Strengthening Medicares Coverage Options: Affordable Health Care to Improve Lives
"Our Nation has a moral commitment to fulfill Medicare's promise of health care security for American seniors and people with disabilities. Yet, we need to do more to meet that commitment. Two problems demand immediate action: Medicare must provide prescription drug coverage, and all seniors should be able to choose an affordable Medicare coverage option that best meets their needs. We will keep our promise to senior Americans and we will make Medicare stronger."
- President George W. Bush
The President's Commitment to Medicare: All Seniors Should Be Able to Choose the Coverage They Prefer, with Prescription Drug Coverage
The President is committed to ensuring that, as Medicare adds prescription drug coverage, the valuable benefits in Medicare+Choice plans remain available for beneficiaries and are strengthened. He is committed to giving seniors access to modern, reliable coverage options, similar to those available to all Federal employees through the Federal Employee Health Benefits Program.
The President has proposed urgent, short-term action to preserve Medicare+Choice for beneficiaries. Specifically, the President proposes to increase payments to plans that have received minimal payment updates over the past four years, by giving them a higher update next year (6.5 percent) and tying future increases to the rate of Medicare cost growth. In addition, the budget proposes incentive payments for new plans that enter Medicare+Choice to encourage a variety of health insurance plans, such as preferred provider organizations (PPOs), to participate.
The President's longer term vision includes a reinvigorated Medicare+Choice built on his principles for strengthening Medicare and on other proposals that have been supported by both Republicans and Democrats.
Giving seniors reliable coverage choices requires a fair, effective system of competition in Medicare. As in the Federal employees' system:
Plans should be allowed to bid competitively to provide Medicare's required benefits at a lower price, and beneficiaries should keep most of the savings.
Medicare's payment system should create a level playing field in areas where private plan payments have been kept below payments to the traditional plan, and should continue to encourage private plans to participate where Medicare provides few choices.
Beneficiaries should get useful and timely comparative information on their health care options.
The savings from competition should be used to reduce Medicare costs for beneficiaries and taxpayers.
Low-income seniors should continue to receive more comprehensive support for their premiums and health care costs.
Reliable coverage options must ensure that all patients get the care they need. This includes effective protections for patients' rights, and "risk adjustment" of payments to Medicare+Choice plans to reflect the health care needs of the beneficiaries they serve, particularly the most vulnerable and those with multiple chronic health conditions.
The President's proposal will not only provide valuable coverage options for seniors today. By allowing seniors and taxpayers to save money, competition will keep Medicare's benefits secure for the Baby Boom generation.
Medicare+Choice Is the Preferred Choice for Millions of Medicare Beneficiaries - Including Lower-Income and Minority Beneficiaries
Medicare+Choice plans are private plans in Medicare that offer a more comprehensive package of Medicare benefits at a lower overall cost to seniors than the "traditional" fee-for-service Medicare plan. As a result, around 5 million seniors (around 1 in 7) choose to enroll in Medicare+Choice plans.
Dr. Kenneth Thorpe's recent report demonstrates the value of the Medicare+Choice program to low-income and minority beneficiaries who do not have access to subsidized coverage from employers or Medicaid. The key findings for these beneficiaries:
Beneficiaries with lower incomes who don't have employer-subsidized coverage or Medicaid are likely to choose Medicare+Choice. For example, in southern California, where there are nearly 900,000 Medicare+Choice enrollees, 78 percent of beneficiaries with incomes between $10,000 and $20,000 per year choose Medicare+Choice. In Philadelphia, 67 percent choose Medicare+Choice.
Nationally, 40 percent of African-Americans and 52 percent of Hispanic Americans who don't have employer-subsidized coverage or Medicaid choose to enroll in Medicare+Choice.
Medicare+Choice is More Affordable
Medicare+Choice plans are generally much less expensive coverage options than the traditional fee-for-service Medicare plan, for beneficiaries who do not have supplemental insurance from Medicaid or their former employer. To stay in the traditional plan, these beneficiaries must get costly Medicare supplemental insurance, so-called Medigap coverage, or face unlimited out-of-pocket expenses to fill in all the gaps in Medicare's benefits.
Medicare+Choice premiums continue to be more affordable than Medigap. The average premium for a beneficiary in Medicare+Choice is $32 a month for a comprehensive benefit package that usually includes some drug coverage. In contrast, Medigap premiums often exceed $100 a month for plans that just fill in some of the high deductibles and copayments in Medicare's required benefit package, and that have no drug coverage.
And Medigap premiums are going up fast. According to Weiss Ratings, the cost of Medigap policies that provide drug coverage has grown rapidly - going up 17 to 34 percent in 2000 alone. Premiums for Medigap policies that do not cover drugs at all increased 25 to 45 percent over the past three years.
In contrast, many Medicare+Choice plans provide their additional benefits for no supplemental premium at all - today, 39 percent of Medicare+Choice enrollees pay no additional premium at all.
As employers continue to cut back Medigap coverage and states limit Medicaid, Medicare+Choice plans are becoming even more important.
