Tag Archives: medicare

Medicare Cost Projections Are Down Stunningly in 2015 Report

by AbdulTihtsobwxb Posted on July 22, 2015

Mother Jones

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As long as we’re on the subject of annual trustees reports, the 2015 Medicare report was released today too. And if the Social Security report was slightly good news, the Medicare report is, once again, spectacularly good news. Here’s the 75-year spending projection from ten years ago vs. today:

Ten years ago, Medicare was a runaway freight train. Spending was projected to increase indefinitely, rising to 13 percent of GDP by 2080. This year, spending is projected to slow down around 2040, and reaches only 6 percent of GDP by 2090.

Six percent! That’s half what we thought a mere decade ago. If that isn’t spectacular, I don’t know what is.

The 2005 projection was based on past performance, which showed costs rising ceaselessly every year. That turned out to be wrong. This year’s projection is also based on past performance, which shows that costs have flattened substantially since 2008. Will it turn out to be wrong too? Come back in 2025 and I’ll tell you.

In any case, this illustrates the big difference between cost projections for Social Security and Medicare. Social Security is basically just arithmetic. We know how many people are going to retire, we know how long they’re going to live, and we know how much we’re going to pay them. Do the math and you know how much the program will cost us. It can change a bit over time, as projections of things like GDP growth or immigration rates change, but that happens at the speed of molasses. There are very few surprises with Social Security.

Medicare has all that, but it also has one more thing: the actual cost of medical care. And that’s little more than an educated guess when you start projecting more than a decade ahead. Will costs skyrocket as expensive new therapies multiply? Or will costs plummet after someone invents self-sustaining nanobots that get injected at birth and keep us healthy forever at virtually no cost? I don’t know. No one knows.

Beyond that, it’s always foolish to assume that costs will rise forever just because they have in the past. Medicare is a political program, and at some point the public will decide that it’s not willing to fund it at higher levels. It’s not as if it’s on autopilot, after all. We live in a democracy, and after lots of yelling and fighting, we’ll eventually do something about rising medical costs if we simply don’t think the additional spending is worth it.

Still, the news for now is pretty good. I happen to think the slowdown in medical costs is real, and will continue for some time (though not at the extremely low rates of the past few years). For more on this, see here, here, and here. Others think it’s a temporary blip due to the recession, and big increases will return in a few years. We’ll see.

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Medicare Cost Projections Are Down Stunningly in 2015 Report

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Sen. Bob Menendez Was Just Charged With Bribery. Read the Indictment.

by CaridadLuse Posted on April 1, 2015

Mother Jones

On Wednesday, federal prosecutors indicted Sen. Robert Menendez (D-N.J.) on charges of bribery, conspiracy to commit bribery, honest services fraud, and making false statements. Salomon Melgen, a top Menendez benefactor and Florida opthalmologist, was named as a co-conspirator in the 22-count indictment. The feds allege that Melgen provided Menendez with private airfare and free accommodations at the donor’s luxury resort in the Dominican Republic. In exchange, Menendez helped “influence the immigration visa proceedings of Melgen’s foreign girlfriends” and pressured the State Department, Customs and Border Patrol, and Centers for Medicare and Medicaid Services to protect the doctor’s business interests.

Menendez will hold a press conference in Newark on Wednesday night to address the allegations.

You can read the full indictment here:

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Sen. Bob Menendez Was Just Charged With Bribery. Read the Indictment.

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Gouging the Gougeable: Yet Another Triumph of the American Health Care System

by JillianLowin Posted on December 16, 2014

Mother Jones

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Len Charlap has had a couple of outpatient echocardiograms recently. Elisabeth Rosenthal tallies up the damage:

The five hospitals within a 15-mile radius of Mr. Charlap’s home here charge an average of about $5,200 for an echocardiogram, according to an analysis of Medicare’s database. The seven teaching hospitals in Boston, affiliated with Harvard, Tufts and Boston University, charge an average of about $1,300 for the same test. There are even wide variations within cities: In Philadelphia, prices range from $700 to $12,000.

….In other countries, regulators set what are deemed fair charges, which include built-in profit. In Belgium, the allowable charge for an echocardiogram is $80, and in Germany, it is $115. In Japan, the price ranges from $50 for an older version to $88 for the newest, Dr. Ikegami said.

Because Mr. Charlap, 76, is on Medicare, which is aggressive in setting rates, he paid only about $80 toward the approximately $500 fee Medicare allows. But many private insurers continue to reimburse generously for echocardiograms billed at thousands of dollars, said Dr. Seth I. Stein, a New York physician who researches data on radiology. Hospitals pursue patients who are uninsured or underinsured for those payments, he added.

