The Medicare Provisions - Case Study Example

The Purpose of the Hearing Testimony Medicare in now in a better financial shape than when it was created by the Congress. But, the Medicare Trust Fund is expected to bankrupt by the next 23 years and this is a far cry suggesting its improvement. “Arguments will be made that because Medicare will consume a larger share of the Nation’s gross domestic product, and a larger share of the Federal budget, it is unsustainable. Whether our society can afford Medicare is a question of values.”( Dingell, J. D. 2003. April 9.) Impact of Government policies in delivery of Health Care “Part A” of Medicare for HI provides the costs of inpatient hospital services while “Part B” of Medicare for SMI covers physician services, outpatient and home services and diagnostic tests etc. The two parts of Medicare are financed in a different way. HI finance is met by FICA and SECA payroll taxes HI tax rate is not scheduled to change at any time in the future except through new legislation. and paid on total earnings. SMI finance is met by monthly premiums from the employees. The Medicare provisions in the Balance Budget Act of 1997 helped to overcome the tough situation that arose during the period 1990-1997 for HI where it fell short of its income. The costs were growing at a faster rate than income and would have been depleted in about 2001. The average life expectancy of the Americans has increased from 65 years to about 22 years. Thus, the older persons become the higher utilization group adding to the financial burden on the Medicare program. It is seemingly been observed that Medicare’s cost-containment performance has been better than that of private insurance even after covering comparable services. Both the sectors grew rapidly in their per capita spending, but Medicare became more cost-conscious through hospital payment reforms. This gap was cached up Medicare by the private insurance. Private plans are interested only in satisfying their own customers and giving profits fro stakeholders, and they cannot be expected to meet larger social goals like sicker beneficiaries to get high quality care. Summary of Witness Testimony Ms. Susan Rawlins is the vice president and head of retiree markets for Aetna Inc. Aetna is of opinion that an updated Medicare plus choice program must influence the private sector. “Despite a critical shortfall in government funding, about five million Medicare-eligible seniors and disabled choose to participate in Medicare Choice, enjoying access to extra benefits -- including prescription drug coverage, preventive care, wellness and disease management programs. These benefits are not available under Original Medicare.”( Rawlins, S. 2003, April 9) About 60% of all Medicare beneficiaries have access to Medicare choice plans which include Coordinated care plans (HMO), Preferred provider organizations (PPOs), private fee-for-service plans, and plans that focuses on disabled elderly beneficiaries. The Medicare +choice plans also offer chronic care, wellness for disabled Americans like parent education, disease management programs, screening programs reminders and reports to physicians about patient’s status etc. About 60% of all Medicare beneficiaries have access to Medicare choice plans which include Coordinated care plans (HMO), Preferred provider organizations (PPOs), private fee-for-service plans, and plans that focuses on disabled elderly beneficiaries. According to Mr. Robert Berenson M.D., F.A.C.P. Senior Consultant Academy Health, the assumptions on the incapability of Medicare about the cost and access have no basis as Medicare is a successful insurance program. He is of the opinion that the frameworks option 2-Enhanced Medicare will cause an increase in the administrative cost to Medicare. He is of the opinion that the Medicare should have provisions for innovative health plans and these plans could be accommodated as modified Medicare + Choice program. But if there is no credibility for the managed care industry as they are charging high premium for income this would certainly harm the health care of the people. So then he is of the opinion that there is no need to privatize Medicare. Mr. Rick Foster’s discussion is about the financial status of Medicare is based on the projections contained in the Board’s 2003 report to Congress which illustrates a possible range of variation of future costs for short range (10 years) or long period (75 years). The Medicare program provides financial adequacy over the next 10 years for the trustee by Hospital Insurance (HI) and Supplementary Medical Insurance (SMI). But these funding will be depleted in earlier period than estimated However, the expenditure are expected to again exceed income after the next 20 years. The previous HI cost rates have increased over time but due to legislation to expand HI coverage and Balanced Budget Act it came to a decline. In general, HI costs are expected to in crease at speedier rate than taxable payroll, and by the end of the 75-year period, scheduled tax income would be only less than one-third of projected expenditures. Like HI, the SMI expenditure have also increased due to transfer of certain home health services from HI to SMI, increase spending in physician service, increase in durable medical equipment spending and rise in drug coverage. In the long run, the SMI expenditure are projected to increase at a rapid growth causes burden on beneficiaries and the Federal