Seniors confront a maze of Medicare changes
Overhauling Medicare, the federal insurance plan that pays the medical bills of some 45 million Americans, most of them seniors, is a key part of remaking the national health-care system.
Seattle Times health reporter
Average yearly spending per Medicare enrollee, 2007:
Washington state: $7,267. New Jersey (highest): $10,005. Hawaii (lowest): $5,926. Average for all states: $8,682.
Medicare enrollees, 2008:
In Washington: 896,838. In the U.S.: 44,831,390
Medicare Advantage enrollees, 2009:
In Washington: 209,878. In the U.S.: 10,259,669.
By 2030, when the youngest baby boomer turns 65, 79 million people are expected to be on Medicare.
Medicare and the new law
A 'cheat sheet'
Medicare pays the medical bills of some 45 million Americans. Its budget is being streamlined to help pay for the new national health plan and to make Medicare, which has four parts, run more efficiently.
Medicare Part A: Inpatient hospital, skilled nursing and hospice care, and other services.
Part B: Doctors' fees, outpatient hospital visits, other services
Part C: Medicare Advantage plans, a private alternative to traditional Medicare
Part D: Prescription drugs
What the overhaul will do:
Benefits: No cuts will be made in guaranteed benefits like doctor visits and hospital care, but Advantage plans may shrink such extras as dental and vision coverage, or increase premiums.
Part D "doughnut hole": This drug-coverage gap eventually closes. This year, enrollees who spend $940 out-of-pocket and fall into the hole will get a rebate of $250. Next year, they will get a 50 percent discount on brand-name drugs. That will grow and the hole will shrink until it ends in 2020.
Part D and income: Seniors with greater means will pay more for drug coverage beginning next year.
Help for areas that keep costs low: In 2012, payments will begin to increase to hospitals in low-cost areas such as Washington.
Quality incentives: Higher-quality Advantage plans can earn higher payments; hospitals that don't prevent infections or readmissions will be penalized.
Preventive services: Beginning next year, co-pays and deductibles will be lifted for annual physicals and many preventive services for people on regular Medicare.
Sources: AARP, medicare.gov, Kaiser Family Foundation.
For more information:
CMS: www.medicare.gov; compare local Advantage plans.
Kaiser Family Foundation: www.kff.org/medicare/index.cfm.
Information meeting: Preregister for an AARP forum in Everett Wednesday: http://aarpwavolunteermtgeverett.eventbrite.com or 877-926-8300.
Put the word "cuts" and "Medicare" in the same sentence, and what do you get?
A bunch of anxious, angry older folks, who think dark thoughts and give voice to worries that don't occur to those who haven't walked a mile of hospital corridors in their shoes.
They're people like Pat Gee, who was sitting in her husband's hospital room late last year, watching TV cover the sausage making called politics that ultimately spat out a health-care overhaul.
Les Gee, 73, a retired Boeing worker from Federal Way, had just undergone a kidney transplant. Pat was worrying about paying for his expensive anti-rejection drugs, and listening as a Democratic congressman intoned about how everyone should get the same health benefits.
"Just who does he think will pay for this?" Pat Gee demanded.
That uncertainty — and worry — among seniors like Gee is understandable. Overhauling Medicare, the federal insurance plan that pays the medical bills of some 45 million Americans, most of them seniors, is a key part of remaking the national health-care system.
To provide coverage for millions of uninsured Americans of all ages, the law calls for squeezing Medicare to come up with more than half the $938 billion estimated cost of the new national health plan. Paring down Medicare is also necessary to keep the massive and financially troubled program afloat for the long haul.
While it's hard to predict what that will mean for individual seniors, it's likely that Les and Pat Gee will reap some benefits.
Many key aspects of Medicare's future are still in play politically, with rules and formulas still being hashed out, including how much doctors ultimately will be reimbursed for treating Medicare patients.
Even so, some gains — and some losses — are clearly spelled out in the law:
• For some 35 million Americans now on traditional Medicare, such as the Gees, basic benefits will be protected and even increased: Beginning next year, co-pays and deductibles will be lifted for many preventive services and a yearly physical.
• For those who have opted instead for private-market Medicare Advantage plans, which offer additional benefits and often require higher premiums, benefits may shrink and premiums rise.
• For those who have "Part D" prescription-drug coverage, there's mostly good news. A coverage gap that has hit many seniors — including the Gees — will gradually disappear, and in the meantime, they'll get discounts on brand-name and expensive biologic drugs. At the same time, though, affluent seniors, for the first time, will pay more for their drug plans.
• The sprawling new law shifts the way care is delivered to seniors on Medicare, rewarding better care instead of more of it and giving some primary-care doctors more money.
For seniors — and those coming up fast on 65 — a big issue still in play politically and financially is whether there will be a doctor to see them when they need one. Doctors are already crabby that Medicare typically pays them less than private insurers do, and Congress could shrink reimbursements even more as it tries to contain health-care costs in general.
Meanwhile, many seniors, pinched by the economy, worry about having to pay more out of pocket.
"These are the forces that are causing anger and discomfort in Medicare beneficiaries today," says Dr. James Lee, an internist at The Everett Clinic, which has about 290,000 patients, including 38,000 on Medicare.
The way it is now
By 2030, Medicare, which began in 1965, is expected to insure some 79 million seniors.
Many with coverage now — whether they're like Pat Gee, 71, who decries "socialized" medicine, or Bettie Dunbar, 90, who believes "poor people should have health care; everyone should have health care" — are quick to say they want the government to keep its hands off their Medicare.