This is now such a common story that it’s hard to work up the outrage it deserve. Is this practice corrupt? Merely venal? Or just crazy? I don’t even know anymore. What I do know is that if an outpatient echo costs $80 in Belgium and $500 via Medicare, there’s no conceivable justification for a $5,200 charge. It bears no relationship to the actual cost of the test, and is designed primarily to gouge the occasional uninsured patient who has no choice in the matter along with the (inexplicable) occasional insurance company willing to pony up even for obviously outrageous charges. One of the hospitals that performed an echocardiogram on Charlap didn’t even bother denying that this is what they’re doing:

In a statement, the hospital in Princeton that performed Mr. Charlap’s first, more expensive echocardiogram noted that “the vast majority of customers” paid much less than the listed prices. It added that its pricing reflected the need to offset losses because many programs, including Medicare, reimburse less than the cost of delivering services.

I doubt that Medicare is reimbursing less than the cost of performing an echocardiogram, but you can see what’s going on here. The “vast majority” of patients do indeed pay far less than list price. So why have such a high list price? In order to gouge the tiny minority who are gougeable.

It’s lovely the way American medicine works, isn’t it?

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Gouging the Gougeable: Yet Another Triumph of the American Health Care System

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Chart of the Day: The Great Medicare Spending Mystery

by DillonMairinger Posted on July 28, 2014

Mother Jones

Here it is: the biggest question mark in the entire federal budget. The 2014 Medicare Trustees Report is out today, and it shows, rather remarkably, that the cost per person of Medicare in 2013 was absolutely flat compared to 2012. Even more remarkably, they expect the combined increase over the next two years to be zero as well. In other words, Medicare costs are growing considerably slower than the inflation rate.

And now for the trillion-dollar question: How long will this slowdown last? The historical data in the report, along with future projections, suggests that between 2006 (when the prescription drug benefit began) and 2018, Medicare costs will have grown, on average, at exactly the rate of inflation. In real terms, that means zero growth over a 12-year period. But Medicare’s actuaries don’t expect that to last. Starting in 2017 they expect high growth rates again, leading to Medicare spending outpacing inflation.

This is by far the biggest unknown going forward in the federal budget: Will Medicare spending continue to increase slowly, or will it revert to the higher growth rates of the early aughts? You can make a pretty good case either way. But no matter what anyone tells you—including me—don’t be fooled. The real answer is that We. Just. Don’t. Know.

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Chart of the Day: The Great Medicare Spending Mystery

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Mitch McConnell Runs Away From Paul Ryan

by JoleneTKWwi Posted on July 10, 2014

Mother Jones

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Three years ago, Senate Minority Leader Mitch McConnell (R-Ky.) was a huge cheerleader for the controversial budget plan proposed by Rep. Paul Ryan (R-Wis.) that would have partially privatized Medicare and slashed social spending programs. Now McConnell, who’s in a tough reelection fight, is backing away from his support and trying to suggest he was not an outright champion of this draconian budget measure.

In an ad released this week, McConnell’s Democratic opponent, Alison Lundergan Grimes, attacks the GOP senator for backing Ryan’s 2011 budget proposal, which would have essentially ended Medicare as a guaranteed federal program, slashed Medicaid, and repealed Obamacare. In the ad, an elderly Kentucky man named Don Disney asks why McConnell voted to raise his medical costs by thousands of dollars a year—referring to a provision in the Ryan budget that, according to the Congressional Budget Office, would hike out-of-pocket costs for Medicare beneficiaries by $6,000.

McConnell’s campaign fired back, pointing out that the senator did not vote for the proposal itself, but rather only voted in favor of bringing the measure to the Senate floor for a vote. “There is no way to speculate” what McConnell would have done regarding a final vote on the Ryan budget, his campaign insists.

But that’s cutting the legislative sausage rather thin. The vote on whether to bring the Ryan plan to the Senate floor for an up-or-down vote was the key vote—and McConnell voted in favor of the proposal. It was only because the majority Democrats blocked the bill from reaching a final vote that McConnell did not have a chance to officially vote for passage of the budget proposal. But McConnell himself bragged about having “voted” for the Ryan budget. And he repeatedly praised the Ryan plan and expressed support for the measure.

In a speech on the Senate floor in April 2011, McConnell called Ryan’s budget a “serious and detailed plan for getting our nation’s fiscal house in order.” He maintained that it would “strengthen the social safety net.”

That month, he also called Ryan’s budget “a serious, good-faith effort to do something good and necessary for the future of our nation and…for the good of the nation,” according to Congressional Quarterly.

In May 2011, McConnell, appearing on Fox News, vowed to vote for Ryan’s proposal. He said Ryan’s plan was “a very sensible way to go to try to save Medicare.”

