Medicare

The following table is derived from a graph (in the print edition)
which accompanied the article
“Campaign 2012 and the Truth about Medicare” by Veronique de Rugy
which appeared in the August 31, 2012 Washington Examiner
[Examiner, Mercatus].
The data is drawn from
the 2012 Trustees Report of the Centers for Medicare and Medicaid Services.
The dollar figures are in real (2012) dollars, i.e., adjusted for inflation.
The total cost did not appear in her graph,
but is obtained by simple multiplication
of the cost per enrollee by the number of enrollees.
(I have rounded the figures slightly more than in the original.)

Year	Medicare Enrollees (M = million)	Cost per Enrollee	Total Cost ($G = $billion)
1975	25M	$2,800	$70G
2011	49M	$11,500	$560G
2040	88M	$21,000	$1,840G

---

Miscellaneous Articles

2011

2011-01-03-WP-benefit-tax-gap

Analysis illustrates big gap between Medicare taxes and benefits
By Ricardo Alonso-Zaldivar
Washington Post, 2011-01-03 (print edition)

2011-05-26-NYT-Redberg

Squandering Medicare’s Money
By RITA F. REDBERG
New York Times Op-Ed, 2011-05-26

Letter in response

2011-05-27-WP-Miller-Ryan

Wait! Paul Ryan has a point
by Matt Miller
Washington Post Op-Ed, 2011-05-27

2011-06-05-WP-Samuelson-why-we-must-end-medicare-as-we-know-it

Why we must end Medicare ‘as we know it’
By Robert J. Samuelson
Washington Post, 2011-06-05

...

It is only a slight exaggeration to say that

unless we end Medicare “as we know it,”
America “as we know it” will end.
Spiraling health spending
is the crux of our federal budget problem.
In 1965 — the year Congress created Medicare and Medicaid —
health spending was 2.6 percent of the budget.
In 2010, it was 26.5 percent.

The Obama administration estimates it will be 30.3 percent in 2016.
By contrast, defense spending is about 20 percent;
scientific research and development is 4 percent.

...

From 1970 to 2008,
Medicare spending per beneficiary increased
an average of 9 percent annually.

2011-08-15-WP-Coburn-Medicare-cuts

Coburn’s cuts: Taking on Medicare and Medicaid
By Walter Pincus
Washington Post, 2011-08-15

Editor’s note: Sen. Tom Coburn (R-Okla.) released a plan in July that he said would achieve $9 trillion in deficit savings over the next decade. Here, we review parts of the proposal.

Coburn, a doctor, has some strong ideas about Medicare and Medicaid, which, he said, provide “health-care coverage for approximately one in five Americans and, along with Social Security, make up the backbone of the federal safety net.”

Among his proposals: raising the entry age for Medicare; means-testing beneficiary payments; raising some premiums for all seniors; increasing funding for investigating fraud and abuse of both systems; and freezing for 10 years the Medicare reimbursement rates for doctors.

Why such dramatic steps? Coburn agrees with the Congressional Budget Office that the dramatic growth of federal spending on health care is “the single greatest threat to budget stability.”

“Medicare and Medicaid consume one in five federal tax dollars,” according to Coburn, who adds, “Taxpayers lose an estimated $100 billion a year to waste, fraud and abuse in the two programs, which is the combined annual budget of three entire federal departments — Transportation, Homeland Security, and Housing and Urban Development.”

Coburn believes that the federal safety net for seniors should reflect that Americans are living longer than when the laws were enacted. He notes that when Medicare was passed in 1965, the average U.S. life span was 70.2 years, and today it is 77.9 years. For someone born in 2009, it’s expected to be 78.2.

That’s “a wonderful development,” he said, but adds, the increase “has significantly raised the costs of the overall program.” He wants to increase the Medicare eligibility age by two months every year. The starting point would be those born in 1949, who will be 65 in 2014, and go until the eligibility age hits 67. Those born in 1960 will be 67 in 2027. After that, eligibility would be indexed to life expectancy, rising a month every two years and reaching 69 by 2080.

