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Christine Macy's Files
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THE HENRY I.
KAISER
FAMILY
FOUNDATION
THE MEDICARE PROGRAM
THE KAISER MEDICARE POLICY PROJECT
Women and Medicare
May 1999
As a partner program to Social Security, Medicare provides
Figure 2
a health and financial safety net for virtually all older Americans
Women on Medicare are likelier than men to
and for many with disabilities who are under 65. Medicare cov-
have many health problems
ers both women and men, yet more than half of the nearly 40
million people covered by the program are women. Seven of
Percentage with health problems
ten beneficiaries 85 and older are women (Figure 1).
2+ Chronic
73%
Conditions
65%
60%
Figure 1
Arthritis
46%
Over half of all Medicare beneficiaries are women
54%
Seven of 10 beneficiaries 85+ are women
Hypertension
48%
27%
100%
Urinary Incontinence
12%
Women
29%
Osteoporosis/
21%
Men
44%
46%
39%
Broken Hip
6%
59%
13%
Skin Cancer
Men
19%
Women
Note: Minimal differences (<4%) between genders were reported for heart disease. diabetes, pulmonary disease.
71%
61%
strokes, and mental disorders
54%
SOURCE Medicare Current Beneficiary Survey. 1996
41%
0%
Total
<65
65-74
75-84
85+
Poverty
Age
Women are especially hard-hit by changes in policies and
Total
39 million 5 million 18 million 12 million 4 million
Beneficiaries
programs that affect poor Medicare beneficiaries. Not only do
SOURCE: Medicare Current Beneficiary Survey. 1996.
they have higher poverty rates than their male counterparts —
nearly seven in 10 with incomes below poverty are women -
but disparities increase with age (Figure 3). Of all female ben-
Women's life expectancy, on average, is 79 - seven years
eficiaries, 16 percent have incomes below the federal poverty
longer than men's. At 65, their life expectancy is more than
level ($7,740 for an individual in 1996), compared to 11 percent
three years longer. Compared with men, older women are
of men. Half have incomes below twice the poverty level
three times likelier to be widowed, and far more apt to live
($15,480 for an individual), compared to 39 percent of men.
alone. Among women 85 and older, four out of five are wid-
And among those 85 and older, nearly two-thirds (62 percent)
owed, and more than 43 percent live alone.
of all women have incomes below twice the poverty rate, com-
pared to 53 percent of all men.
Health and Long-Term Care Needs
Given their longer life spans, women are likelier than men
to live with multiple chronic conditions and certain health prob-
Figure 3
lems (Figure 2). A greater share report having often disabling
Seven of 10 Medicare beneficiaries with
conditions like arthritis, hypertension, urinary incontinence, and
osteoporosis.
incomes below poverty are women
Also compared with men, women are more likely to have
functional impairments and long-term care needs, Of the six
Men
million beneficiaries with functional limitations - measured as
Poverty level, 1996 =
33%
$7,740
needing assistance with one or more activities of daily living
(ADL) like eating or bathing - two-thirds (65 percent) are
women. One-third (34 percent) of women 65 to 74 report func-
tional limitations. Among those 85 and older, 82 percent do.
As for long-term care, women are more likely than men to
Women
use long-term care services: two-thirds of all Medicare bene-
67%
ficiaries who receive home health services and three
quarters of all nursing home residents are female. Policies that
affect users of these services have a disproportionate impact
Total = 5 million poor beneficiaries
on women.
SOURCE: Current Population Survey of non-institutionalized population, 1997.
WASHINGTON OFFICE: 1450 G STREET, N.W., SUITE 250 WASHINGTON. DC 20005 (202) 347-5270 FAX (202) 347-5274
FOUNDATION HEADQUARTERS: 2400 SAND HILL ROAD MENLO PARK, CALIFORNIA 94025 (650) 854-9400 FAX (650) 854-4800
WEBSITE: WWW.KFF.ORG PUBLICATION REQUEST LINE: (800) 656-4533
Compounding the financial difficulties of living in poverty,
Out-of-Pocket Spending
women with low incomes are, on average, in worse health than
Because Medicare provides basic rather than comprehen-
those who are better off. Of all poor female Medicare benefici-
sive coverage, many beneficiaries face high-out-of-pocket
aries, 43 percent report being in fair or poor health, compared
health care expenses. Women, on average, devote a greater
to 20 percent of women with incomes above 200 percent of
share of their income to health care than men do. In 1998, 22
poverty (Figure 4).
percent of their incomes went toward medical care, compared
with 17 percent for men (Figure 5). These figures mask the fact
that the most vulnerable spent a significantly larger share of
Figure 4
their incomes for health care: Women 85 and older spent 27
Poor women on Medicare have greater health
percent of their incomes, on average, for health, while those
needs than those with higher incomes
with ADL impairments spent a third of their income. But the
burden was highest for poor women without Medicaid, whose
Percent of women on Medicare reporting fair/poor health, by poverty level
60%
health care spending consumed over half of their income.