Even though the Senate never held a final vote on the Ryan budget, McConnell’s backing for the plan—which included large tax cuts for the wealthy—was full-throated and unambiguous. “He’s probably relieved that it never came to a final vote,” says Ross Baker, a professor of political science at Rutgers University.

In responding to the Grimes ad, McConnell’s campaign also took issue with the charge that he voted to raise medical costs for Kentucky seniors by $6,000 each. The campaign claimed that this figure is out of date because Ryan’s subsequent budget plans—which also were not passed by Congress—would raise Medicare beneficiaries’ out-of-pocket costs by much less. Yet Paul Van De Water, a senior fellow at the nonprofit Center on Budget and Policy Priorities, says that the Grimes campaign “accurately” cited what the 2011 plan would have done.

Ryan’s 2011 budget would have slashed Medicare by $389 billion by raising the eligibility age and partly privatizing the program, dramatically increasing costs for new retirees. Under the same plan, funding for Medicaid would have been slashed by 35 percent over 10 years. The proposal additionally would have ended Obamacare, preventing millions from obtaining affordable health insurance. At the time, Senate majority leader Harry Reid warned the Ryan budget “would be one of the worst things that could happen in this country if it went into effect.”

As the McConnell-Grimes race—one of the most closely watched Senate contests of the year—heats up, Grimes is attempting to tar McConnell with the extreme budget plan that he once embraced. McConnell, the veteran Capitol Hill wheeler-and-dealer, is trying to wiggle out of the trap through a legislative loophole—creating a false impression and distancing himself from his party’s policymaker-in-chief.

His campaign did not respond to a request for comment.

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Mitch McConnell Runs Away From Paul Ryan

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Medicare Just Keeps Producing Great Budget News

by KatriceEvu Posted on July 9, 2014

Mother Jones

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Medicare has been a bastion of good news lately. Every year, the CBO reduces its baseline estimate of Medicare costs, which have dropped by more than $1,000 since 2010. So what’s going on? Tricia Neuman and Juliette Cubanski of the Kaiser Family Foundation round up the evidence:

It is clear that the Medicare savings provisions in the ACA, such as reductions in provider payment updates and Medicare Advantage payments, have played a major role….In addition, the Budget Control Act of 2011 also exerted downward pressure on Medicare spending through sequestration that reduced payments to providers and plans by 2 percent beginning in 2013. And yet even after incorporating these scheduled payment reductions in the baseline, CBO has continued to lower its projections of Medicare spending.

So what else might be going on here? In addition to scheduled reductions in Medicare’s more formulaic payment rates, providers may be tightening their belts and looking to deliver care more efficiently in response to financial incentives included in the ACA, and it is possible that these changes are having a bigger effect than expected. For example, CMS recently reported that hospital readmission rates dropped by 130,000 between January 2012 and August 2013. It is also possible that hospitals and other providers are using data and other analytic tools more successfully to track utilization and spending and to reduce excess costs. Another more straightforward factor is that several expensive and popular brand-name drugs have gone off patent in recent years, which has helped to keep Medicare drug spending in check.

No one knows for sure if these reductions are permanent, or whether high growth rates will reappear in the future. But even if the low growth rates of the past few years can’t be sustained, I suspect that Medicare growth will continue to be lower than anyone expected. There are two reasons for this. First, the growth rate of medical costs in general has been declining steadily for the past 30 years, and this has now been going on long enough that it’s highly unlikely to be a statistical blip. After a surge in the 80s and 90s, we really are returning to the growth rates that were common earlier in the century, and obviously this will affect Medicare.

Second, Obamacare really will have an impact. Not everything in it will work, but it includes a lot of different cost-cutting measures and some of them will turn out to be pretty effective. And who knows? If Republicans ever stop pouting over Obamacare, we might even be able to experiment with different kinds of cost reductions.

There’s a fair amount of year-to-year variability in health care inflation, and we should expect to have some years of high growth. But I’ll bet the average over the next decade is somewhere around 2 percent above the general inflation rate. That’s not too bad.

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Medicare Just Keeps Producing Great Budget News

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The Annual Medicare Doc Fix: Not as Bad as You Think!

by ElliottClaudio Posted on April 28, 2014

Mother Jones

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Here’s a bit of contrarianism for you today: Austin Frakt says that the much-maligned Medicare “doc fix” actually works pretty well. This is Congress’s annual charade in which it overrides the formula for Medicare reimbursements to doctors, resulting in doctors getting paid more—but without ever changing the formula itself. (Why? Because changing the formula would cost money, and they’d have to figure out how to pay for it. Better to just kick the can down the road each year.)

