Authored by Vicki Gottlich, Senior Policy Attorney, Center for Medicare Advocacy
Medicare is an American success story. When the program was enacted in 1965, half of all older people were uninsured. Now virtually all older people have health insurance through Medicare. Medicare also helped reduce the percentage of older people living at or below the poverty rate, from 25% in 1965 to 16% in 2008.
And Medicare provides protection for more than just older people and people with disabilities who are eligible for the program. Family members have peace of mind knowing their older relatives or relatives with disabilities have health insurance to pay for needed medical care – and from knowing that they won’t have to choose between paying for a parent or disabled relative’s health needs and a child’s college education.
Like all domestic programs, Medicare is under attack as costing the federal government too much money. In fact, the budget recently passed by the House of Representatives pretends to save money by turning Medicare into a voucher program. Instead of receiving a defined and guaranteed set of health benefits, people eligible for Medicare would get a fixed dollar amount to go buy whatever health insurance they could afford with the voucher in the private market.
Ironically, Congress created Medicare because these same private insurance companies did not want to sell insurance to older people and people with disabilities, whose age and chronic conditions made them more costly to insure. There is no guarantee that in a voucher program private insurance companies would sell health insurance policies to Medicare beneficiaries, or that the vouchers would cover the cost of the insurance policies, or that the policies would cover the full range of benefits currently provided under Medicare. And the Congressional Budget Office has already stated that, under the voucher program, Medicare beneficiaries would pay twice as much for their health care as they do under Medicare today.
Ironically, too, private insurance companies have not done a good job in reducing the costs of Medicare. In the 1990’s, and again in 2003, Congress expanded the role that private insurance companies play in Medicare on the theory that they would save money for the program. Instead, the private HMOs and other Medicare Advantage plans ended up costing Medicare on average 13% more than Medicare would have paid if the same person had remained in the traditional Medicare program. These overpayments increased the cost of Medicare Part B premiums and depleted the Medicare trust fund more quickly. To protect Medicare, health care reform legislation enacted last year changed the way private health plans are paid to reduce overpayments and to reward quality.
Medicare is also threatened by proposals to impose global spending caps on all domestic programs. Such caps would require an across-the-board cut for all domestic spending by a set percentage amount. The cuts to Medicare would be so steep that the only way to continue the program would be to change eligibility and benefits – and perhaps to turn Medicare into a voucher program as House Republicans have already voted to do.
To all those who want to cut Medicare because of the current fiscal difficulties, I say, “Medicare already gave at the office.” Health care reform legislation enacted in 2010 included changes to the program designed to reduce Medicare expenditures by promoting more effective delivery systems that will improve quality and reduce costs; by eliminating fraud, waste, and abuse; and by revising how health care providers are paid. These reforms should be allowed to take effect before policymakers look to take more out of Medicare.
And, while the cost of Medicare to the federal government raises concerns for some, advocates for older people and people with disabilities worry about the cost of Medicare to the beneficiaries it serves. Medicare beneficiaries pay, on average, twice as much out-of-pocket for their health care than others, and the share of their income that they pay in out-of-pocket costs continues to rise. In an ideal world, we would be advocating to reduce the burdens of Medicare by adding catastrophic coverage in the form of a cap on out-of-pocket expenses. But, unfortunately, we don’t live in an ideal world where all policy makers understand the benefit of a universal health insurance program for older people and people with disabilities. Just the opposite - some policy makers want to increase costs to beneficiaries by turning Medicare into a voucher program or by asking beneficiaries to pay more in premiums or for Medicare-covered services.
In sum, Medicare is an American success story. For 45 years it has offered health coverage to vulnerable populations and helped to reduce poverty. It would be fiscally irresponsible to destroy Medicare in the guise of deficit reduction, and to move this country back to the mid-Twentieth Century, when older people and people with disabilities could not obtain health insurance.