Entitled to Know

Congress once again did the right thing and cast a vote for seniors in Medicare by setting aside the Bush administration’s flawed Medicare trigger proposal (required in privatization legislation passed in 2003) and the mandatory cuts it requires. Chairman Pete Stark says the trigger was passed solely “to do a hatchet-job on Medicare”. He’s so right.

The 45 percent threshold at which the “trigger” is set is a completely arbitrary limit included in the Medicare Modernization Act. There has never been a public debate on whether it is appropriate to establish a cap on the federal revenue contribution to the Medicare program at any level, nor has any policy rationale been identified for selecting 45 percent as that federal contribution limit. The fact that more than 45 percent of Medicare financing may come from general revenues poses no more of a problem in itself than the fact that 100 percent of the financing for defense, veterans’ benefits, education or most other federal programs comes from general revenues. The problem facing Medicare is the cost of health care, not how the cost is allocated between revenue sources.

Here’s reaction from our President Barbara Kennelly, after last night’s House vote suspending consideration of the Medicare trigger:

"The National Committee applauds Congress for postponing cuts which would have hurt millions of seniors who depend on Medicare while ignoring the real challenges facing our healthcare system nationwide. The 45% financing cap, mandated in Medicare privatization legislation passed 5 years ago, is arbitrary and meaningless in the larger debate of reigning in the high cost of healthcare. This healthcare crisis is crippling our nation and skyrocketing costs affect not only seniors in Medicare but Americans of all ages. This trigger is nothing more than a distraction from the true challenge facing Medicare: how will our nation provide high-quality health care for an aging population in an era of unchecked health care costs? We congratulate Congress for turning the tide away from arbitrary cuts and cost-shifting to seniors in favor of taking the longer view. Our National Committee members look forward to working with Washington to craft meaningful reform which will serve seniors in Medicare, their children and grandchildren as well."

Last week’s Medicare votes gave Congress and the President a simple choice: strengthen the Medicare program for seniors and their physicians or support billions in wasteful subsidies the health insurance industry has lobbied hard to protect. Ultimately, even those who’ve supported the billions of dollars of wasteful subsidies to private Medicare Advantage insurers for years realized this was a very important vote to seniors, doctors and their families.

While the major goal was to block scheduled cut in fees to doctors in Medicare there were many other important provisions, which didn’t get as much attention, yet will affect millions of seniors on Medicare, such as:

• Provides lower out-of-pocket costs for mental health services



• Offers new preventive benefits to Medicare beneficiaries



• Some widely used anti-anxiety and sleep drugs will be added to Part D coverage



• Increases funding for low income beneficiaries and extends the program
  until December, 2009



• Eliminates the Part D enrollment penalty for low income seniors



• Provides incentives to doctors to encourage electronic prescribing




For more details, here’s our summary of The Medicare Improvements For Patients and Providers Act (MIPPA).

Barbara B. Kennelly, President and CEO of the National Committee to Preserve Social Security and Medicare, issued the following statement to NCPSSM members and supporters today:

“Thanks to hard won bi-partisan support in the House and Senate, America’s seniors and their caregivers have averted physician pay cuts that would have severely limited healthcare access to millions receiving Medicare. The National Committee’s members and supporters applaud those in Congress who made the right choice today and voted to put seniors’ healthcare needs before insurance industry profits, by overriding President Bush’s veto. I hope this is just the first vote of many to come, which will reverse the destructive and costly privatization of Medicare, begin a serious bi-partisan debate about nationwide healthcare reform and strengthen the Medicare program for future generations.”

Sounds like an easy choice, right? Apparently, not for Republican Senators who voted against the Medicare bill last month. By all accounts, that Medicare vote, which preserved billions in insurance industry subsidies while requiring cuts in doctors’ payments, made for a tough July 4th recess for some Senators. You can certainly see why... casting a vote to protect billions in industry overpayments while cutting pay for doctors in Medicare has to be a tough sell to seniors, their families, and the doctors serving them. Especially as they're all feeling the pinch of this current economy.