That still would have the average person on Medicare for at least 10 years, double the coverage time expected when Medicare first passed. Such a change could save $124 billion, according to Coburn.

Coburn also suggests targeting Medicare assistance “to those who need it most.”

First, he knocks down the notion that its payroll tax funds the program. He shows that it covers only hospital expenses (Part A). Medicare premiums cover only 25 percent of doctor visits and treatments (Part B). The rest is “subsidized through general revenue tax dollars,” Coburn said.

Premiums in 2010 paid for 11 percent of the Medicare drug program (Part D) that passed during the George W. Bush administration; general tax revenue paid 83 percent. Through 2010, the program overall cost $214 billion.

Coburn says individuals making $150,000 or couples with incomes of $300,000 “should pay the full cost of their Medicare Part B and D coverage,” a step he said would save $21 billion over 10 years.

His most controversial proposal is to raise Medicare Part B premiums for everyone by 2 percent for the next five years so that they cover 35 percent of the overall program.

Coburn notes that when the measure was passed, premiums were to cover 50 percent of all costs, but they never rose above 25 percent. He projects the average cost for his increase would be $15 to $20 a month and implementation would save more than $241 billion over the next 10 years.

Another big saving could come from increasing oversight of both Medicare and Medicaid, where losses from fraud are estimated by analysts and law enforcement officials to run from 3 percent to 10 percent of health-care expenditures. That, Coburn says, could be about $230 billion “fraudulently diverted” from the $2.3 trillion system.

He noted that at a recent House hearing the deputy inspector general of the Department of Health and Human Services (HHS) said that public health-care programs are “attractive to organized crime because the penalties — if they are apprehended — are lower than penalties for many other criminal offenses.” His answer is to beef up investigations because every $1 given the HHS inspector general returns almost seven times that amount in fines or money saved.

On Medicaid, Coburn wants to transfer management authority from Washington, making the states responsible for providing care for certain populations but leaving them the flexibility to negotiate with providers and design benefit packages.

Coburn wants to create stability in the Medicare reimbursement fees to doctors, which are annually threatened with reductions as the cost of the program increases. It’s to meet that threat, which Congress regularly defers, that he wants the 10-year freeze on reinbursement levels. That step, Coburn said, would ensure “stability and predictability for physicians, enabling seniors to continue to access the care they need.”

2012

2012-05-31-WP-Lawrence-why-we-cant-afford-medicare

Clueless about Medicare
By Bryan R. Lawrence
Washington Post Op-Ed, 2012-05-31

Medicare may be the most sacred government program in the United States — even 76 percent of tea-party supporters oppose cuts to it, a McClatchy-Marist poll found in November. Given its central role in our fiscal challenges, it makes sense to examine why this program is so popular.

There are two key factors. First, retired Americans receive high-quality care but have virtually no idea what their Medicare benefits cost. The George W. Bush administration required Medicare to begin providing such information, but it is presented in a way that makes it hard to understand and is read only by people who request it. (The Medicare Web site even cautions that the “files are large so printing them is not recommended.”) While not every retiree takes the time to study the cost, almost all rely on the benefits.

Second, every working American has Medicare taxes deducted from each paycheck and has been told that the money is paid into a trust fund for his or her future benefits. It’s not surprising that Americans feel proprietary about Medicare — they believe that they have spent their working lives paying for their future benefits.

But those Medicare taxes, and interest on the program’s small trust fund, cover just 38 percent of the annual cost of the program’s benefits. Premiums paid by beneficiaries cover an additional 12 percent, but fully half of the program’s $549 billion cost last year was funded by federal income taxes on working Americans.

Put another way, Medicare is a transfer of wealth from younger to older Americans.

