policy studies at The Heritage Foundation.

There are many different premium support proposals, and the contribution beneficiaries would receive will likely vary by region. The first proposal analyzed by the Congressional Budget Office was projected to shift seven thousand dollars in costs to the average 65-year-old, Neuman said. Some proposals include regular adjustments for inflation, but experts fear health care costs are increasing faster than inflation.

“If you adjust just for prices, you are in a slow motion way shifting costs to the elderly,” Aaron said.

While premium support is the most discussed proposal for reform and received the most attention from the panelists, Neuman summarized other proposals. 

“Soaking the rich,” as Neuman called it, means making the rich pay higher premiums.  But Neuman pointed out that the wealthiest beneficiaries already pay more.

“If you learn this today, you will learn more than the majority of the American public who don’t know that wealthier people on Medicare already pay substantially higher premiums than other people on Medicare,” Neuman said. Further increases in premiums based on income would hit middle-income people.

Prohibiting “first-dollar Medigap coverage” – which is already called for in the Affordable Care Act – would require beneficiaries to pay a larger portion of their bills before Medicare or supplemental insurance kicks in. “There are folks that say, ‘If people don’t have any upfront payment, they will overuse services,’” Neuman said.

Proposals to cap total government spending would mean significant cuts for Medicare and Medicaid and “big change in terms of what the [benefits] guarantee means,” she said.

Raising the age of eligibility for Medicare is also under discussion.

There is also talk of shifting the poorest beneficiaries, those who are eligible for both Medicare and Medicaid, to one program or the other.

While changes in care delivery, such as the patient-centered medical home, may bring down costs of care for Medicare beneficiaries, panelists agreed it is too soon to tell.

What can reporters do?

Reporters need to make this policy issue a local story, Lieberman said. The key, she said, is doing your homework so you can explain to your audience how these complex changes affect them. Don’t focus on 75 years from now, she warned. Look ahead only a decade.

“How are these things going to affect ordinary people?” Lieberman asked. “This is what’s been missing in so much of the coverage. What is this going to mean to your readers, listeners and viewers?”