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Senior Citizen Politics
Bush Solution to Medicare Funding is Shifting More
Costs to High Income Seniors
Proposal to Congress responds to mandate for plan
to fund program
Feb. 16, 2008 – Reminding Congressional leaders
that the “Medicare program is on an unsustainable path,” Health and
Human Services Secretary Michael O. Leavitt, yesterday presented the
Bush Administration’s response to a mandate to solve this problem.
Shifting more of the financial burden of the drug program to higher
income Americans is the primary change suggested in the proposed
legislation.
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Medicare
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Medicare Drug Program |
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Bush proposes that the Social Security Act be
amended to extend the Medicare Part B income-related premium adjustment,
which he added to the program earlier, to the Part D drug program, with
some modifications.
Effective in January of next year, Bush would stop
the government’s subsidy of prescription drug coverage and have
wealthier senior citizens pick up more of the cost.
Specifically, the premium will be higher for
prescription drug coverage for single beneficiaries with incomes greater
than $82,000 and married beneficiaries with incomes greater than
$164,000.
And, even worse for those with lower incomes, the
income thresholds will be fixed and not be adjusted for inflation, which
means increasing numbers of seniors will reach these levels with
continued inflation.
These higher premiums would affect about 4.5
percent of current beneficiaries in 2009, according to the Associated
Press.
The AP’s Kevin Freking also reports, “Democrats
also have offered ways to slow Medicare spending. But their preference
is to trim payments to private insurers serving the elderly through a
program called Medicare Advantage. The administration has opposed any
substantial cuts to the insurers, so the two sides are basically at a
standstill over how to slow the program's growth.” (See link below
story.)
Sec. Leavitt said the financial problems of the
program are “driven by two principal factors: projected growth in its
per-capita costs, and increases in the beneficiary population as a
result of population aging.”
He added, “Excess cost growth will not be brought
under control until there is comprehensive reform changing Medicare's
underlying structure.”
Another part of the proposed legislation addresses
the “value-based health care” promoted by Leavitt and the Centers of
Medicare and Medicaid Services since 2006.
Title I of our proposal provides the Secretary of
Health and Human Services the authority and responsibility to introduce
principles of value-based health care in the Medicare program,
consistent with the President's Executive Order 13410 of August 22,
2006. This title directs the Secretary to develop and implement
He said these proposals reduce Medicare spending by
increasing “provider efficiency and encouraging beneficiaries to be wise
health-care consumers.”
The specific elements included in this part of the
legislation are:
● Improved health information technology,
including electronic medical records;
● Transparency of pricing information;
● Transparency of quality information; and
● Incentives for providers to deliver, and
beneficiaries to choose, high-quality, low-cost health care.
Leavitt also said this funding problem for Medicare
is “a small piece of a much larger problem.”
“That problem is an unsustainable design in which
government controls too many aspects of health care. In traditional
fee-for-service Medicare, the government decides what treatments are
provided and what the price should be. Until this system is modernized
to offer greater choice and price accountability to individual
consumers, the program's finances will remain on a path to insolvency,”
he said.
The mandate that the President address the funding
of Medicare was stated by Congress in the Medicare Prescription Drug,
Improvement, and Modernization Act. This Medicare funding warning is
triggered whenever the Trustees determine, for two consecutive years,
that more than 45 percent of total Medicare spending will be derived
from general revenues within the current or following six years. In
April 2007, the Trustees issued the first such warning.
“While Congress is required to consider the
legislation, Democrats on Capitol Hill pronounced it "dead on arrival,"
according to the Washington Post.
“Several said a better way to trim Medicare costs
would be to reduce payments to the private Medicare plans administered
by insurance companies that are more costly than the standard benefit --
an idea the administration opposes,” according to the Post. (See link
below news report)
Representative Pete Stark of California, chairman
of the House Ways and Means Subcommittee on Health, told the New York
Times “it was hypocritical of Mr. Bush to try to increase some premiums
while not proposing any cuts in ‘overpayments to private insurance
companies’ that manage care for nearly nine million beneficiaries.” (See
link below news report)
Leavitt also urged the passage of the Bush budget
proposal. "In
the meantime, we urge the Congress to pass the Medicare savings
submitted with the President's fiscal year 2009 Budget. Enactment of
these savings would improve Medicare's long-term outlook – reducing the
75-year unfunded obligation by nearly one-third," he said.
Key Links to Administration Materials:
Medicare Funding Warning Response Act of 2008
>>
Letter of Transmittal>>
>>
Summary (PDF - 50KB)>>
>>
Legislation (PDF - 179KB)>>
Other News Reports:
>>
Associated Press
>>
Washington Post
>>
New York Times
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