The bill will come up again this week and National Committee members have added their voices to the debate by urging the Senate to cast the right vote this time around. We’re launching an internet ad campaign and have emailed our new :30 Medicare spot to our members urging them to contact their Senators before the mid-week vote:

As Finance Committee Chairman, Senator Max Baucus told reporters today:

Find out how your Senators voted and then use our Legislative Hotline at (800) 998-0180 to connect to them directly with one toll-free call. Ask them to support HR 6331-the Medicare mprovements for Patients and Providers Act of 2008.

Barbara B. Kennelly, President and CEO of the National Committee to Preserve Social Security and Medicare, issued the following message to NCPSSM members and supporters today:

“Once again we’ve seen the profits of the insurance industry take precedence over a call for help from America’s seniors and their doctors. The Administration’s allies in the Senate last night rejected HR 6331, a bill that would have preserved Medicare beneficiaries’ access to their doctors by averting a physician fee cut. Instead of approving important beneficiary improvements for the more than 44 million seniors and people with disabilities served by Medicare, a minority in the Senate once again blocked action on legislation that would have begun to reduce the overpayment of billions of tax payer dollars to Medicare Advantage insurers.

H.R. 6331 would have improved access to prevention and mental health services for all beneficiaries, and decreased the cost-sharing burden for low-income seniors who often forgo services because of expense. In addition, the bill would have preserved access to needed physical, occupational and speech-language therapy and prohibit many of the abusive marketing practices used to enroll beneficiaries in private Medicare Advantage plans and Part D prescription drug plans.

The momentum of the on-going privatization of Medicare continues to worsen the economic and healthcare outlook for the elderly. How ironic as the Presidential candidates discuss improvements to our nation’s healthcare system, the Congress continues to weaken our one universal healthcare plan – Medicare.”

Once again the Bush administration is threatening to veto legislation which would prevent June’s scheduled pay cuts to doctors in Medicare because Congress wants to pay for it by trimming some of the billions of dollars in industry subsidies going to private insurers. Let’s see...doctor’s pay cuts or industry subsidies?

For many it’s seems obvious that supporting providers should take priority over government giveaways to an industry already seeing record profits thanks to the privatization of Medicare; however, for the Bush administration the priority continues to be to protect this industry slush fund above all else.

Congress Now quotes our Government Relations and Policy Director, Maria Freese:

“Democrats need to get 60 votes in the Senate to avoid a filibuster,but without the support of Republicans like Grassley and Sen. Orrin Hatch (R-Utah), who both oppose MA cuts, it will be difficult for them to be able to meet this threshold, Maria Freese, director of government relations and policy for the National Committee to Preserve Social Security and Medicare, said.”They're going to be lucky" to get 60 votes, she said.”

So, once again Congress appears ready to protect these outrageous industry overpayments ($150 billion over ten years) even though they shave almost two years from Medicare’s solvency, and force all beneficiaries (not just those enrolled in MA plans) to pay $36 per year in higher premiums. Even MedPac continues to recommend their repeal.

Oh yes, don’t forget why Congress is even debating this issue now. Doctors serving Medicare patients will also face payment cuts in less than a month in order to protect this giveaway to insurers.

The May 21st New York Times’ editorial on Medicare Advantage Marketing Abuses is our selection for this month’s “Networthy Award” for outstanding coverage of elder issues on the net.

Entitled “Medicare’s Much-Too-HardSell” this piece narrows in on the unavoidable truth behind the inexcusable fraud and predatory marketing practices too often used to sell private Medicare Advantage plans. The Times writes:

“The Bush administration has proposed welcome new regulations to curb the deceptive, hard-sell tactics often used to foist private Medicare policies on unwary consumers. Unfortunately, it has been unwilling to eliminate the root cause of the problem: the high subsidies that prop up these plans and make them so attractive to high-pressure marketers.”

Also:

“The worst abuses have been committed by predatory marketers selling the comprehensive policies known as Medicare Advantage plans. The government pays these plans 13 percent more, on average, than the same services would cost in the traditional Medicare program. The subsidies are even more egregious — averaging 17 percent above cost — for the so-called private fee-for-service plans within Medicare Advantage. All told, the unjustified subsidies will cost the government more than $50billion from 2009 to 2012. Small wonder that plans use high-pressure tactics to market these lucrative policies.”