As long as the baby boomers were working and paying taxes, their large numbers made this transfer to their parents and grandparents affordable. But the boomers began to retire last year. In its 2011 annual report on the nation’s financial position — compiled in conjunction with the Office of Management and Budget — the U.S. Treasury described the federal government’s finances as unsustainable. Treasury Secretary Timothy Geithner, in testimony to Congress this year, cited the ballooning cost of the transfer inherent in Medicare as a key driver.

The net present value of the transfer — the amount that would have to be set aside today to fund Medicare’s future intergenerational promises — has grown to at least $25 trillion, as calculated by the Government Accountability Office. This number is buried in footnotes of the annual Treasury-OMB report and is so large (almost twice the $14 trillion value of all public U.S. companies) that it defies comprehension. It’s not surprising that Americans can’t relate the alarming cost of this transfer to their own lives.

But recent work by the Urban Institute calculates the amount of the transfer to an average retiree. An American man retiring in 2011 could expect to receive Medicare benefits worth $170,000 (in 2011 dollars). If he had worked from age 22 at the average U.S. wage each year, he would have paid Medicare taxes (plus interest) worth $60,000 (also in 2011 dollars). So the average male worker retiring in 2011 will receive benefits worth almost three times what he paid in. And the transfer to that retiree will be $110,000 from younger Americans, perhaps including his grandchildren.

If that average worker had a wife who didn’t work, she would receive $188,000 worth of benefits, despite having paid nothing in. So the couple’s benefits are six times what was paid in, or a $298,000 transfer from younger generations.

...

2012-08-24-WP-matt-miller-the-real-medicare-villain

The real Medicare villain
By Matt Miller
Washington Post Op-Ed, 2012-08-24

[This is really an excellent column.
Mr. Miller has been publishing excellent work.]

[1]
Republicans cry that President Obama
is raiding Medicare to fund a socialist health-care nightmare.
Democrats blast the GOP for
sticking grandma with vouchers
to wreck a program they’ve secretly loathed for decades.
Far be it from me to put the kibosh on all this drama,
but when it comes to the policy stakes,
such breathless charges are beside the point.

[2]
The real Medicare villain is not Barack Obama,
and it’s not even “evil” Paul Ryan.
The real villain is America’s medical-industrial complex —
and once you grasp this, everything changes.

[3]
The beginning of wisdom on Medicare’s future starts with
two things both parties say
but which can’t simultaneously be true.

[4]
The first is that
we spend much more on health care than any other advanced nation
yet get no better results.
The second claim —
implicit in the attacks on Obama’s $716 billion in “cuts”
or on Romney/Ryan’s heartless vouchers —
is that,
if we do much to slow the growth of health-care spending,
we’d hurt seniors’ access and quality of care.

[5]
As I’ve argued before, no matter how often and how loudly
interest groups and politicians scream this second claim,
it can’t be true if the first claim is a fact.
And U.S. health care’s inefficiency is indisputable.

...

2012-09-07-NYT-long-term-care-looms-as-rising-medicaid-cost

With Medicaid, Long-Term Care of Elderly Looms as a Rising Cost
By NINA BERNSTEIN
New York Times, 2012-09-07

Medicaid has long conjured up images of inner-city clinics jammed with poor families.
Its far less-visible role is as the only safety net for millions of middle-class people
whose needs for long-term care, at home or in a nursing home, outlast their resources.

With baby boomers and their parents living longer than ever,
few families can count on their own money to go the distance.

...

[The article concludes with these examples:]

[29]
Wendy James spent nine years and thousands of dollars struggling to keep her mother safe at home with her in Yonkers, in Westchester County.
Her big mistake, she says now, was not filing a Medicaid application sooner.

[30]
Her mother, Elaine, 76, formerly a secretary in a doctor’s office in Manhattan,
had to quit work when she developed symptoms of Alzheimer’s disease.
As the illness worsened, Ms. James’s father, now 80,
retired from his job in a department store to help care for his wife.
When she needed an adult day program in a nursing home, which rose to $2,400 a month,
the family paid out of pocket.
And Ms. James, 37, who works for a medical billing company,
paid up to $1,000 a month for her mother’s medications
when she hit her Medicare prescription “doughnut hole.”