So from one point of view, the formula is just a joke. However:

From another point of view, the formula — as flawed as it is — has helped keep Medicare spending lower than it might otherwise have been. Instead of cutting physician payments by the large amount the S.G.R. demands, Congress has increased payment rates, but typically by only tiny amounts — at an annual rate of just 0.7 percent. That pace does not keep up with the typical cost of care.

The gap can be seen in the chart below. The bottom line illustrates how Congress has permitted Medicare physician payments to grow. The middle line shows an index of medical spending — spending at a typical physician’s practice over time — that is a proxy for the change in price for a typical, or average, medical treatment.

….The relatively gentle increases in Medicare payment rates makes clear that the formula is not the problem. I think that the formula has actually helped Congress be more fiscally responsible than it otherwise might have been. To physicians who fear a double-digit decrease in payment rates called for by the formula, a 0.5 percent or a 1.5 percent increase that Congress passes looks like a great deal.

So there you go. Two cheers for the Sustainable Growth Formula!

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The Annual Medicare Doc Fix: Not as Bad as You Think!

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Quote of the Day: Will Obamacare Deliver More Votes Than Medicare?

by MiquelCuriel Posted on April 21, 2014

Mother Jones

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From Jonathan Bernstein, questioning whether Obamacare will ever be a vote winner for Democrats:

After Medicare passed in 1965, voters “rewarded” Democrats for Medicare with big midterm losses in 1966 and then by putting Republicans in the White House in five of the next six presidential elections.

Actually, that’s….true, isn’t it? Even granting that there was a lot of other stuff going on in 1966, let’s hope that history doesn’t repeat itself.

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Quote of the Day: Will Obamacare Deliver More Votes Than Medicare?

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Hostage Taking Is Back!

by AntonVaughan Posted on March 14, 2014

Mother Jones

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Last month I passed along the news that, in a break with recent tradition, Congress might actually do something useful and pass a permanent fix to Medicare’s Sustainable Growth Rate, a well-meaning policy that turned out not to be sustainable at all when its formula started calling for actual cuts in payments to doctors. Every year Congress addresses this by passing a one-year “doc fix,” but recently a bipartisan effort finally came together to pass a permanent modification. Hooray!

But now it turns out that congressional Republicans enjoy the tradition of dysfunctional government too much to give it up. Sahil Kapur reports that hostage-taking is back:

House Republicans expect to vote this Friday on legislation that would risk steep, destabilizing Medicare cuts at the end of the month unless Democrats agree to a five-year delay of Obamacare’s individual mandate.

It mirrors some of the brinkmanship in the government shutdown fight last fall in that the GOP is using a must-pass bill as a vehicle to chop the Affordable Care Act. Democratic leaders have repeatedly rejected proposals to tinker with the mandate to buy insurance and have warned Republicans not to tie a physician payment fix to their partisan quest to unravel Obamacare.

Insurance companies oppose this. Doctors oppose this. The CBO says it would be a disaster. It obviously has no chance of passing. But it looks like Republicans are going right up to the brink once again. I guess that once you’ve tasted the thrill of threatening to shoot a hostage, nothing else quite compares.

Besides, there’s a midterm election coming up. Have I mentioned that before?

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Hostage Taking Is Back!

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Santa Claus Points the Way to Our Robot-Filled Future

by N0bodyh56 Posted on December 24, 2013

Mother Jones

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Dean Baker writes today that the Washington Post should be less worried. Their writers seem to think that eventually robots will take away all our jobs, but their editorial page is worried about bankrupting the country via spending on Social Security and Medicare. But you really can’t have both. If robots are beavering away producing everything we could possibly desire, then national bankruptcy is hardly a worry. Except, of course, for this:

There can of course be issues of distribution. If the one percent are able to write laws that allow them to claim everything the robots produce then they can make most of us very poor. But this is still a story of society of plenty. We can have all the food, shelter, health care, clean energy, etc. that we need; the robots can do it for us.

Yep. This is the issue. For all practical purposes, you can think of the elves in Santa’s workshop as a bunch of robots. As near as I can tell, they work for free, they’re insanely productive, and they produce as much stuff as Santa wants them to. So how is all this bounty distributed? Santa is smart enough to have figured out that capitalism won’t really work in a situation like this, so he’s adopted what’s basically a centrally-planned Marxist system: he decides who’s been naughty and who’s been nice, and then distributes gifts accordingly.

That might not quite work for our robot-filled future, but something like it will. Distribution, as John Stuart Mill pointed out more than a century ago, is really the most important question in economics. In the future, it will only get even more important.

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Santa Claus Points the Way to Our Robot-Filled Future

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