Our President/CEO, Barbara Kennelly, commended the Times on its dead-on assessment in this letter to the editor:

“Rather than spending even more federal dollars policing private insurers in Medicare, why not remove the underlying incentive encouraging them to push these higher profit plans in the first place? How many dollars will we spend on investigations and enforcement for private insurers who want to maximize the financial incentives provided to them by Congress?”

Health and Human Services Secretary Michael Leavitt continues the entitlement crisis call, this time in an address to conservative think-tankers who’d rather see Social Security and Medicare just go away entirely. While using language like “drifting toward disaster” and “serious danger” to describe the program he’s overseen for almost 8 years, he conveniently ignores the role the Bush Administration has played in worsening Medicare’s financial condition.

It’s very hard to take these clarion calls very seriously when it was this administration that implemented and continues to fight to protect $150 billion in industry subsidies to insurance companies providing private Medicare coverage. These subsidies alone steal almost two years of solvency from the Medicare program. If Secretary Leavitt and the Bush administration are really worried about Medicare’s solvency...how about putting that $150 billion back into Medicare rather than private insurers’ pockets?

Secretary Leavitt also expressed concerns there could be a generational divide on funding entitlement programs:

“The kind of division I worry about is when we begin to see one generation pitted against another or when you begin to see economic classes pitted against each other. Those are the kinds of divisions that have classically divided and undermined nations.”

Medicare’s chief actuary testified in the House today following last week’s release of the Social Security and Medicare Trustees Report. Ways and Means Health Subcommittee Chairman Pete Stark highlighted some of the back-and-forth in a News Release issued at the conclusion of today’s event:

“When Secretary Leavitt appeared before the Subcommittee earlier this year, he made alarmist statements about the future of Medicare and told us to ‘call the government actuary’. Well, we did,” stated Chairman Stark, “and the Medicare Chief Actuary made it clear time and time again today that overpayments to private plans are a serious drain on Medicare’s financing that undermine the program’s financial health and raise costs for all beneficiaries. I think Secretary Leavitt is the one who needs to talk to his actuary.”

In today’s Ways and Means Health Subcommittee hearing on the 2008 Medicare Trustees report, Centers for Medicare & Medicaid Services Chief Actuary Rick Foster made several important statements.

** Foster said that overpayments to private Medicare Advantage (MA) plans shorten the solvency of the Part A Trust Fund:

“If the law were changed such that benchmarks were set at fee-for-service rates, then it would extend the solvency of the Medicare Trust Fund by about 18 months.”

** He also indicated that overpayments increase premiums for all 44 million seniors and people with disabilities – even though almost 80 percent of Medicare beneficiaries are not enrolled in private plans:

“As of 2009, the additional premium associated with higher [MA] benchmarks is about $3 a month.”

** When directly asked if Medicare advantage ever costs less than fee-for-service, Foster flatly said:

“No, not under current law.”

** Foster also stated that hitting the “45 percent trigger” does not mean there is a crisis with the Medicare Trust Funds:

“Despite the title, the Medicare Funding Warning should not be interpreted as a finding that Medicare funding is inadequate.”

**When asked about the arbitrary nature of the nature of the trigger, he stated:

“I’m not aware of any specific technical rationale for it.”

** Foster confirmed that the 2008 Trustees report would not have triggered the “Medicare Finance Warning” had payment rates between traditional fee-for-service Medicare and Medicare Advantage plans been equalized:

“If [benchmarks were set at fee-for-service rates] as in the CHAMP Act, the trigger would not have been tripped in this report. General revenues would not have crossed the 45% threshold until 2016 rather than 2014.”

** When discussing the financial future of Medicare, it is important to remember that health projections are notoriously unreliable. For example, small changes in assumptions or experience with respect to productivity, utilization and other variables, can produce substantially different estimates. In discussing this volatility, the Chief Actuary warned against putting too much stock in long-term estimates:

“We should never kid ourselves or place too much reliance on what are inherently uncertain projections.”


Our Analysis of the 2008 Trustees Report can be found here and more details on Medicare Advantage Plans and the outrageous industry subsidies they depend on is linked here.

Congress provided even more evidence of just how flawed the 2003 Medicare Modernization Act is this week when the leadership was legally required to introduce legislation, which experts agree, is doomed to fail.