"We're so well taken care of now, I don't want it to change," explains Marie Heberling, 82, who, like Dunbar, is a Medicare Advantage plan patient at Group Health Cooperative's Burien clinic.
But for the majority of seniors, who are insured by traditional, fee-for-service Medicare, change has already been happening. For years, primary-care doctors and clinics in Washington have been quietly closing their doors to new patients on regular Medicare, saying they lose money in treating them.
By contrast, many doctors and clinics are happy to take patients on Medicare Advantage plans. To encourage development of these insurer-run, private-market plans, which ideally would compete with each other, the government in 2003 began funding them better than traditional Medicare plans — about 9 to 14 percent more, on average.
Of the 900,000 seniors in Washington insured by Medicare, about 200,000 are in Medicare Advantage plans, says Ingrid McDonald, advocacy director of AARP Washington. Locally and nationally, the percentage opting for Advantage plans has grown fast.
Increasingly, clinics are urging — even requiring — senior patients to sign up for Advantage plans.
The Everett Clinic, for example, doesn't take new Medicare patients unless they're on an Advantage plan, and if current patients "age in" to Medicare, they must select an Advantage plan, a spokeswoman said.
"We lose $12 million a year on regular Medicare," says Mark Mantei, the clinic's chief operating officer.
Leveling the field
So what will happen under the new health-care law?
The law explicitly says there will be no cuts to benefits guaranteed under traditional Medicare, such as doctor visits and hospital care.
But next year, the extra government payments to insurers that run the private Medicare Advantage plans will freeze at 2010 levels, and roll back until they are essentially equal to regular Medicare. Insurers say the cuts will force them to raise premiums and reduce benefits and choices in Advantage plans, despite a recent stern warning against doing that by U.S. Department of Health and Human Services Secretary Kathleen Sebelius.
If insurers make good on their threats, it might play out in ways similar to what Erik Gulmann of Seattle has already experienced.
Gulmann, 72, was happy with his Regence BlueShield Medicare Advantage plan. For an extra $149 a month, it combined drug coverage, preventive dental services and a wide choice in doctors.
In October, Regence raised his premium to $262 — a 76 percent increase. Regence's explanation? The feds cut payments to insurers by 4.5 percent, and medical costs increased 6 percent. So how does that equal a 76 percent increase?
We got the same answer as Gulmann: zip, really.
He switched to another Advantage plan. Although his choice of providers is more limited, his doctor's still covered, his drugs are cheaper, and the plan's customer-service representatives answer his questions.
Drug coverage is also going to change under the overhaul.
By 2020, the law aims to fill the "doughnut hole" gap in Medicare Part D coverage that each year requires patients to pay all drug costs once their out-of-pocket costs reach $940. They don't climb out of the hole that year until they've spent $4,550.
Filling the hole
This year, people who have fallen into the hole — like Les Gee — will get a $250 check. It's a pittance compared with what they may spend before their drugs are covered again, but it does signal the feds' intent to abolish the hole.
Next year, patients who are in the hole will get a 50 percent discount on brand-name and super-expensive biologic drugs. The discount will increase to 75 percent by 2020, when patients will pay 25 percent for all drugs until they've spent $4,550 out-of-pocket and their co-pays drop to 5 percent.
But people with higher incomes, who already pay more for Medicare's Part B (doctor services), will begin paying pay more for Part D.
The real savings in the overhaul of Medicare may come from a gradual shift toward a more cost-effective, prevention-oriented approach to caring for seniors.
Many have chronic conditions such as heart disease, diabetes or cancer, and coordinating care among specialists and keeping them out of the hospital can save money. Medicare's traditional fee-for-service approach works against that.
"The present system actually discourages coordination and communication between doctors," says Dr. Marty Levine, a geriatrician at Group Health Cooperative. "This fragmentation really drives up the cost and lowers the quality."
Many doctors have for years said the whole system needs to change, and some hospitals and clinics have already begun doing that.
For example, some doctors at Group Health Cooperative hold monthly group visits for seniors, combining socializing with a sort of ongoing preventive checkup. At The Everett Clinic, a nurse-coach visits hospital patients to help them avoid unnecessary, expensive return trips.
The new health-care-law supports innovative pilot programs, cranks up payments to some primary-care doctors, and links payments with progress toward better care and cost containment.
For example: Medicare Advantage plans that rate higher on quality measurements will be eligible for increased payments.
Boost for state
In Washington state, where medical providers have long complained Medicare payments are much lower than in other states, a geographic adjustment in 2012 will boost payments for some hospitals, and further studies and adjustments are planned.
Beyond seniors, it's likely the rest of us will feel the overhaul, too. As an insurer, Medicare is the big dog on the block, and its coverage has long been the model for many private-plan benefits.
To work, the health overhaul must succeed in aligning pay with prevention instead of crisis care, Levine says. And much of this work will start with Medicare. "It's going to be bumpy and people are going to be scared ... ," he says.
But in the end, "we can actually increase the quality of care and lower the cost — and people will know they're getting a better deal."
Carol M. Ostrom: 206-464-2249 or firstname.lastname@example.org
Information in this article, originally published June 20, 2010, was corrected July 1, 2010. The caption of a photo of Les and Pat Gee included an incomplete cost for Les' recent kidney transplant, provided by Pat Gee. The caption was edited to include the total costs for the transplant operation, about $300,000.
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