[31]
A 2009 analysis by the Kaiser Family Foundation found that
direct, out-of-pocket spending by individuals and families
accounts for 22 percent of the $178 billion spent on nursing homes.

[32]
Mrs. James is now in a New Rochelle nursing home, where Medicaid pays the bill.
Her husband travels daily
to spoon-feed lunch to her
in the nursing home’s chaotic day room.
Ms. James feeds her mother every evening after work,
rubbing her cheek to remind her to swallow.

[I would respectfully question the wisdom, considering the country has limited resources and many needs,
of paying Medicare dollars to extend the life expectancy of someone whose mind is so far gone that they cannot remember to swallow the food that they have chewed.
Note by the remark in ¶ 30 that someone was paying up to $1,000 a month (that's over $30 a day!) just for medications for her.]

[33]
“I did what I had to do for her,” said Ms. James, the youngest of three siblings.
“She was the best mom before she got sick.”

2012-10-23-NYT-Pear-settlement-eases-rules-for-some-medicare-patients

Settlement Eases Rules for Some Medicare Patients
By ROBERT PEAR
New York Times, 2012-10-23

WASHINGTON —

Tens of thousands of people with chronic conditions and disabilities
may find it easier to qualify for Medicare coverage of
potentially costly home health care, skilled nursing home stays and outpatient therapy
under policy changes planned by the Obama administration.

[Only "tens of thousands"?
I bet this is a gross low-ball.
The real answer will be millions.
We shall see who is right.]

...

Neither she nor Medicare officials could say
how much the settlement might cost the government,
but the price of expanding such coverage
could be substantial.

[What an irresponsible bastard Obama turns out to be.
Committing future taxpayers to a new commitment
without even estimating the cost!
How anyone can vote for such an irresponsible bastard is beyond me.
Oh wait.
He's good for the PC community.
What do they care about fiscal responsibility?
Do you think Nancy Pelosi gives a **** about fiscal responsibility?
If so, are really in denial.
She turned down the Simpson/Bowles recommendations.]

2013

2013-01-14-WP-Lane-shining-a-light-on-medicare-payments

Shining a light on Medicare payments
by Charles Lane
Washington Post Op-Ed, 2013-01-14

[What Mr. Lane points out here is both highly significant and highly surprising.
I, and I am sure, many other people have wondered
just why per-capita, inflation-adjusted, Medicare benefits
have gone up so much.
I certainly thought the basic facts about
what Medicare is spending money on
would be known to those who specialize in covering such topics,
if not to me.
But Mr. Lane's article says that is not the case.
The emphasis is added, and also some comments.]

Now costing more than $500 billion per year,
Medicare is central to the United States’ fiscal predicament.
For this complicated problem,
there are many complicated proposed solutions.

But what if we try something simple, like journalism?

In essence, that is the argument that Dow Jones,
publisher of the Wall Street Journal,
is pressing in a federal court in Jacksonville, Fla.
Dow Jones is asking District Judge Marcia Morales Howard
to lift a 1979 court order that
exempted from the Freedom of Information Act
all provider-specific data on Medicare payments.
Arguments ended in August, and a ruling could come at any time.

Thanks to the 33-year-old injunction,
the press and the public cannot examine
the treatments individual physicians billed to Medicare
or — most important — how much Medicare paid for them.
Yet this is a matter of obvious public concern,
given that Medicare made $28.8 billion in improper payments in 2011,
according to a Government Accountability Office report last February.

Media coverage could be a powerful weapon against waste, fraud and abuse,
Dow Jones argues — plausibly, given the Journal’s recent work.

In 2009, Dow Jones and the nonprofit Center for Public Integrity
sued the Department of Health and Human Services
for access to its database of physician fee-for-service claims.
HHS resisted but ultimately agreed
to supply a small portion of its information
in return for a fee
and a promise not to reveal individual physicians’ names.