Dr. Thorpe's report found that, of the beneficiaries who don't have access to supplemental coverage through an employer or Medicaid, more choose Medicare+Choice (39 percent) than traditional Medicare and Medigap (38 percent) or traditional Medicare alone (24 percent).
According to Jim Beemer of Peoria, Illinois, he's saved thousands of dollars in Medigap premiums as well as copayments for his heart disease care and recovery - including advanced treatment for a heart attack and free cardiac rehabilitation.
Medicare+Choice Provides Prescription Drug Coverage
Medicare+Choice has long been the preferred choice for millions of beneficiaries because of the extra benefits available, including prescription drug coverage and drug discounts.
Currently, 72 percent of Medicare+Choice enrollees have some drug coverage in their basic Medicare+Choice plan.
An additional 15 percent of Medicare+Choice enrollees can get drug coverage and other benefits by paying a supplemental premium that is generally much more affordable than Medigap drug coverage.
In addition to providing some prescription drug coverage, these drug benefits allow seniors to benefit from lower prices on all of their prescriptions.
According to Dr. Isaac Thompson, a primary care physician in Delray Beach, Florida, "Medicare+Choice has served as a safety net for my patients and for tens of thousands of beneficiaries, so many of whom are low income and would otherwise not be able to afford the drugs they need."
When Medicare adds a prescription drug benefit, private plans will be able to use the new subsidy for drug coverage to provide a more comprehensive drug benefit than Medicare requires at a lower cost.
Medicare+Choice Provides Extra Benefits to Support Seniors with Serious and Chronic Health Conditions
Medicare+Choice plans offer additional benefits that are particularly valuable to beneficiaries with serious and chronic health conditions. Examples:
A Medicare+Choice plan in Boston instituted a comprehensive disease management program for its enrollees with diabetes. The result has been significant increases in the share of enrollees who receive preventive treatments like annual retinal eye exams and kidney tests, and better blood sugar control and cholesterol levels, all of which prevent the life-threatening complications of diabetes.
A Medicare+Choice plan in Florida instituted a comprehensive disease management program to monitor, facilitate, and coordinate care for enrollees stricken with cancer. As a result, the share of inpatient admissions for complications of cancer has declined by 10 percent.
A Medicare+Choice plan in New York instituted a case management program for patients hospitalized for mental health disorders. As a result, the share of patients who received appropriate follow-up care within 7 days of their hospital discharge doubled.
A Medicare+Choice plan in California established a successful outreach program to increase influenza vaccination rates among their elderly and chronically ill beneficiaries to reduce mortality and morbidity among these at-risk populations.
According to Fred Salazar, a senior who lives in San Antonio, Texas, his plan's "Taking Charge of Diabetes" disease management program has helped him control his diabetes and improve his health.
Medicare+Choice Provides Innovative Health Care Services
In addition to extra benefits such as prescription drugs and disease management, Medicare+Choice plans provide innovative health care services that are generally not available in the traditional Medicare plan.
Medicare+Choice plans offer important health promotion services, including immunizations, exercise programs, cancer screening, and health education. Example: a plan in Connecticut offers seminars on topics such as healthy eating, how to lower blood pressure, and pain management.
Medicare+Choice plans also use a variety of outreach efforts to connect beneficiaries with other important programs. Example: a plan in Massachusetts has a caregiver support program that helps caregivers provide effective assistance for patients with dementia, depression, and anxiety disorders.
Medicare+Choice plans are also helping to improve patient safety. Example: a plan in Oregon has a program for patients with chronic, non-healing wounds, which helps them avoid complications like leg edema and wound recurrence.
Mary Grunewald of Seattle, Washington, a retired nurse, helped her health plan develop a "consulting nurse" service that provides quick advice and assistance to beneficiaries with their health care needs, 24 hours a day and 7 days a week.
During the annual checkup covered by his plan, Joe Hotin of Milton, Massachusetts, had a worrisome spot discovered by his doctor. Joe got the necessary treatment early, before the cancerous spot became life-threatening.
Seniors are Losing the Medicare+Choice Coverage They Depend On, Because of Medicare's Unfair System of Competition and Payment
Even though Medicare+Choice is clearly the preferred choice of many beneficiaries, including those who are the most vulnerable, years of consistently inadequate payment updates have left many beneficiaries without this important option.
Over the past four years, Medicare+Choice plans have received payment increases generally no greater than 2 percent per year - far less than cost growth in health care generally and in the Medicare fee-for-service plan.
Consequently, well over 100 health plans have left Medicare, leaving over 2 million beneficiaries without their Medicare+Choice plan. Between 1998 and this year, the share of seniors with access to a Medicare+Choice plan declined from 74 percent to 60 percent. If inadequate payments continue, many more beneficiaries are in danger of losing Medicare+Choice coverage next year.
Because of inadequate payments, seniors are also losing important benefits. Example: In 1999, 5 million beneficiaries in Medicare+Choice had access to drug coverage through their basic plan; in 2002, this number is down to 3.6 million, and the drug coverage is often less comprehensive.