GPLI
Professor John Sardelis
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A SUMMARY OF THE 2013 ANNUAL REPORTS
• ‘Neither Medicare nor Social Security can sustain projected long-run programs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers.’
• http://www.ssa.gov/oact/trsum/
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WHY? • Both programs will experience cost growth
substantially in excess of GDP growth through the mid-2030s due to rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment.
• In the case of Medicare, to growth in expenditures per beneficiary exceeding growth in per capita GDP.
• http://www.ssa.gov/oact/trsum/
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Part A
Hospital Insurance
Part B Medical
Insurance
Part C Medicare
Advantage (like HMOs and PPOs)
Part D Medicare
Prescription Drug
Coverage
05/05/2011 Getting Started 4
The Four Parts of Medicare
The ABCD’s of Medicare
• Part A- Hospitals, Skilled Nursing, Hospice, Home Health Services financed by payroll tax
• Part B- Out-patient, doctor visits- financed by premiums but mostly general revenues
• Part C- Medicare Advantage- A whole other story.
• Part D- Prescription Drugs- financed by premiums but mostly general revenues
• Supplemental policies later on.
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Where and When?
• Part A- The Trustees project that the Medicare Hospital Insurance (HI) Trust Fund’s projected date of is 2026.
• http://www.ssa.gov/oact/trsum/
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Where and When?
• Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, will remain adequately financed into the indefinite future because current law automatically provides financing through general revenues each year to meet the next year’s expected costs.
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Where and When?
• Part D of SMI, which provides access to prescription drug coverage, will remain adequately financed into the indefinite future because current law automatically provides financing through general revenues each year to meet the next year’s expected costs.
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Medicare Doesn’t Cover Everything
• Part B premium Most people pay $104.90 each month. • Part B deductible $147 per year
• Part A premium most people don't pay a monthly
premium. A hospital inpatient deductible $1,216 deductible for each benefit period
• Days 1-60: $0 coinsurance for each benefit period • Days 61-90: $304 coinsurance per day of each benefit
period • Days 91 and beyond: $608 coinsurance per each
"lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime)
• Beyond lifetime reserve days: all costs
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Supplemental Policies or Medigap
• The 10 plans are designed in a letter system ranging from Plan A to Plan N. The ten policies that are specifically offered are: Plan A, Plan B,Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M, and Plan N.
• Plan F, G, & N are by far the three most popular options among senior citizens today. Plan F alone has about 46% of the total supplement plan enrollment at this time.
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05/05/2011 Getting Started 11
Medigap Benefits Medigap Plans
A B C D F* G K** L** M N
Part A Coinsurance
Up to 365 Days
Part B Coinsurance
Blood
Hospice Care Coinsurance
Skilled Nursing Coinsurance 50% 75%
Part A Deductible 50% 75% 50%
Part B Deductible
Part B Excess Charges
Foreign Travel Emergency (Up to Plan Limits)
*Plan F has a high-deductible option ** Plans K and L have out-of-pocket limits of $4,640 and $2,320 respectively
Part C- Medicare Advantage • Medicare Advantage Plans must cover all of the
services that Original Medicare covers except hospice care. Original Medicare covers hospice care even if you're in a Medicare Advantage Plan.
• Medicare Advantage Plans may offer extra coverage, like vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). In addition to your Part B premium, you usually pay a monthly premium for the Medicare Advantage Plan.
• Most people pay the Part B premium of $104.90 each month.
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The Problem
Chart C—Medicare Cost and Non-Interest Income by Source as a Percentage of GDP
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Life Expectancies- Good News
Calendar Year
At Birth- Male
At Birth- Female
Age 65- Male
At 65-Female
1940 61.4 65.7 11.9 13.4
1965 66.8 73.8 12.9 16.3
1980 69.9 77.5 14.0 18.4
2000 74.0 79.4 15.9 19.0
2010 75.9 80.8 17.6 20.2
2012 76.3 81.1 17.9 20.4
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The Better Model?
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Potential Solutions
• Delay entry into Medicare to coincide with Social Security normal retirement age
• Increase Part B premiums
• Increase Part A payroll tax
• Reduce benefits
• Ban Supplemental plans
• Reduce payment to Advantage plans
• Voucher system
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Affordable Care Act
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ACA and Medicare
Restructure payments to Medicare Advantage (MA) plans by setting payments to different percentages of Medicare fee-for-service (FFS) rates.
Reduce annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers.
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ACA and Medicare
Freeze the threshold for income-related Medicare Part B premiums for 2011 through 2019, and reduce the Medicare Part D premium subsidy for those with incomes above $85,000/individual and $170,000/ couple. (Effective January 1, 2011).
Establish an Independent Payment Advisory Board comprised of 15 members to submit legislative
proposals containing recommendations to reduce the per capita rate of growth in Medicare spending if spending exceeds a target growth rate
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ACA and Medicare
• Allow providers organized as accountable care organizations (ACOs) that voluntarily meet quality thresholds to share in the cost savings they achieve for the Medicare program. To qualify as an ACO, organizations must agree to be accountable for the overall care of their Medicare beneficiaries.
(Shared savings program established January 1, 2012)
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ACA and Medicare
Reduce Medicare payments that would otherwise be made to hospitals by specified percentages to account for excess (preventable) hospital readmissions. (Effective October 1, 2012)
Reduce Medicare payments to certain hospitals for hospital-acquired conditions by 1%. (Effective fiscal year 2015)
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Helpful Websites
http://www.ssa.gov/oact/anypia/index.html – Estimate Your Benefit
– ♦ Life expectancy calculator
http://www.medicare.gov/
http://www.medicare.gov/hospitalcompare/search.html
https://www.medicare.gov/find-a-plan/questions/home.aspx
http://www.medicarerights.org/
www.kff.org
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Questions
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