As we’ve reported here before, there’s no economic or budgetary reason for the arbitrary 45% trigger provision, which will require massive budget cuts in Medicare. This trigger really is nothing more than a political device designed to convince Americans we “can’t afford” Medicare while also distracting attention away from the real crises; our national debt and skyrocketing healthcare costs. Kaiser has provided a good roundup of news coverage on this trigger legislation.

On Monday, House Majority leader Steny Hoyer, as required by law, introduced the trigger legislation, in spite of its certain death in Congress. He told Congress Daily, lawmakers can’t ignore the growth in Medicare and Medicaid costs but:

"Unfortunately, the Medicare trigger is ill-suited to such a process”, he said. "I am very skeptical that we can deal with the issue of entitlements in a bipartisan manner in the current environment, especially since the current administration has made it clear that it is not willing to discuss all options."

Let’s review those options not up for discussion. The administration still refuses to consider allowing Medicare to to negotiate for lower drug prices as the VA currently does. Why? It will cut into drug makers’ profits. But that provision could save Medicare an estimated $600 billion dollars over 7 years. The administration also refuses to consider eliminating the $149 billion dollar subsidies provided to private insurers offering Medicare Advantage plans. Why? It would cut into insurers’ profits. But that provision could save almost $150 billion dollars and add two years of solvency for Medicare.

See the common theme here? Triggers and cuts that hurt seniors and the programs that protect them in order to preserve profits and new privatized markets that help industry prosper.

Is it any wonder then that seniors are anxious to pull their own trigger come November?

Unlike many of us, Humana, a private Medicare Advantage insurer, doesn't have the post-holiday blues.

According to the Associated Press , one Wall Street analyst has upgraded shares of health insurer Humana Inc. today saying it will be at least three years until Congress can make any cuts in Medicare Advantage programs. Carl McDonald with CIBC World Markets predicts:

"There will be no Medicare Advantage cuts in 2009, and unless cutting Medicare is the first priority of the new administration, it will be difficult to enact any cuts in 2010, either," he said. "This will give Humana and the Medicare industry three more years of strong enrollment and earnings growth."

by Alison Bonebrake, NCPSSM Policy Analyst


'Twas the night before Christmas, yet the Senate and the House
Have yet to fix Medicare due to a political louse.

Seniors were hoping that government would care,
That insurance industry subsidies made their premiums flare.

Those in traditional Medicare couldn’t get it through their head,
why they had to pay subsidies that were so widespread;

Those in private plans felt completely entrapped,
with high out of pocket costs and benefits severely capped,

Seniors wanted Congress to resolve this matter,
and prevent insurance company profits from getting even fatter.

But insurance industry lobbyists began doling out cash,
to preserve the subsidies they’ve collected en masse.

Negotiations received a deadly blow,
When Bush said MA savings are a no-no.

He threatened to veto legislation this year,
that reduced subsides the insurance industry held dear.

Without MA savings, the bill was pared down quick,
And Medicare improvements were no longer a policy pick.

All-in-all the Medicare bill looked pretty lame;
In fact, it was really more of the same.

No preventive, no mental health, no low-income protections!
Only future growth in insurer subsidy projections!

Seniors were astounded, they couldn’t believe the gall,
Bush’s allies in Congress didn’t eliminate subsidies, or reduce them at all!

They passed a short-term doc fix that was incredibly shy
of achieving the priorities the House laid out in July.

The one thing that seniors know is true
is their monthly premiums will increase in dollars of two.

They are charged more to fund MA plans, and if you need proof
The Medicare Modernization Act engorged this illogical goof.


MA subsidies give all taxpayers a reason to frown,
and the 150 billion dollar price tag is sure to confound.

The Medicare HI trust fund is also asked to foot,
the bill for these subsidies which are so hard put.

Subsidies place the trust fund further under attack,
It loses two years of solvency unless they are rolled back.

The unfairness of the situation made seniors anything but merry!
How could Congress pass a bill with public opinion so contrary?

Despite receiving subsidies, didn’t Congress know,
MA plans offered inferior coverage for services seniors couldn’t forgo?

Sure they might give you glasses or even some new teeth,
But hospital stays are costly and other tricks lurk underneath.

Their marketing handbooks must have been written by Machiavelli,
Because sales tactics can be unethical, illegal and just plain smelly.

Unfortunately for seniors, this year no Angel or Christmas elf,
will correct the situation since the issue has been shelved.