43%
Figure 5
29%
31%
Women on Medicare spend a greater share
of their incomes on health care than men
20%
The most vulnerable pay significantly more
Out-of-pocket spending by selected characteristics
60%
53%
0%
Total
<100%
100-200%
>200%
33%
Poverty Level
28%
27%
SOURCE: Medicare Current Beneficiary Survey. 1995.
22%
17%
0%
Insurance Coverage
Men
Women
Fair/Poor
1+ ADL
85+
Poor
Total
Total
Health
Non-Medicaid
While Medicare provides coverage for basic acute care
Characteristics of Women
services, it has high cost-sharing requirements and does not
Note: Excludes beneficiaries enrolled in Medicare HMOs, beneficianes under-65 and disabled. and
cover outpatient prescription drugs. Consequently, most bene-
beneficiaries in long-term care facilities. ADL= activities of daily living limitation. such as eating or bathing.
SOURCE: AARP Public Policy Institute. 1998
ficiaries have public or private supplemental insurance to fill in
the gaps in Medicare's benefit package. Like their male coun-
terparts, 60 percent of all female beneficiaries have private
That traditional Medicare does not cover outpatient pre-
supplemental insurance. In 1995, 33 percent had employer-
scription drugs exposes many beneficiaries to high out-of-
sponsored retiree health benefits (versus 36 percent of men)
pocket costs. Most women on Medicare - 17 million - use
and 27 percent had individually purchased Medigap policies
prescription drugs regularly. More than a quarter (29 percent)
(versus 23 percent of men). A growing share of beneficiaries (9
spend over $50 a month for this purpose, according to the
percent for both men and women in 1995) are enrolling in
Kaiser/Commonwealth 1997 Survey of Medicare beneficiaries.
Medicare HMOs for supplemental benefits.
Given their disproportionately low incomes and their
greater long-term care needs, female Medicare beneficiaries
Issues for Women
are more likely than men to rely on Medicaid, the federal/state
Women are major stakeholders in the debate over
health program that provides health and long-term care cover-
Medicare's future. Given their higher rates of poverty, multiple
age for the poor. Nearly 17 percent of women rely on Medicaid
chronic conditions, and long-term care needs, adequate health
to fill in Medicare's gaps, compared with 11 percent of men.
insurance is especially important as they grow older. Policies
Despite Medicaid's protections, nearly 10 million female
that improve financial protections for the poor and near-poor
Medicare beneficiaries with incomes below twice the poverty
would improve the lot of all low-income beneficiaries, the
level are not on Medicaid. This group is especially vulnerable
majority of whom are women. Likewise, policies that extend
to financial burdens in the event of a serious, high-cost illness.
Medicare coverage to outpatient prescription drugs and long-
term care would help fill coverage gaps that drive up out of
pocket spending for women. Conversely, policies that erode
coverage or that shift costs to beneficiaries will adversely affect
women, especially those with low incomes. Understanding the
full implications of proposed reforms for aging women will be
essential to the success of any effort to preserve and protect
Medicare for future generations.
The Henry J. Kaiser Family Foundation is a non-profit independent national health care philanthropy and is not associated with Kaiser Permanente or Kaiser Industries.
PRESS RELEASE
666 11TH STREET, NW
WASHINGTON, DC 20001
202-783-6686
FAX 202-638-2356
For further information:
FOR IMMEDIATE RELEASE
Deborah Briceland-Betts
June 29, 1999
202/783-6686
WOMEN BENEFIT FROM CLINTON PROPOSAL
TO STRENGTHEN MEDICARE AND NEW DRUG COVERAGE
OWL today praised President Clinton's plan to strengthen and modernize Medicare, as
"real help to millions of Medicare beneficiaries--most of whom are women."
"Nothing makes better sense in good economic times than to support the generation who
sacrificed SO much for us," said OWL Executive Director Deborah Briceland-Betts. Because
nearly six in ten Medicare beneficiaries are women, the President's plan has a disproportionate
impact on women. "You know these women," said Briceland-Betts. "They are our mothers and
our grandmothers."
Shoring up Medicare with the surplus, adding a Medicare prescription drug benefit,
helping low-income beneficiaries and eliminating cost-sharing for preventive care "directly
addresses gaps in Medicare coverage that cause particular problems for women," said Briceland-
Betts. She noted that--
Women are the majority of low-income elderly Americans. Women age 65 and over are
twice as likely as men the same age to have annual incomes under $10,000.
Nearly eight out of ten women on Medicare use prescription drugs regularly. Lack of
prescription drug coverage represents a significant out-of-pocket cost for elderly women.
Chronic conditions are sources of significant and increasing disability for older women,
in contrast to men, who are more likely to suffer one acute, fatal episode. Picking up
the cost to help identify and treat diabetes, osteoporosis, arthritis, breast cancer and a
host of other disabling diseases could greatly enhance women's quality of life, as well
as reduce long-term costs for Medicare.
Briceland-Betts cautioned, however, that while the President's plan is an excellent start,
it does have some rough edges. "We are concerned that plan's efforts to control costs in the
short run may create a precedent to alter the fundamental social insurance principle on which
the program was founded. OWL will be working to smooth these rough edges as the proposal
makes its way through Congress."
OWL is the only national grassroots membership organization to work on issues unique
to women as they age. OWL has 75 chapters and over 15,000 members nationwide.
