A Consumer Perspective on Medicare's 40th Anniversary 

Brian Berggren, Consumer Co-chair of the Medicare Justice Coalition at Medicare's 40th Anniversary Congressional Summit Celebration, August 2, 2005 - Plymouth Community Center, Plymouth, Minnesota

 Many of our national legislative representatives have no idea of the nuts and bolts problems affecting upper-Midwest seniors and providers. They have money we will never have, access that we will never have, and insurance coverage they will never have to fear.

 My goals today are to share a thank you to our past leaders, to share some of the distortions and inequities in Medicare, to tell you that Medicare is the only social insurance program in real financial trouble, and to forewarn you about senior care in 2006 and beyond.  Ex-Vice-president Walter Mondale was there at the start, and Senator Dave Durenberger continues to be deeply involved in health issues. Dave is the only non-industry MedPAC commissioner advising Congress and he also chairs the National Institute of Health Policy at St. Thomas University. If Diogenes was looking for the last honest man on Midwest healthcare issues, Dave would be that man.

 The 1997 Balanced Budget Act gave us Medicare reform legislation that started the consumer-choice and market competition ideas that led to the MMA, our 2003 Medicare Modernization Act. Some of us were at Regions Hospital in the summer of 2003 when the FDA commissioner, the Surgeon General, the Centers for Disease Control Chief, and the National Institutes of Health Director were shilling for the proposed Medicare Improvement Act that would give seniors a prescription drug benefit.
Here were the best medical minds in the nation and they were promoting not healthcare but insurance options. We got bright yellow T-shirts that said, “More Choices Better Benefits,” but what we needed most was a little restraint on drug cost increases.

 In November of 2003 the Medicare Modernization Act was passed in the dead of night, using an unprecedented three-hour voting period (for arm-twisting), Congressional cameras fixed in position rather than scanning to less accurately record the debacle, and with few legislators having read the bill and even fewer understanding it. A proud moment in our democratic tradition.

 When President Bush was in Maple Grove this summer promoting Part D – the prescription drug benefit, he said, “We have a massive education effort” to do and asked young people to help their seniors fill out the paperwork to enroll in Part D. I suggest that we seniors tell our children that, with two exceptions – the poor and those with catastrophic drug costs - Part D is a disaster that uses their money to fund the drug companies abusive pricing. An April Kaiser Foundation poll found only 9% of seniors would enroll, 37% would not enroll, and 54% don’t know enough to decide.

 Part D has all kinds of charming features such as the  “donut hole,” a coverage gap where you pay all, an inflatable deductible, a late enrollment penalty, something called “actuarial equivalence” that means different premiums, different deductibles, different copays, different out-of-pocket maximums, and different formularies.

 Here is the biggie. What it doesn’t have is federally negotiated drug prices. The MMA specifically prohibits CMS from negotiating prices for drugs – yet they negotiate for other health care supplies – and the VA negotiates for drugs.  European countries pay less than 60% of what U.S. citizens pay for drugs by doing just this. The Prescription Drug Plans will save you money by getting discounts and rebates from whatever the drug companies charge. Remember the Drug Discount Cards?
Part D is a great benefit for two groups of seniors, the really poor and those with really huge drug costs. People below 135% of poverty and having less than $6,000 in assets, including burial plot, have no premiums or deductibles and pay only $2 for generic prescriptions and $5 for brand drugs. A can’t miss benefit. Similarly, those with catastrophic drug bills get 95% coverage for costs above $5,100.
Some examples:

If you pay $600 a year for drugs, you pay $456 in monthly premiums, a $250 deductible and an $88 copay totaling $794 for a 32% loss;

If you pay $1,200 a year, you save 22%
If you pay $3,160 a year, you save 32%
If you pay $5,000 a year, you save 21%
And, if you pay $12,000 a year, you save 66%    For 2006

 Between 2006 and 2013 the premium, deductible, initial coverage cap, catastrophic coverage start amount, and donut hole are expected to almost double. More confounding is that the premium is really projected to increase at only a 6% annual rate; when was the last year drugs went up only 6%?   The 1% per month penalty for late enrollment is essentially a 12% cost increase similar to what the premium increase will likely be.

