Contrary to the Register Editorial on 12/1/2019, we should not add long-term care as a new benefit under Medicare. (See link below to The Register’s Editorial urging Medicare coverage of long-term care.) If we want to solve problems using the force of government, we should do the minimum needed to solve the problem. In this case, the problem is making sure that people receive medically necessary long-term care, not making sure that money is left to people’s heirs.We currently have a pretty good situation: Many people voluntarily purchase private long-term care insurance. Many others who could afford insurance choose to take a risk and not buy it. Taxpayer-funded Medicaid covers the cost of long-term care for those who are unable to pay. For those in the middle – not on Medicaid, but who would struggle to pay for private long-term care insurance – Medicaid already goes a long way to help them qualify for long-term care coverage. For example, if one spouse of a married couple needs long-term care, the other spouse gets to keep a house and a car and some income, even though Medicaid pays for the long-term care of the first spouse.The best long-term, sustainable solutions to our problems is to give voluntary, free choice to people and then expect them to be responsible for their decisions. To the extent that we allow our government to force everyone into one-size-fits-all welfare programs, there will be ongoing, unsustainable frustrations, disagreements, and dependency problems.
Recently, Gloria Mazza wrote, (and other Iowa Republicans signed), an essay in The Des Moines Register that urged President Trump and Iowa’s Republican Senators to oppose recent proposals by the Centers for Medicare and Medicaid Serivces (CMS) that would have taken reasonable steps to reign in increasing drug cost under Medicare Part D. It has now been reported that CMS and the Trump administration have backed off of important parts of the proposed changes.
Currently, Medicare Part D regulations require patient access to “all or substantially all” medications within “six protected classes” of drugs regardless of price. (Protected classes include drugs for HIV, mental illness, cancer, epilepsy, and organ transplants.)
Among other things, the proposed new rule would have allowed Medicare Part D plans to exclude a drug from coverage, 1) for an existing drug if the price increased more than the rate of inflation, or 2) for a new drug if it was simply a reformulation of an existing drug. Apparently, lobbying efforts were successful in getting these two provisions removed from the final new rule.
We don’t have a free market for prescription drugs under Medicare Part D. We should not allow drug makers to set their own price and still require coverage. It is unfortunate that the Trump administration caved-in to the lobbying pressure.
Link to Register essay by Gloria Mazza: https://www.desmoinesregister.com/story/opinion/columnists/2019/05/16/pro-life-advocates-dont-reduce-medicare-part-d-protection-drugs-congress-chuck-grassley-joni-ernst/3685349002/
Thanks to Susan Voss for her thoughtful essay about the complexities of our health care system, and how difficult it is to reduce costs. (See link to Register essay below.) I don’t claim to have “the answer”, but I do suggest that the following cost saving ideas be given serious consideration.
- Medicare, Medicaid and private insurance should not be required to cover every new drug, product, or procedure that is approved by the FDA. Some are very high cost but provide only marginal improvement over alternatives that cost much less. Also, at least some covered products and procedures would likely be considered not medically necessary by most people.
- Consider shortening the amount of time that government grants a monopoly for patents. Patents are not natural property: humans have copied one another since the beginning of time. Our U.S. Constitution allows patents to be granted to encourage inventiveness, but there is no objective reason why a patent must be granted for 20 years. Why won’t five or ten years work? Maybe the length of the patent should be based on the cost to develop the patented item and whether or not government funds were used to help develop the item.
- Don’t require limits on out-of-pocket payments such as co-payments, especially for very high cost items. A person should have “skin-in-the-game” if they expect their insurance to cover very high cost items. Today, we see the opposite: drug companies offer to help pay people’s out-of-pocket costs so there won’t be so much political pressure on them to lower their prices.
- Allow both pharmacies and individuals to purchase drugs from sellers in other countries that are “deemed” to have sufficient safety procedures in place. If drug companies are free to charge lower prices in other countries, then pharmacies and individuals should be free to purchase the drugs from those other countries.
- Allow Medicare and Medicaid to negotiate with drug companies on prices they pay for the drugs that are covered by the programs. Right along with that, Medicare and Medicaid should be allowed to develop formularies (lists of drugs that are preferred over other therapeutically similar drugs), that give beneficiaries a financial incentive to use the preferred drugs and a penalty for using higher cost drugs.
Our health care wants are unlimited. Our ability to pay is not. We, as citizens, should not expect private insurance or our government health care programs to cover everything, regardless of cost. We should expect our government to NOT do things that increase costs, or reduce our choices.
Republicans are right to not increase the debt ceiling without some action to reduce our Country’s spending deficit. They are not right to pick out Obamacare as the only possible target. President Obama and the Democrats are wrong to insist that the Republican in the House of Representatives pass a “clean” debt limit expansion bill. The compromise should be to agree on spending cuts that are not specifically related to Obamacare. The four big drivers of the Federal budget deficit are Medicare, Medicaid, Social Security and Military spending. Any other spending cuts, although helpful, do not really solve our long-term problem. Republicans should propose some type of binding agreement on entitlement and military spending cuts in return for passing a debt increase bill. The real problem to be solved is that we must stop spending beyond our means.