-30-
Women and Medicare:
President Clinton's Plan to Strengthen and Modernize Medicare
OWL--July, 1999
On June 29, 1999, President Clinton announced a new plan to prepare Medicare "for the
health, demographic, and financing challenges it faces in the 21st Century." The President's
proposal has three parts, which would:
(1)
Strengthen Medicare's financing;
(2)
Modernize Medicare's benefits by responding to medical practice today; and,
(3)
Introduce market constraints to "make Medicare more competitive and efficient."
Because women are the majority of Medicare beneficiaries, outnumbering men 3 to 2 at
age 65 and making up 71 percent of beneficiaries age 85 and over, President Clinton's plan, like
any Medicare reform plan, will have a disproportionate impact on women. The following is an
analysis of the key components of the President's 21st Century Medicare Plan, from the
perspective of the 20 million older women who are Medicare beneficiaries.
1.
Strengthening the Trust Fund.
The President's plan would extend the life of the Trust Fund to 2027, by dedicating 15
percent of the projected budget surplus to Medicare. The proposal also uses two percent of the
surplus to help finance the new Part D drug benefit.
Strengthening and preserving Medicare for future beneficiaries is by far the most
important impact of the President's plan on older women. The number of Medicare beneficiaries
is expected to more than triple by 2030. And, just as they do today, a disproportionate number
of older women will be living on low incomes, very likely alone, and most likely suffering from
at least one chronic illness (and probably more). For more than 35 years, Medicare has
provided millions of older women with health care coverage they would not otherwise have had.
This provision maintains that commitment.
2.
Modernizing Medicare.
This provision contains two proposals which directly address two of the most significant
gaps in Medicare for women: prescription drug coverage and preventive screening. Even while
Medicare cuts back on coverage for acute care, it still treats prescriptions and preventive
services much as it did in 1965, when acute care was the norm and illness almost always
resulted in hospitalization.
New prescription coverage.
Today, prevention is central to the practice of medicine and when illness cannot be
prevented, it is managed by medication. Access to prescription drugs is a women's issue.
1
Women account for 62.5 percent of all prescriptions, according to independent pharmacy benefit
manager Express Scripts. More than 40 percent of prescriptions are written to women age 40
and over.
When fully phased in, the President's plan would pay for half of prescription drug costs
up to a limit of $5000, with no deductible. Medicare recipients would pay a monthly premium,
estimated at $44 when the program is fully operational, but would buy drugs at a discount even
if their costs exceed the $5000 limit. According to the White House, over 90 percent of
Medicare recipients would never reach this cap. All costs would be covered for low-income
Medicare beneficiaries.
Almost eight out of ten women on Medicare use prescription drugs regularly, and most
pay for medication themselves. As many as 15 million older Americans have no prescription
drug coverage, according to the White House. Because older women are more likely to have
low incomes (women 65 and over are twice as likely as men the same age to have annual
incomes under $10,000), and more likely to be chronically ill (nine in ten women age 65 and
over report one or more chronic conditions; once they pass age 85, the figure rises to 97
percent). Help with the cost of medication is especially urgent for women.
Even those who have coverage are seeing it move out of reach as the price of Medigap
coverage rises, as HMOs opt out of the Medicare program, and as retiree health coverage
declines.
New coverage for preventive screening.
The President proposes to eliminate all copayments and deductibles for preventive
services covered by Medicare. This is an especially critical provision for women, for whom
chronic conditions are the source of significant and increasing disability (in contrast to men, who
are more likely to suffer one acute, fatal episode).
The White House notes that in 1995-96, "only one in four women in their sixties were
tested as often as recommended for breast cancer only 14 percent of eligible women without
supplemental insurance received a mammogram" in the first two years that service was covered
under Medicare. Not only would this provision improve quality of life for countless older
women, it would save lives and money when Medicare is not called upon to pay for a hip
fracture, for breast or colon câncer, or a hospitalization brought on by diabetes identified too
late.
3.
Cost-Sharing Provisions.
The President's plan contains two beneficiary cost-sharing proposals in particular which
should be carefully examined for their impact on low-income elderly women. These are:
Competitive defined benefit for managed care.
2
This provision establishes a core mix of Medicare benefits for Medicare managed care
plans. It also would give Medicare beneficiaries the option of choosing a plan with a lower or
no Part B premium if they choose a low-cost HMO, and allow beneficiaries to pay out-of-pocket
for a richer mix of benefits. The proposal explicitly includes prescription drug coverage in the
core managed care benefit package, which is essential from a woman's perspective.
However, women have the greatest health needs and the fewest financial resources and,
frankly, need a richer mix of benefits and specialists. We hope that provision does not set a
precedent which moves Medicare away from the social insurance model which has provided the
same level of care to beneficiaries regardless of income, to a market-driven program in which
wealthier beneficiaries receive better care.
Early buy-in.
The President proposes to extend health care coverage through a Medicare buy-in, to
displaced workers beginning at 55 and early retirees beginning at age 62, and offers COBRA
coverage for retirees whose companies dropped retiree health insurance. Though women in this
group urgently need this access to care, a $300 monthly premium for the buy-in is out of reach
for most uninsured, low-income women.