Even with those limitations,
the Journal produced articles in 2010 and 2011 documenting
many millions of dollars’ worth of
excessive spinal­fusion surgery,
questionable prostate-cancer treatments and
dubious billing for home health-care services.

More irregularities might turn up if all journalists
could comb through Medicare’s records using data-mining techniques.
And imagine how many irregularities would be deterred
if providers knew that they might be named and shamed.

Doctors, of course, see a threat to privacy —
theirs, not patients’,
since patients would not be identified no matter how a lawsuit turns out.
“Privately employed individuals have a substantial interest in
the privacy of their personal financial information,
including their income,”
the American Medical Association argued in its brief to the court.

[This really is a gray area.
Physicians may be in some sense privately-employed,
but when they are billing Medicare
they are expecting the public, i.e., the government,
to pay them.
In a sense, Medicare is then their employer.]

The doctors warn of “deleterious effects on the physician-patient relationship.”
One physician affidavit avers that
“it would undermine my ability to care for my patients
if they think that I might be prescribing” a particular therapy
“for the money rather than for their well-being.”
Public disclosure of Medicare billing
would increase such purported misconceptions,
because non-experts can’t interpret the data accurately,
the doctors claim.

How paternalistic can you get?
Information about doctors’ incentives
might in fact empower health-care consumers,
as it generally does in other markets.
Surely patients who got some of the 276 spinal fusions performed by a single Midwestern surgeon in 2008
would have wanted to know, as the Journal reported,
that the doctor received
more than $400,000 in payments from spine-device makers.

Privacy was the doctors’ argument in 1979,
when they first sought, and won,
a permanent injunction to stop a Carter administration plan
to disclose Medicare reimbursement data.

Though issued by a single Florida district court,
the injunction applied nationwide and can be lifted only if
the court that imposed it finds, in essence,
that times have changed.

[Interesting that it is Florida court,
where such a high percentage of the population receives Medicare benefits.]

They have:
Medicare cost a mere $37.4 billion in 1980.
For that reason alone, the nation’s interest in cost control today
far outweighs doctors’ interest in billing secrecy.
Sens. Charles Grassley (R-Iowa) and Ron Wyden (D-Ore.) agree
and have introduced legislation to overturn the injunction,
though their bill is moving slower than the Dow Jones lawsuit.

[Why is that?
Congress surely has an interest in controlling excessive Medicare spending.
But Congress seems highly reluctant to do much in that direction.
There often is a cry for transparency in many things which affect out lives.
Why is there not much of an outcry for transparency on
where the Medicare dollars go?]

In a way,
it’s too bad that Dow Jones framed its case
as a matter of fighting fraud.
It is indeed that.
But the vast majority of providers are honest.

Still, doctors’ resistance to disclosure illuminates
the mentality bred by a system of
open-ended public financing on the one hand and
private provision of fee-for-service care on the other.

The latter creates powerful incentives to exploit the former,
yet it is often legal to do so.
Congress can only partially counteract this design flaw
by limiting reimbursement rates and other expedients.
And while Medicare makes sense, sort of,
to those who must deal with it on a daily basis,
who knows how the public would react
if people could see, in detail,
how the system really works?

Fuller disclosure about Medicare could help curb abuses.
Even more important,
it might inform a debate about
why Medicare spending keeps rising
even when everyone does follow the rules.

[Mr. Lane really deserves commendation for raising this issue.
I wonder why all the liberals in the media have not.
Can it be that they really have no interest whatsoever in controlling spending
in the areas in which they, and their relatives and friends, make a profit?
Controlling defense spending and farm subsidies
seems the extent of their interest in cutting spending.
But, as I implied above, many of them and their circle
either work in or profit from spending on education and health care.
Seems to be a conflict of interest within the left wing classes,
between their responsibility (one would think) to control spending
and their desire to achieve a profit.
In the famous slogan of Washington leftists, they
"Do well by doing good."
But at the expense of the federal budget, the federal deficit, the federal debt,
and thus future generations, including their own children.]