Maybe it would be best to let the Sequestration spending cuts to take effect. It appears that elected politicians are unable to make significant cuts to any specific federal spending items.If cuts could be prioritized, here would be my short list in order of priority:
- The Medicare eligibility age should be coupled with Social Security and they both should be gradually moved to age 70. The federal government should not be responsible to pay for 15 – 30 years of retirement for healthy adults. (see below)
- Freeze the dollar amount of federal spending on Medicaid – block grant the money to the states and let States decide on the priorities. There will always be more demand than there is supply for free medical care.
- Cut military spending, in actual dollars, by at least 5%. Let the defense department decide on priorities to give us the best defense that the budget can buy. We would still have greatest defense on Earth.
- Eliminate the Dept. of Education – leave education to the states entirely.
- Limit farm subsidies to $50,000 per farmer maximum, $100,000 per family maximum. Phase out all subsidies for farmers who have a Adjusted Gross Income between $100,000 and $200,000. Require 100% of the cost of crop insurance to be charged to the farmers. Why do we keep paying subsidies to farmers when they have record profits? Something is wrong.
- Cut the FEMA budget by 50%, and make States pay a 50% co-insurance payment for all federal money that flows into any State. States would be much more efficient, and there would be much less abuse and fraud.
- Eliminate subsidies and special tax breaks for all forms of energy. All energy producers fight to protect their subsidies by claiming that the other forms of energy get subsidies and all they want is a fair playing field. Well, lets make the playing field very fair – no subsidies for anyone.
- Eliminate spending on arts, and humanities, public broadcasting, etc. Contributions to these kinds of organizations should be left to charitable organizations.
I’m sure the list would be different and much larger if I took enough additional time.
According to data compiled by the Social Security Administration:
- A man reaching age 65 today can expect to live, on average, until age 83.
- A woman turning age 65 today can expect to live, on average, until age 85.
And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.
The Des Moines Register’s report on the Iowa Poll on Sunday, 9/30/2012, reported that 45% of Iowans prefer to, “Change the way Medicare works to provide seniors with the option of a subsidy to help pay for regular health insurance in the private market” as the most popular way to prevent Medicare from running out of money. Less popular were the options of increasing taxes (26%) or cutting benefits (9%). 20% were not sure. It’s pretty clear that a voucher program is the way most Iowans prefer to fix our Medicare funding problem. Of course, if the Iowa Poll had given Iowans the choice, “Do nothing – don’t touch my Medicare”, the results might have been different.
We do need to solve this problem, so thanks to the Iowa Poll for not giving people the “Do nothing” choice. A voucher system would contain costs, give freedom to people to choose the kind of coverage they want, and still provide a substantial safety net to meet people’s health care needs.
The letter to the editor in the Des Moines Register from John Hyde on 8/31/2011 (Medicare problem is mismanagement) contained a math error. If a person earned $45,000 every year beginning 1969 through 2011 and paid the maximum Medicare tax, including the employer match, and compounded it annually, using the 10-year treasury interest rate each year, assuming each annual amount was paid in at the beginning of the year, the ending compounded total would be $128,124 – still far below the average lifetime benefit payout of $188,000 . Note: Before 1988 the Maximum taxable wages subject to Medicare was less than $45,000, and before 1986, the tax rates were also lower.
Medicare is not sustainable in its current form. Currently, Medicare is a Ponzi scheme. The early beneficiaries’ benefits are paid for using the taxes collected from future beneficiaries. Soon, there will not be enough money to pay the full benefits that are promised today. If a private business did this, the people responsible would go to jail.
We need to continue to raise the retirement age for Social Security and Medicare, and require Medicare beneficiaries to pay some significant amount out of their own pocket each time they incur a cost. That way, individuals would decide whether or not the cost of any given product or service is worth the benefits. It would also encourage people to be aware of costs and to try to reduce costs. Today, there really is no financial incentive for beneficiaries to reduce costs.
Here is the link to the original letter in the Register:
Some people argue that there should be no cap on Social Security taxable wages and that the tax should be paid on all wages. The reason for the cap is that social security is not a welfare program. Benefits received are based on taxes paid in. Medicare has already been converted into a welfare program. The Medicare tax is applied to all wages, but those who pay more don’t get any greater benefits. Medicare taxes 2.9% of all wages. Social Security taxes 12.4% of wages up to $110,100. If the Social Security tax were to be applied to all wages, it would probably be the greatest tax increase of all time. Most people want a fair payment for what they have paid in. They understand that a higher retirement age is fair. That is what should be done.