In addition, an monthly payment will be assessed beginning when a beneficiary of the
buy-in becomes eligible for Medicare. Because women live an average of six years longer than
men, and because the premium is a "lifetime premium," it has an unintended gender bias.
*****
Women are the majority of Medicare beneficiaries. Their incomes are lower and their
health care costs are higher. Women's out-of-pocket health spending is as much as five percent
higher than men's; poor older women can spend more than half of their incomes on health.
The President's plan is a strong first effort to strengthen Medicare and improve services
to beneficiaries. The plan does have provisions--the HMO market-driven proposal and the early
buy-in plan--which require further examination for their impact on the most vulnerable women
in Medicare. However, fortifying the Medicare trust fund, adding help for the cost of
prescription drugs, helping low-income beneficiaries and providing direct incentives for
preventive care, represent important and overdue advances in Medicare for the millions women
who depend on it.
This analysis was prepared by OWL for the National Council of Women's Organizations. For
further information, contact Deborah Briceland Betts, OWL Executive Director at 202/783-6686.
3
THE VOICE OF MIDLIFE AND OLDER WOMEN
MEMORANDUM
July 19, 1999
TO:
The National Council of Women's Organizations
FROM:
Deborah Briceland-Betts
Executive Director, OWL
SUBJ:
White House Meeting
I am writing in reference to this afternoon's Medicare meeting at the White House and
the opportunity that I believe it presents to the women's community.
Medicare long has been a key issue for OWL. We are wrapping up our 1999 Mother's
Day campaign, The Face of Medicare is a Woman You Know, and I hope you received our
Mother's Day report of the same name. The report describes why Medicare is a women's
program--at every age, we are the majority of beneficiaries--why it is so important to protect and
preserve Medicare for women's health the decades to come, and how we must do it if we are
to be effective for the women we know
But just as with Social Security, Medicare is becoming an issue for all women as the
Baby Boom ages and we women increasingly find ourselves in the majority. We are delighted
that the White House has chosen to take such a high profile on Medicare and that its policy
people have chosen to frame the issue from a woman's perspective.
We are looking forward to getting together to talk about how we can make the Medicare
reform debate real for the millions of women who are current Medicare beneficiaries, and for
the millions more women who will become eligible for Medicare in the next century. We at
OWL hope that you will feel free to use us as a resource as this debate heats up and you become
more involved. Call us for statistics, for fact sheets, for the experiences of real people, and of
course, for copies of the Mother's Day report.
I have attached an analysis we prepared of the President's Medicare proposal, and a press
release we issued the day the proposal was released. I hope that this will be of help as we begin
to put our heads together on Medicare, and I look forward to your creativity and input.
666 11TH STREET. NW, SUITE 700
WASHINGTON, DC 20001
202-783-6686
FAX 202-638-2356
The Face of Medicare is-r>>
a Woman You Кпош~
BLK
877
ML2999 Mother's Day Report-26
X-267
A Message from Betty Lee Ongley
President. OWL
Happy Mother's Day!
not covered by Medicare, low income programs, or the
Each year, OWL marks Mother's Day with il report high-
plemental Medigap insurance policies ive buy, and we
almoral
or
lighting an issue of critical importance to America's midlife
spend an average 22 percent of our already meager incomes
and older women. The Face of Medicare is a Woman You
on out-of-pocket expenses.
dalla
Know ranks as one of our most significant and timely
Increasingly, the report shows, we are being urged 10
efforts. It goes directly to the heart of the critical national
look to Medicare managed care as a way to expand our
debate now taking place about the future of Medicare and
access to health care while lowering its costs. Managed
delineates the issues unique to women that must be
care has been beneficial for older women in many ways.
addressed if the program is to be strengthened effectively
Increasingly, however, as plans seek to reduce their costs,
for the future:
we are being asked to sacrifice quality for efficiency.
The report is based on the findings of a series of three
Access to many services is being limited, new high cost
forums held by OWL, with the support of the Henry J.
pharmaceuticals and treatments are often not covered,
Kaiser Family Foundation, on Women and the Future of
and when doctors leave plans, continuity of care may be
Medicare. At the forums in San Francisco, Atlanta and
disrupted. We have learned, according to the report, that
Chicago, some of the country's top experts helped to pin-
the result is poorer health outcomes.
point the benefits and barriers in a program that has liter-
The Medicare+Choice managed care options that were
ally provided a lifeline for America's older women for
included in the 1997 Balanced Budget Act, and new pro-
nearly 35 years.
posals being considered by policymakers, must be careful-
The report vividly shows that the face of Medicare is a
ly assessed to make certain they meet our needs for
women's face. We are almost six in ten of those receiving
affordable, high quality care.
benefits from the program at age 65, and more than seven
Today's Medicare must be strengthened for future gener-
in ten by the time we reach 85. Two times more of us are
ations of women. As we look to reform our major social
poor than men, and 20 percent of the most vulnerable-
programs, we must remember that Medicare and Social
widows, divorced and never married-are poor. Medicare
Security fit hand in glove to protect women as they age, and
has made it possible for us to have access to the health care
they must continue to do so. We need the continuing guar-
we increasingly need as we age and that we otherwise
antee of a program with defined benefits, a program that
would not be able to afford.
maintains and enhances our ability to access affordable
As we age, we develop more-and more complex-
high quality health care services.
chronic conditions. We are more likely to become disabled
OWL believes that policymakers must assess the impact
and to require long-term care Without Medicare, we would
on women of any changes they propose for Medicare. They
not have access 10 necessary treatments and important new
must first look at our health care needs, and what they
preventive benefits/There are, however significant gaps in
cost, and then how best to design a framework that is
coverage that can, even with Medicare, make our health
inclusive as well as efficient. As our report clearly shows, if
care costs close to unaffordable. Prescription drug costs,
Medicare works for women, it will be a program that will
specialized treatments and high-tech medicine are often
work for everyone-today and in the future.
Highlights
with the passage of this Act, the threat of financial doom is lifted from
senior citizens and also from the sons and daughters who might otherwise be
burdened with the responsibility for their parents' care. [Medicare] will take
its place beside Social Security and together they will form the twin pillars of
protection upon which all our people can safely build their lives.
President Lyndon Johnson, 1965
edicare, the nation's health insurance program for older
health care for women, and make health care costlier as
women and men, is not typically thought of as a
well. Women have a stake in preserving and strengthening
"woman's program." But it should be. Almost six in ten
the Medicare program to ensure that they and future gener-
individuals receiving Medicare are women and more than
ations will have access to quality, affordable health care.
seven in ten over the age of 85 are women. Over time, the
In all age groups over age 65, women outnumber men
proportion of Medicare beneficiaries who are women will
in the Medicare program. By age 85, women outnum-
only increase. More and more, the face of Medicare is a
ber men in the Medicare program by two to one.
woman's face.
Women rely on Medicare for more years than men do
Women have a significant stake in the Medicare program.
because they live longer. Women's average life
Women live longer than men-and are more likely to suffer
expectancy is 79 years-compared to 73 years for
from chronic health conditions, to require more medical
men.
care, and to need assistance with activities of daily living.
The longer a woman lives, the more likely she isto suf-
With women's poverty rates twice that of men, health care
fer from prolonged chronic illness. Nine in ten women
costs take a bigger bite out of women's limited incomes.
age 65 and over report one or more chronic conditions
Women are Medicare's most vulnerable population.
and almost three out of four have two or more chronic
This OWL Mother's Day Report, The Face of Medicare is
conditions.
a Woman You Know, shines a spotlight on Medicare as a
Chronic conditions are sources of significant and
women's issue. It shows that while Medicare provides cru-
increasing disability as well as mortality for older
cial health care for older women, the gaps in the program
women. The older a woman, the more likely she is to
and the limitations of supplemental insurance leave women
need assistance with activities of daily living such as
vulnerable to high out-of-pocket costs. These gaps, such as
eating, walking, and bathing.
long-term care coverage, affect women disproportionately:
With more chronic and disabling conditions and a
Moreover, the shift of individuals on Medicare to managed
greater likelihood of living alone, women are more
care in recent years has had mixed consequences for
likely than men to have long-term care needs and to
women, lowering their health care costs and increasing
use long-term care services. In 1996, 1.5 million elder-
access to services in some cases-but creating new prob-
ly women resided in a long-term care facility and
lems with access and quality in others.
women made up three out of four of the residents in
The report cautions women 10 pay close attention to
these facilities.
changes that have already taken place in the Medicare pro-
At every age, women are at greater risk of poverty than
gram and to proposals for reforming it further. Some of the
men-but the disparities are particularly pronounced
reform proposals on the table would increase barriers to
in old age. Women age 65 and over are twice as likely
as older men in this age group to be poor, with
Women enrolled in Medicare managed care plans have
incomes less than $10,000.
increased access to preventive and screening services
There are a number of gaps in the Medicare program-
such as mammography, clinical breast exams, Pap
most notably the absence of coverage for prescription
smears, bone scans, and blood pressure screening.
drugs and long-term care, as well as the lack of stop-
Additionally, most managed care plans offer some cov-
loss protection-that result in higher out-of-pocket
erage for prescription drugs.
health care costs for low- and moderate-income women.
Research suggests that managed care plans are more
Poor elderly women often face financial barriers to
effective than fee-for-service plans at coordinating
health care. The Kaiser/Commonwealth 1997 Survey
health services-and at identifying and treating cer-
of Medicare beneficiaries found that more than one in
tain diseases at earlier stages. These features are par-
four women experienced difficulty getting needed
ticularly important for older women who require many
health care or paying their medical bills.
complex services from difference sources.
Older women on Medicare have substantial out-of-
Research has also identified potential concerns for
pocket costs. Estimates for 1998 showed that women
women enrolled in managed care plans including poor-
spent, on average, $2,613 for health care-or 22 per-
er health outcomes, disruption of patient-provider rela-
cent of their incomes. Men spent, on average, $2,385
tionships, and, in some instances, difficulties gaining
or 17 percent of their incomes on out-of-pocket health
access to specialists and high-cost prescription drugs.
care costs.
The Balanced Budget Act of 1997 created
The older and poorer the woman, the higher her out-
Medicare+Choice which expands the range of private
of-pocket costs. Estimates indicate that in 1998,
managed care plans that may contract with Medicare
women age 85 and over spent 27 percent of their
to provide health care to older Americans. As these
incomes on health care. However, women living below
new types of plans become available, women will need
the poverty level spent 34 percent of their incomes on
to assess their options and choose a plan that most
health care.
closely meets their individual requirements.
Many older women rely on private insurance or
In 1997, Congress established the National Bipartisan
Medicaid to supplement their Medicare coverage.
Commission on the Future of Medicare to recommend
Seventy-eight percent have some type of private sup-
proposals to reform Medicare. Women need to under-
plemental insurance coverage.
stand how these changes could affect their coverage,
Seventeen percent of older women have Medicaid COV-
their costs and access to care. Several of the proposals
erage to supplement their Medicare coverage. However,
now under consideration could have adverse conse-
22 percent of poor older women have no coverage
quences for women, such as raising the eligibility age
other than Medicare.
for Medicare and increasing cost-sharing for home
In recent years, the managed care industry has moved
health services. More broadly, the commission consid-
aggressively to enroll those on Medicare in managed
cred a new system of "premium supports" that
care plans. Today, women represent the majority of
would provide a set amount of money which seniors
Medicare recipients enrolled in managed care, reflect-
and people with disabilities of proposed changes for
ing their share of general medicare population: 2.9
women-our mothers and grandmothers-is essen-
million women (about eight percent of the Medicare
tial for the success of any effort to preserve and protect
population) and 2.2 million men (about six percent),
Medicare.
were enrolled in managed care plans in 1997.
Introduction
n their later years, both women and men rely on
In recent years, Medicare has come under scrutiny
Medicare-the nation's health care program for 39 mil-
because of the rapidly growing Medicare population-pro-
lion aged and disabled persons. Like Social Security,
gram rolls are projected to swell to 76 million by the year
Medicare is a social insurance program. It provides health
2030-and the rising costs of services provided under the
care protection to all people with disabilities and the aged
program. Medicare spending now represents 12 percent of
regardless of income or health history.
the federal budget and spending is projected to grow in the
As the majority of those on Medicare, women have a
future. Moreover, the expected drop in the number of
particular stake in preserving and strengthening the pro-
workers per beneficiary means that there will be propor-
gram. They live longer than men-and are a dispropor-
tionately fewer people to contribute payroll taxes to sup-
tionate share of persons who are over age 85. Women are
port those on Medicare in the future. The Medicare Trust
more likely to be widowed, to live alone, and to live in nurs-
Fund is currently projected to be depleted by 2015.
ing homes.
A variety of changes were made in recent years to reform
Women are also more likely than men to suffer from
the Medicare program and to help slow the growth in
multiple chronic illnesses-and they are more likely to
Medicare spending by expanding the role of private plans
experience difficulties with activities of daily living. In
and encouraging managed care enrollment through the
addition, women are heavy users of health and long-term
Medicare+Choice program. Women should monitor these
care services. Because their incomes are lower than men's,
changes and be aware of what they mean for their ability to
out-of-pocket spending for health care by elderly women
get-and pay for health care.
takes a bigger bite out of their available incomes.
women outnumber men in the Medicare
For almost thirty-five years, Medicare has provided mil-
program. Almost six in ten of those on
lions of older women with access to health care they would
Medicare are women, and more than seven in
not otherwise have had. However, there are a number of
ten age 85 and older are women.
gaps in the Medicare program-most notably the absence
of coverage for prescription drugs and long-term care as
Other changes made by the Balanced Budget Act of 1997
well as the lack of stop-loss protection-which make the
will have a disparate impact on women. The most impor-
program costly for low- and moderate-income women.
tant of those changes imposes a prospective payment sys-
The Medicare program has undergone significant
tem on home health and skilled nursing care. The payment
changes in recent years. Out-of-pocket health spending
formula for these services sets levels which provide disin-
has increased as a result of the increased costs of sophisti-
centives for providers to serve patients requiring more
cated treatments and prescription drugs not covered by
intense care, primarily women.
Medicare, as well as Congressionally-mandated increases
In addition to the significant changes in law already
in payments for premiums, deductibles, and copayments.
enacted, Congress is considering further changes to pre-
Increasing numbers of individuals on Medicare are turning
serve the program for the baby boom generation.
to managed care plans to help pay for uncovered services
Some new proposals would build on Medicare's existing
and lower out-of-pocket costs.
structure. However, other initiatives call for a restructuring
of the program. Because older women are more likely than
out-of-pocket costs for women. In Part Three, the report
older men to have low incomes, multiple chronic condi-
assesses how well the various types of supplemental health
tions, and high out-of-pocket costs, they could be dispro-
coverage-Medigap, retiree health insurance, and
portionately affected by changes in the program-especial-
Medicaid-are working for women.
ly those that shift costs onto beneficiaries. Women need to
In the final section of the report, the implications of
assess any reform proposals to ensure that their financial.