As they pay rising premiums with a bit of dread,
they look forward to 2008 and the election ahead.

Politicians who do not address this overpayment quirk,
may very well find themselves in 2009 out of work.

Perhaps the holiday season can convince our foes,
that traditional Medicare is not something they should oppose.

We should preserve social insurance, not arrange for its dismissal,
as we’ve discovered private plans are as thorny as a thistle.

As we approach the holiday, Medicare beneficiaries unite to say
"Happy Christmas to all, and next year we’ll win the fight."

by Barbara B. Kennelly, President/CEO

"The debate over Medicare legislation has been a true disappointment to millions of seniors tired of paying more in premiums so that insurers offering private Medicare Advantage plans can keep their billions in government subsidies. While everyone in Washington talks about fiscal discipline, the President’s veto threat with support from his allies in Congress, shows the influence of the insurance lobby once again ruled the day.

This legislation offers only a band-aid fix to the doctor’s fee cut and clearly puts insurers’ profits ahead of Medicare’s solvency and seniors’ needs. The National Committee will continue to work with House and Senate members next year on legislation to eliminate these outrageous and wasteful subsidies to Medicare Advantage insurers, strengthen aid for low income beneficiaries and improve Medicare’s long-term solvency.”

More than 10 million Medicare beneficiaries live at or near the poverty line but it’s been hard to get much attention for reforms that could ease their burden.

House and Senate conferees appear bogged down in negotiations of a Medicare reform bill. Of course, the focus of Congressional wrangling so far has been on cuts to wasteful subsidies to private Medicare Advantage insurers and a fix to prevent a 10% pay cut to Medicare physicians, which is scheduled for the New Year.

Now, Senators Jeff Bingaman (D-NM) and Olympia Snowe (R-ME) are sending a letter to Medicare negotiators, signed by more than 30 of their Senate colleagues, urging them to support reforms in three other areas:

· Increase the asset allowance for the Part D low income subsidy so that those with very limited incomes, but modest retirement savings, can obtain the assistance the Medicare Modernization Act was intended to deliver in paying premiums and coinsurance under the drug benefit

· Update the income and asset allowances for the Medicare Savings Programs, and provide continuing inflationary adjustment for those limits. Today many fail to receive needed assistance due to an asset test which has been unchanged for two decades

· Improve outreach and enrollment in both programs

Here’s more information on the Medicare Savings Program and the Low-Income Subsidy.

by Max Richtman, NCPSSM Executive Vice President

That simple sentiment sums up my trip to Iowa this week perfectly. I met with National Committee members and supporters who are organizing for the Iowa Presidential Caucuses,which are just a month away. We have more than 38-thousand supporters in Iowa and these seniors want to be sure that the Presidential candidates don’t ignore issues critical to retirees and their families.

We talked about so many different issues of concern to seniors including, the continuing preoccupation by some in Washington with privatizing Social Security and the inadequacy of the Medicare drug benefit. But nothing raised the hackles of this group of National Committee activists as much as our discussion about the Medicare Advantage Program or, as one participant characterized it, the Medicare Disadvantage Program.

They resent the fact that all Medicare beneficiaries, including the 81% of beneficiaries who have not signed up for Medicare Advantage, are paying more in premiums ($2 per month) to help finance this outrageous subsidy of the insurance companies selling Medicare Advantage Plans.

They were outraged that $149 billion dollars will be spent, or more accurately wasted, over the next 10 years on government subsidies to these plans while so many health care needs of seniors go unmet – supposedly due to lack of money in the Medicare budget.

The participant who said, “I thought Medicare was for seniors – not the insurance industry”, summed up the tone of our meeting perfectly. The Medicare law passed nearly 4 years ago had a different set of priorities and forgot that Medicare is for seniors. The National Committee is doing every thing we can to change this and is urging the Congress to eliminate this wasteful spending on subsides to the insurance companies.

It is time to get our priorities in order. It is time to devote theses precious resources to those in need -- not those motivated by greed.

The huge irony of watching President Bush accuse Congress of “wasteful Washington spending” while at the same time threatening to veto a Medicare bill which could trim billion dollar subsidies to the insurance industry might make us chuckle...if only it weren’t so harmful to seniors.

According to Congressional Quarterly today: