Health Policy Expert – Harvard Gazette Dims Biden’s Hopes to Strengthen Medicare

President Biden’s new budget, released last week, aims to strengthen a key component of Medicare by raising taxes on those making more than $400,000 and cutting prescription drug costs. The government-run health insurance program for more than 65 million elderly and disabled Americans is headed for a crisis in 2028, when one of its four parts, Part A, the trust fund that covers hospital visits, will soon begin to expire. Money. Biden’s proposal to eliminate the deficit is expected to face stiff opposition from congressional Republicans. John McDonough, a health care policy expert and professor of public health practice at the Harvard T.H. Chan School of Public Health, spoke about the hope that the crisis could be averted.

Newspaper: How urgent is the Medicare funding crisis?

McDong: First, Medicare funding is not a crisis; Medicare Part A is a funding crisis. Part A is Medicare’s hospital program, by and large. And the crisis is by design. The real architect of Medicare — in the mid-1960s — was Congressman Wilbur Mills from Arkansas, then chairman of the House Ways and Means Committee, who was not a supporter of Medicare. But when 1965 came and Lyndon Johnson had supermajors in the House and Senate and all the Democrats wanted to create a health care insurance program for the elderly, he had to go with the flow or be washed away. But he knew that the resulting program would be inherently unstable and financially at risk because the pressure on the development of medical care was constant. So, they created this structure where Congress is forced to periodically go back and reassess the finances to manage future growth. This comes as no surprise to those familiar with the program’s history. This is one of its design features.

Newspaper: And did they do that by building a financial model that inherently requires care and maintenance rather than congressional reauthorization?

McDong: It does not require re-authorization. Part A is covered by that Medicare payroll tax, on your paycheck. Part B—Physician Services—is covered by registered premiums and federal payments. Therefore, each class – A, B, C, D – has its own finance. When we talk about Medicare being “broken,” Medicare cannot be broken, because it is not a corporation in that sense. But it could start running out of money, in which case, the federal government won’t be able to reimburse 100 percent of what it has to pay hospitals and other Class A units. In Part A, payments for services legally provided by hospitals and other parties create a deficit.

Newspaper: So the crisis, for example, mainly concerns the part of Medicare that pays for hospital services. Not Part B, which is a physician service. What are parts C and D?

McDong: Section D Created in 2003, it is an outpatient prescription drug program. It is mostly financed by federal loans and written premiums. Part C is more commonly known as Medicare Advantage. Parts A and B are known as traditional Medicare and are what most people typically combine. If you enroll in A and B, when you go to a hospital or doctor, the hospital or doctor will bill the federal government and a check will be returned. In parts C and D, you don’t enroll in the federal program, you enroll with a private insurance company and the company provides all your services and you get a single lump sum annual payment from the federal government – how the risk is adjusted, how old you are and how sick you are. That program was created because private insurers, mostly HMOs — health maintenance organizations — said, “We can provide better care at a lower cost.” In some ways, they provide better quality, and in other ways they don’t. And it’s always more expensive than traditional Medicare. What’s happening in Medicare right now is that for the first time this year, more people will be enrolled in Part C instead of traditional Medicare Part A and B. It’s like a dog’s tail, but this year that tail is getting bigger. rather than the dog itself. It is causing all kinds of inconvenience and confusion as the funds feeding Class C are stolen from Class A and B.

Newspaper: What is the consumer attraction for class C? Is it to keep private health insurance instead of enrolling in a government program?

McDong: It’s a lot, but the bottom line is that most people can enroll in Medicare Advantage for much lower premiums than A and B. Parts A and B have a lot of loopholes. So almost everyone above the poverty line buys supplemental coverage called Medigap to pay for things traditional Medicare doesn’t cover. But most people—about half—enroll in Medicare Advantage and don’t have to pay premiums. It is very attractive. It also offers limited – they don’t use that word – dental, vision and hearing benefits. But the emphasis is on “limited” because it’s much less than people think. And there are armies of health insurance brokers who work for Medicare Advantage carriers and make money by enrolling people in their Medicare Advantage plans.

Newspaper: What do you think of President Biden’s proposal to raise taxes on wealthy individuals and cut prescription drug costs? Sounds straightforward, but is it a real proposition or politics?

McDong: It is as true as it can be. There is no way a Republican majority in this Congress can agree to it in two years of Congress where Republicans have controlled the House. The cardinal commandment of being a Republican is: “Don’t raise taxes on anyone, anytime, anywhere, in any way,” and especially taxes on the rich and corporations. That’s what Biden proposes to do, and what Democrats don’t care about. So if the Democrats hold the White House and the Senate and take back the House in 2024, then something like this could pass in the next Congress as part of a reconciliation bill, which would only require 51 votes. Senate and House Majority. That would work, and Democrats could take credit for saving Medicare from bankruptcy until 2050.

Newspaper: This is part of the president’s proposed budget, but is this issue too hot for Republicans who control the House? Is this just a can that is being kicked in the road?

McDong: Yes. Because the trouble is, Democrats don’t care about raising taxes, especially on something like Medicare, and they don’t want to cut benefits. And Republicans are in a box because they have officially agreed to no cuts and, philosophically, refuse to support higher taxes. I look forward to any plan you can put forward, because there are only two ways forward: more taxes and/or more cuts.

Newspaper: Take the politics out of it and is there a better solution from your point of view?

McDong: In the year In 2010, when the ACA passed, private plans in Medicare Advantage cost $1.20 for every dollar spent on traditional Medicare. Today, it would be $1.04 or $1.05 for every dollar spent on traditional Medicare. But 4 or 5 cents, because the program has grown so big in Medicare, is now a significant amount of money. So one easy way to roll back Medicare benefits is to bring them back in line with traditional Medicare. This results in significant savings and increases the Part A solution because Medicare Part C gets most of its money from A. Therefore, Part C – the Medicare benefit – must be part of this solution in one way or another. The insurers are making an extraordinary amount of money from this program.

Newspaper: When you say that the money in Part C comes from Part A, is it because patients in Part C enroll in Part A, or is it more direct marketing?

McDong: Let’s say I’m in a Medicare Advantage plan, and I get services at Beth Israel Deacon Medical Center. The insurance company will bill Medicare Part A for that service.

Newspaper: So Part A is paying $1.04 for every dollar they pay directly to a Part A enrollee, and can Congress decide that we pay Part C the same amount, dollar for dollar, as Part A?

McDong: It’s more complicated than that. The bottom line is that they are all interconnected. If Democrats take control of the House, Senate, and White House in 2025, I foresee them passing legislation that does a lot of things, including extending the life of the Class A trust fund and increasing equity in Medicare benefits. and traditional Medicare.

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