Medicare managed care for women are considered. Finally,
health, and long-term care needs will be met in the future.
the report describes recent proposals for Medicare reform
This OWL Mother's Day Report, The Face of Medicare is
and concludes by making recommendations for policy
a Woman You Know, focuses attention on Medicare as a
changes which would strengthen the Medicare program for
women's issue. Part One presents an overview of the health
today's older women and men, as well as for future genera-
and income status of women on Medicare. Part Two
tions.
explains how the Medicare program works and describes
the gaps and limitations of the program-and the resulting
Women, Health,
and Income
Today, there are 20 million older women on Medicare.
Figure 1
Another two million women are covered by Medicare
Age and Gender of Elderly Medicare Population, 1996
because they receive Social Security disability benefits At
5 million
18.4 million
12 million
4.2 million
all age groups over age 65, women outnumber men in the
59%
45%
40%
29%
Medicare program. Almost six in ten (58 percent) of those
on Medicare are women and more than seven in ten (71
percent) age 85 and older are women(see Figure 1). By age
Males
155%
Females
85, women outnumber men in the Medicare program by
more than two to one (Rice and Michel 1998).
Women rely on Medicare for more years than men do
because they live longer-an average of six years longer.
Under age 65
Age 65-74
Age 75-84
Age 85+
Women's average life expectancy is 79 years-compared to
Source: Kaiser Family Foundation 1999
73 years for men. If a woman lives to age 65, she can
expect to live until the age of 84-about 3.3 more years
woman, the more likely she is to be living alone. More than
than a man will (Rice and Michel 1998).
one in three (35 percent) older women live alone-com-
Most women marry older men. Because men do not live as
pared with 14 percent of older men. And more than half (53
long as women, older women are three times more likely to
percent) of women age 85 and older live alone, whereas only
be widowed than men and four out of five women age 85 or
one in four men do (Gibson and Brangan 1998).
older are widowed (Rice and Michel 1998). The older the
in
Figure 2
and their average age is 57. One out of four caregivers is
Medicare Beneficiaries with Incomes Under $10,000, 1996
between the ages of 65 and 74-and one in ten is age 75
55%
and over (Rice and Michel 1998).
Millions of elderly women rely on paid help for long-
AGE
term care assistance at some point in their lives as well. In
30%
65-84
1996, 1.5 million elderly women resided in a long-term care
27%
85+
facility-a skilled nursing home, retirement home, or insti-
16%
tution for the mentally retarded-and they made up three
out of four of the residents in these facilities. In addition,
women comprised two out of three (67 percent) of home
Men
Women
health care users and over half (55 percent) of hospice
Source: Medicare Current Beneficiary Survey. 1996
patients in 1996 (Rice and Michel 1998).
Chronic Illness and Long-term Care
Older women are twice as likely as older men
T he longer a woman lives, the more likely she is to suffer
to be poor
among those 85 and older, more
from prolonged chronic illness. Nine in ten women age 65
than half of women had incomes of less
and over report one or more chronic conditions and almost
than $10,000.
three out of four have two or more chronic conditions.
Among women age 85 and over, 97 percent have one or
Women, Poverty. and Access to Health Care
more chronic conditions and 47.5% women in this age
every age, women are at greater risk of poverty than
group suffer from Alzheimer's disease (Rice and Michel
are-but in old age, the disparities are particularly
1998). (Evans et al. 1990)
pronounced(se Figure 2). Older women are twice as likely
Chronic illnesses are sources of significant and increas-
as older men to be poor. In 1996, women between the ages
ing disability, as well as mortality, for older women. The
of 65 and S5 were nearly twice as likely (30 percent) as
older a woman, the more likely she is to need assistance
older men (16 percent) in this age-group to have incomes
with activities of daily living such as eating, walking, and
under 125 percent of the poverty line (less than $10,000
bathing. One in three women age 65 to 74 report functional
annually). The older the woman, the more likely she is to
limitations and more than eight in ten women age 85 and
be poor: among those on Medicare age 85 and older, more
over report being limited in their functioning (Rice and
than half of women compared to one in four men had
Michel 1998).
incomes less than $10,000 in 1996 (Rice and Michel 1998).
Most older persons with long-term care needs are
Poor elderly women often face financial barriers to
women (Neuman 1998). Long-term care includes a broad
health care. The Kaiser/Commonwealth 1997 Survey of
array of in-home, community, and institutional services for
Medicare Beneficiaries found that more than one in four
people who need assistance carrying out everyday tasks
women (26 percent) experienced difficulty getting needed
because of a chronic condition.
health care or had problems paying their medical bills.
Many elderly women who require help with everyday
This survey also reported that low incomes were correlated
activities rely on family and friends. In fact, three out of
with a lower likelihood of using preventive services: poor
four elderly disabled persons rely exclusively on informal
and near-poor women were about 20 percent less likely to
unpaid caregivers-most of whom are older women them-
have had mammograms than were women with incomes.
selves: three out of four informal caregivers are women
more than twice the poverty level (Schoen et al. 1998).
