Two weeks ago a Midwest businessman sent an email to a long list of his senior friends warning that their Medicare Part B premiums would reach $247 a month by 2014. “These are provisions incorporated in the Obamacare legislation,” he wrote, and they “are purposely delayed so as not to cause Obama problems in the 2012 re-election campaigns.” He urged recipients to forward the email to “all seniors you know so they will know who’s throwing them under the bus. Remember This In November 2012 and vote!!!”
It sounded like a GOP campaign ad, and it may well have political roots for all I know, but it was part of a mass email that “has been circulating since before the 2010 elections” and “has no basis in fact,” wrote Patricia Barry, senior editor of the AARP Bulletin, last December. The message was still circulating in early July, when Kelly Greene of The Wall Street Journal reported that Journal readers had contacted the paper wanting to know if those numbers in the mass email were true. “The short answer is no,” Greene wrote. She went on to report that the Part B premiums for 2013 and 2004 have not yet been set.
This is another example of Medicare misinformation, and shows what reporters—and a very interested public—are up against as they try to understand and explain Medicare, the social insurance program that pays for healthcare for nearly 50 million Americans.
Lately, press coverage of Medicare has mostly focused on the back and forth between the Obama and Romney camps, in the wake of the president’s visit to Florida last week. For the most part, that coverage has been unhelpful to seniors—or anyone trying to figure out what is changing about Medicare.
But a great many people want to know about both how the changes might hit their wallets and purses, and journalists, not politicians, are going to have to shine the light. So in the interest of helping that process along, what follows is another of my Medicare beat memos.
Medicare can get complicated, so fasten your seat belts. But the bottom line is that some seniors are paying more—and others will pay more—for their Medicare benefits, because of changes called for both by the Affordable Care Act and by changes called for in the prescription drug law—the Medicare Modernization Act—passed in 2003, which gave seniors coverage for their medicines.
These changes affect both Medicare part B, which pays for doctor and lab services and outpatient hospital care, and part D, which covers pharmaceuticals. Both these benefits are financed partially by premiums paid by seniors themselves. And the real story is that seniors with higher incomes will be paying higher premiums for both their Part B and Part D services in the coming years. As for the political angle, it is worth noting that both Democrats and Republicans pushed the measures that will raise those premiums.
First, Part B. And, sorry, but this can be confusing: Way back in 2003, the law that gave seniors the drug benefit (Part D) also called for people with more income to pay higher Part B premiums. Before the Medicare Modernization Act, as the law is called, all seniors paid the same benefit for Part B services. But beginning in 2007 about two million seniors paid a higher premium for them as a result of the law, which was basically a Republican plan supported by some Democrats.
The income threshold that determined who paid the higher premium was indexed to inflation, so that about 5 percent of all Medicare beneficiaries would pay a higher premium each year, on a sliding scale. (In 2012, the income-related premium ranges from about $140 to $320 and affects individuals with incomes equal or greater than $85,000 and families with incomes over $170,000.)
Medicare Part B premiums every year it seems like and it's definitely confusing to keep up on. This year, the Part B premium actually dropped from $115 to $99 for seniors making $85,000 or less.
We can count on premiums fluctuating year to year, but the claim that by 2014 premiums will be up to $247 seems a little over the top to me.
It's a bit like alphabet soup trying to understand all the parts to Medicare. To help add some context to this article, I'd like to share this video that breaks down Parts A through D in two minutes.
http://youtu.be/soFI7uIkNdQ
Thanks for the post!
#1 Posted by BlueGooseMaine, CJR on Fri 27 Jul 2012 at 08:58 AM
What a hoot!
"Insurance."
"Health care."
"Free market."
If only.
#2 Posted by Dan A., CJR on Fri 27 Jul 2012 at 09:23 AM
to bluegoose
The part B premium went down in 2012 only if a beneficiary first signed up for Medicare in 2010 or 2011 (between 1-2 million people). For the vast majority of beneficiaries (over 40 million) the premium went up from $96.40 to $99.90 a month in 2012. This oddity has to do with the fact that SS was frozen for three years.
Interestingly the mechanics of the freeze is probably the root of the $247 a month email referred to in the opening of this article as a Republican campaign ad. It looks to me like someone got Medicare trustee high-income premium estimates in the 2010 Trustee report mixed up with basic premium estimates. Although the 2013 premium has not been "set" yet, there is an estimate for 2013 in the March 2012 Trustee report.