budget. Ms. Marilyn Moon is Senior fellow in the Urban Institute. According to her, the long term financing challenges faced by the Medicare should be met by new plans and additional funding. There is no need for privatizing Medicare as it has track record for the last thirty years. The traditional Medicare should remain a major portion of the overall program which needs certain changes. Solvency measures indicate the date of exhaustion of the Part A fund and this helps to act as an indicator of affordability of the fund. Affordability indicates whether a society can support Medicare into the future. Here, an alternative measure to proposed to examine affordability. From 2002 to 2035, the increase in net (after subtracting Medicare) per worker resources would be 51.0 percent as compared to the 54.9 percent increase in per worker GDP. This measure of net per worker output suggests that, the Medicare burden could be better afforded by sharing of the costs by the society without an inordinate burden on workers and taxpayers. There can be a favorable sharing from beneficiaries if there occurs a rise in their income rates. Also, protection must be given for low-income beneficiaries. For moving the traditional Medicare to private insurance seems too uncertain as there is little evidence to suggest even modest savings to Medicare. Reform options like a premium support model to work, some beneficiaries should shift plans each year in order to reward more efficient plans and better savings. Payments made to private plans and the fee for service system help to better care delivery. Better benefit packages like the prescription drugs will a goal of reform Also, better standards of care like investment in research, disease management and other techniques could lead to improvement for the public. Long term cost savings could be done by additional flexibility to CMS to manage and develop payment initiatives. Ms. Mary Grealy is the President of Healthcare Leadership Council. The HCL is one among the governing members of the Alliance to improve Medicare. Medicare should be improved in respect of outpatient prescription drug coverage benefit. These goals can be achieved by a delivery model through larger employer-sponsored plans or through the Federal Employees Health Benefits Program. People who will be enrolled in these programs receive better benefits like prescription drugs, lower out-of pocket costs. Etc. Medicare as it is today is not offering such benefits Medicare as against private health plans is not offering any built-in incentives to guide beneficiaries or using internet services for better management. And also, private plans, utilizes the service of pharmacy management companies and other consumer choice programs for positive results. The Medicare Choice program is providing valuable information towards private health plans. Medicare +Choice program Is not sufficient for achieving goals. A Superior Medicare model is needed for better benefits. A comprehensive FEHBP-style model can be implemented. Ms. Barbara Kennelly is the President of National Committee to Preserve Social Security and Medicare. According to her, the National Committee proposes a prescription drug benefit and chronic diseases management and preventive benefits.The social insurance principle should guarantee all senior citizens a defined prescription drug benefit. Medicare +Choice program and FEHBP model are not enough to meet the problem especially for the seniors. So, a comprehensive and universal prescription drug coverage is essential. And, it is not necessary to create private plans to implement them. Mr. Robert Buddy describes his experience on having benefited from the Medicare +Choice program and stresses its importance and why it should be preserved. The advantages of this plan was that it emphasized on early detection and treatment of illnesses, its promotion of wellness. The plan offers broader benefits including brand name and prescription drug coverage at al lower cost. Recent health policy based on Testimony. “President Bush has kept his promise to focus on strengthening and improving Medicare by committing $153 billion over 10 years to modernize Medicare, including the addition of a prescription drug benefit.” (HHS 2001, April 27) In addition, The President has put forward to help seniors the Immediate Helping Hand prescription drug proposal which provides immediate financial support to states for drug coverage. Around $46 billion is funded for Immediate Helping Hand from the HHS budget.. Also, new technical assumptions are added to Medicare Part A trust fund. Reference Department of Health and Human Services Press Release (2001, April 27) Strengthening and Improving Medicare. The Senior Citizens League. Retrieved 1 Aug 2008 from http://www.tscl.org/NewContent/101017.asp Dingell, J. D. (2003. April 9) Subcommittee on Hearing on Improving and Strengthening Medicare. Committee on Energy and Commerce. Retrieved 1 Aug 2008 from http://energycommerce.house.gov/press/108st29.shtml Moon, M. 2003, April 9. Prepared Witness Testimony. Strengthening and Improving Medicare, Subcommittee on Health. Retrieved 2 Aug 2008 from http://energycommerce.house.gov/reparchives/108/Hearings/04092003hearing868/Moon1405.htm Rawlins, S. 2003, April 9. Prepared Witness Testimony. Strengthening and Improving Medicare, Subcommittee on Health. Retrieved 2 Aug 2008 from http://energycommerce.house.gov/reparchives/108/Hearings/04092003hearing868/Rawlins1404.htm Read More