  The simple answer: the Senior Federation’s Canadian Drug program saves 53% and importation from Europe likely will save more.

 Part B is called Supplementary Medical Insurance and pays for physician, outpatient, and preventive services. This is the part that is deducted from Social Security checks, with the Medicare enrollee paying about 25% of costs and the general tax fund paying the remaining 75%. That 25% of costs has been relatively modest and allowed seniors to buy Medigap policies where needed. (In 2002, this part paid less than half of the average $11,700 in annual beneficiary costs.) All enrollees nationwide pay the same amount. CMS Commissioner McClellan got a 17% premium increase to $77.80 per month to pay for a one-time physical exam and to give physicians and rural services a little more. Next year, the premium will be $89.20 -- $89.30 had been the premium estimated for 2009!

 Anyway, we get angioplasties, implantable heart defibrillators, and counseling for smokers added to the Part B coverage. These newly covered services seem to have been added in response to lobbying by groups wanting a hunk of the sure money. The implantable defibrillators are preventive just-in-case devices that cost $20,000-25,000, plus another $23,000 for the install. With 500,000 seniors thought to possibly benefit from these devices, can you say Billions?

 See where this is going? Add a couple of services each year and 15-17% increases will be the norm and your Medicare Part B premium will easily approach $250 in less than 10 years. To make sure this happens our merry band of helpers in Washington has already enacted legislation that cuts physician reimbursement 25% over the next several years, money that will have to be restored. Talk about making sure you have enough sticks to fight with over this stuff.

 Now for geographic inequities. Minnesota is in the newly created Medicare Region 19. We are grouped with Iowa, North and South Dakota, Nebraska, Montana, and Wyoming in a seven-state region that contains 91% of the most poorly reimbursed counties in the nation. (The other 25 regions are of one and two states.) Remember, all enrollees pay in $77 a month. Medicare payments to Medicare Advantage providers in our region run in the $590-650 range, while providers in Miami, New York, Los Angeles, and New Orleans receive $900 to 1500 per enrollee. This excess lets Florida seniors avoid plan premiums, copays, costs for glasses, costs for generic drugs –they did have a $10 copay for branded drugs. Minneapolis seniors pay a $1440 annual plan premium, have a copay for office visits, and pay all drug costs. It’s geographic inequity and it’s not fair. Just be glad you don’t live in Iowa; that’s cruel and it’s not a joke.

 Some of our leaders consider the Health Savings Accounts the most important part of the MMA. This is the tax advantaged savings program for the pre-retirement healthy and wealthy. The program requires participants to buy high-deductible insurance and pay for health needs with real first-dollar money. The healthy will save money in two ways; they will spend less on health and watch an IRA-like account grow. They will also be removed from the big risk pool. Each will become a self-insurer.

 A very large portion of medical costs for seniors is for chronic conditions (71% have two or more conditions) and care in the last six months of life. With the healthiest seniors free to choose and buy as much health insurance as they want or can afford outside the big risk pool – remember the More Choices-Better Benefits pitch –costs for the big pool can only spiral up.

 Just last week, the Washington Post published a three-part series on Medicare by reporter Gilbert Gaul. This series could have been written in the Twin Cities, written better, and with more powerful anecdotal citations. The articles and research the MJC members share is far more comprehensive, current, and frightening. And the information in our Senior News and in the Medicare In Crisis slide show is much more informative and regionally relevant. I hope Gaul gets nominated for a Pulitzer anyway, but Peter Wyckoff would be a better candidate.

 I’ll close with some discouraging words from Senator Durenberger’s NIHP Commentary papers. The trustees predict the program’s bankruptcy in 2019. Congress is required to act when 45% of Medicare payments come from general revenue in 2007. Even if Congress adopted every MedPAC recommendation for the next 40 years, program changes alone cannot save the Medicare program as we know it today