#3 Posted by dennis byron, CJR on Fri 27 Jul 2012 at 04:26 PM
What follows are some suggested clarifications to parts of this article TYPED IN UPPER CASE in order to make them more readable and distinctive as compared to the underlying text:
"These changes affect both Medicare part B, which pays for doctor and lab services and outpatient hospital care AND INPATIENT HOSPITAL CARE WHERE THE PATIENT HAS NOT BEEN ADMITTED; OFTEN THIS GOES ON FOR MULTIPLE DAYS AND CAN AFFECT THE BENEFICIARIES SKILLED NURSING BENEFIT AS WELL AS LEAD TO VERY EXPENSIVE HOSPITAL STAYS NOT COVERED BY THE MEDICARE PART A DEDUCTIBLE BUT BY THE PART B CO-PAY...,
"... and part D, which covers pharmaceuticals UNLESS THEY ARE ADMINISTERED IN AN OUTPATIENT SETTING.
"Both these benefits are financed partially by premiums paid by seniors themselves. ALL PARTS OF MEDICARE ARE FINANCED PARTIALLY OR IN WHOLE BY SENIORS THEMSELVES, NOT JUST PARTS B AND D. MOST SENIORS NOW GOING ON MEDICARE PAID FOR THEIR PART A COVERAGE BY PAYING MEDICARE TAXES FOR 40 YEARS. A FEW SENIORS WHO FOR WHATEVER REASON (USUALLLY BECAUSE THEY WERE GOVERNMENT EMPLOYEES NOT COVERED BY SOCIAL SECURITY), DID NOT PAY MEDICARE TAXES OVER THE YEARS. CAN PAY A $400-PLUS MONTHLY PREMIUM..
"... and families with incomes over $170,000. THE WORD COUPLES IS PROBABLY MORE APPROPRIATE THAN "FAMILIES" IN THIS SENTENCE. THERE IS NO SUCH THING AS A FAMILY PLAN IN MEDICARE. CONVERSELY I DON'T BELIEVE THAT MEDICARE MAKES ANY ACKNOWLEDGEMENT OF HOUSEHOLD (THAT IS, FAMILY) INCOME IN DETERMINING WHETHER OR NOT THE HIGHER PART B PREMIUM IS DUE. I AM NOT POSITIVE OF THAT. (MEDICAID FOR SENIORS -- AT LEAST IN SOME STATES -- DOES MAKE THAT FAMILY/HOUSEFHOLD VS. COUPLE DISTINCTION.)
"By 2019, about 10 percent of all seniors will be paying higher Part B premiums. THE MEDICARE ACTUARY HAS ESTIMATED THAT THE PERCENTAGE WOULD HAVE BEEN 8% EVEN WITHOUT PPACA, NOT THE CURRENT 5%. I ASSUME THAT IS BECAUSE MORE HIGHER INCOME SENIORS ARE COMING ON TO MEDICARE AS THE BABY BOOMERS AGE
"(Unlike other Medicare coverages, private insurers provide the drug benefit). THE AUTHOR IS INCONSISTENT ON THIS POINT FROM BLOG POST TO BLOG POST. IN OTHER POSTS THE AUTHOR HAS SAID THAT PART C BENEFITS ARE ALSO PROVIDED BY PRIVATE INSURERS. IS IT FLOOR WAX OR DESSERT TOPPING? THE REALITY IS THAT ALL PARTS OF MEDICARE ARE EQUALLY PRIVATE AND PUBLIC, ADMINISTERED BY PRIVATE INSURERS AND PAID FOR WITH PUBLIC MONEY (AND BENEFICIARY PREMIUMS AS DESCRIBED ABOVE). THE WHOLE PRIVATE VS. PUBLIC THING IS A DEMOCRATIC PARTY CANARD, USUALLY COUPLED WITH THE NASTY WORDS "FOR PROFIT" (DESPITE THE FACT THAT MANY INSURERS ARE NON-PROFITS)
"Increased revenue from higher premiums along with cuts to Medicare—mostly in the form of payment reductions to hospitals and other providers—are part of a package of savings experts hope will reduce the cost of the Medicare program. IN ADDITION TO CALLING A PREMIUM INCREASE A "SAVINGS" IN TRADITIONAL DEMOCRATIC PARTY SPEAK, THE MEANS TESTING OR INCREASED MEANS TESTING OF THESE TWO PARTS OF MEDICARE IS ACTUALLY A SMALL PART OF THE MONEY THAT IS GOING TO BE TAKEN FROM MEDICARE AND GIVEN TO SUBSIDIZED NON-SENIOR INSURANCE. THE SECOND BIGGEST CUT AFTER THE CUTS TO HOSPITALS AND OTHER PROVIDERS (WHICH THE ACTUARY HAS PREDICTED WILL NEVER HAPPEN) IS TO PART C REBATES.
"Other proposals would increase the amount of healthcare expenses beneficiaries would have to pay out-of-pocket. The media haven’t touched those hot buttons yet, but seniors listening to the candidates might just want to know about them (I will write about them in coming days). I ASSUME THE AUTHOR IS REFERRING TO SEPARATE PROPOSALS BY PRESIDENT OBAMA AND SENS LIEBERMAN/COBURN AND OTHERS TO CHANGE THE REGULATIONS FOR TOTALLY PRIVATE MEDIGAP PLANS SUCH THAT NOT HAVING ALL THE GAPS COVERED BY TRULY PRIVATE INSURANCE WILL THEORETICALLY DISCOURAGE USE OF MEDICARE ITSELF. IRONICALLY WE WILL HAVE THE SITUATION WHERE ON ONE HAND WHILE PPACA IS FORCING NON SENIORS W
#4 Posted by dennis byron, CJR on Fri 27 Jul 2012 at 05:06 PM
Typo that needs fix:
#5 Posted by Bonnie Britt, CJR on Sat 28 Jul 2012 at 01:02 PM
Is it any wonder seniors (and reporters) are having trouble following the Medicare changes? I respect Trudy and the CJR but I sure wouldn't consult AARP as a source; that organization sells UnitedHealth Care plans.
Don't forget that Medicare Advantage plans cost the taxpayer 12-14 % more than traditional Medicare, and the marketing and administration of Advantage plans add to overhead, to our runaway per capita costs.
I am sure Dennis Byron wanted to make the post clearer, but the added caps text just made things more confusing. The exceptions are almost amusing --unless you are sick and need care.
#6 Posted by Harriette Seiler, CJR on Mon 30 Jul 2012 at 04:10 PM
I originally thought Dennis truly wanted to be helpful--but I see he had an anti-administration agenda. I'm reminded that caps in an e-mail are interpreted as shouting.
The problem with our current Medicare--and with the ACA--and with our costly US healthcare system is the dependance on private insurers. We need HR 676 Improved and Expanded Medicare for All.
Should I put that in caps?
#7 Posted by Harriette Seiler, CJR on Mon 30 Jul 2012 at 04:22 PM
Harriet
I am sorry that my use of upper case did not work for you, As I said at the beginning of my comment, I simply wanted to distinguish the sentence in the underlying Columbia Journalism Review article from the clarification or correction. If it wanted to shout, I certainly wouldn't do it on this blog.
I did not cite AARP so you must be referring to something else in the article or in one of the other comments. The source of everything I wrote is from one of the following: the Medicare and You booklet that every Medicare beneficiary gets every year, a memo written by the Medicare actuary, material from MedPAC (the CBO-like organization dedicated just to Medicare). If you found that "anti-administration," you have an issue with the source, not with me
#8 Posted by Dennis Byron, CJR on Wed 1 Aug 2012 at 07:23 AM
Harriet
You introduced a new subject: Medicare Part C (currently called Medicare Advantage). It is good that you introduced it because you sort of prove the original point of the article--throwing around data that is misinfored because of bad press reporting. The press, when repeating the Democratic Party's claims about Medicare Part C costing more, never explains that Medicare Part C costs more than Fee for Service (FFS) Medicare per capita -- note per capita -- for a reason.
The original idea was to get more seniors and the disabled into ACOs, which would theoretically lead to more coordinated and preventive health care, and lower total costs for Medicare. If you disagree with this theory, you are anti-administration. This theory is the same theory behind PPACA and the recently passed Massachusetts healthcare provider price-control legislation by which Massachusetts hopes to save the failing RomneyCare.
As per the latest MedPAC Data Book (June 2012 but with 2010 data) the theory appears to be working out: 28% of the beneficiaries are in Medicare Part C but it accounts for only 24% of the spending. But it is much too soon to tell if that trend will continue.
You can argue that even with its good intentions, the fundamental concept behind Medicare Part C (giving one cohort of seniors and disabled more benefits than another) is unfair and should be repealed. However if you made that argument you would also be "anti-administration" because the Obama administration is currently funneling billions of extra dollars -- on top of the current premiums paid to most Part C insurers -- into Medicare Part C plans in a massive demonstration project to see if ACOs can be made to work. (All earlier ACO demonstration projects have failed.)
The press also never explains -- because it simply repeats the Democratic Party party line -- that the major problem (if it is a problem) with Medicare Part C is in the FFS part of Medicare Part C, not in the ACO part of Medicare Part C. There was/is a theory that Medicare FFS can be made ACO like using electronic records without actually taking away seniors benefit of going to any doctor or getting any service they like. See section 7 of the Medicare March 2012 report if you want more detail.
#9 Posted by dennis byron, CJR on Wed 1 Aug 2012 at 07:40 AM