6
The Medicare Program
8
efore Medicare was enacted in 1965, half of our nation's
under Part A without paying a premium. For Medicare Part
older citizens were uninsured and just one serious ill-
B, individuals pay a monthly premium ($45.50 in 1999)
ness away from financial ruin. Today, nearly all Americans
which is deducted from their Social Security checks.
age 65 and over are insured under Medicare. Medicare pro-
vides health insurance for one in seven Americans.
The most glaring gap in Medicare is in the area
Like Social Security, Medicare is a "social insurance" pro-
of long-term care a serious problem for
gram. It offers health care protection to all eligible elderly
women, who make up the majority of those who
need long-term care assistance.
and disabled people-regardless of income or health histo-
ry. Individuals contribute to Medicare while they are work-
Gaps in Medicare
ing so that they and their spouses will be provided with
health insurance upon retirement.
F
or more than three decades, Medicare has provided mil-
lions of older women and men, and since 1972, people
Medicare consists of two parts which together provide
with disabilities, with access to health care they would not
health care coverage for basic medical services. Part A-
otherwise have had. However, there are a number of gaps
hospital insurance-primarily covers hospital inpatient
in the Medicare program which make the program costly
care. It does not cover most long-term care, although it
for low- and moderate- income women. Cost sharing and
does pay for some skilled nursing facility benefits and
deductibles can be high, and there is no cap on what an
home health benefits following a hospital or nursing stay as
individual must pay towards the costs of treatment.
well as hospice care. Medicare Part 3-Supplemental
Because of these gaps Medicare is less generous in coverage
Medical Insurance-covers physician services, outpatient
than health plans typically offered by large employers
hospital services, home health visits not covered under Part
(Hewitt Associates LLC 1997).
A, and other services such as laboratory procedures and
Traditional Medicare does not cover prescription drugs
medical visits.
unless they are used in a hospital or other health care insti-
Before Medicare was enacted in 1965, half of
tution. Almost eight out of ten women on Medicare use
our nation's older citizens were uninsured-
prescription drugs regularly and most pay for these med-
and just one serious illness away from
ications out-of-pocket (Schoen et al. 1998). Non does the
financial ruin.
program cover the costs of vision, hearing, and dental care.
The most glaring gap in Medicare for women is the
With the passage of the Balanced Budget Act of 1997, a
absence of long-term care coverage. Many of those on
range of preventive services necessary for women are now
Medicare are surprised to learn that Medicare covers only a
covered by Part B of Medicare, including mammography,
small proportion of long-term care services and is limited
Pap smears, bone mass density screening for osteoporosis,
to coverage of skilled nursing care, usually following an
and diabetes testing.
acute health care crisis. This is a serious problem for
As long as they are eligible for Social Security, citizens
women, who make up the majority of those who need long-
age 65 and older are automatically entitled to benefits
term care assistance.
7
Figure 3
pocket costs is higher than their male counterparts. AARP
Average Percent of Income Medicare Beneficiaries are Spending
projected that in 1998 women spent, on average, $2,613 on
Out-of-Pocket for Health Costs 1998, by Gender
out-of-pocket costs for health care-or 22 percent of their
incomes-compared to the $2,385 (17 percent of income)
spent by men (See Figure 3). These figures exclude the
Dollars
% of Income
costs of home care and nursing home care (Gibson and
Women
$2,613
22%
Brangan 1998).
The older and poorer the woman, the higher her out-of-
Men
$2,385
17%
pocket health care costs: women age 85 and over spent 27
percent of their income for health care in 1998. Women liv-
ing below the poverty level spent a third of their incomes
Source: Projections from Medicare Benefits Simulation Model. 1998. Gibson and Brangan 1998.
on out-of-pocket health care in 1998 and elderly women
with one or more limitations with activities of daily living
Another problem with Medicare is it does not include
stop-loss protection, which caps the maximum amount that
also spent a third of their incomes on out-of-pocket health
individuals are required to pay for covered services. Private
care in 1998 (see Figure 4). Poor older women without
insurance offered by large companies generally includes
Medicaid coverage were the most vulnerable group spend-
stop-loss protection. This is not the case with Medicare,
ing more than half (53 percent) of their incomes on out-of-
leaving those with serious medical problems vulnerable to
pocket health care (Gibson and Brangan, 1998).
catastrophic expenses. Many women and families often are
Older women's health care spending will continue to
left with significant out-of-pocket costs in the event of cata-
grow substantially over time. For example, changes in the
strophic illness due to this gap in Medicare.
Balanced Budget Act of 1997 are projected to increase
Medicare premiums from $45.50 per month ($546.00 a
Out-of-pocket Spending
year) in 1999 to $105.70 per month ($1268.40 a year) in
any individuals on Medicare have high out-of-pocket costs
2008. Although Medicare premiums were expected to rise
M
due to the financial requirements of the Medicare pro-
over time, this is $552 a year more than the increase pro-
gram. Those on Medicare are responsible for the cost of Part
jected prior to passage of the Balanced Budget Act of 1997
B premiums, deductibles and cost sharing, outpatient pre-
(Congressional Budget Office 1998). The increased costs of
scription drugs, and long-term care. To help cover these costs,
Medicare premiums will place an even greater burden on
low- and moderate-income women in the future.
most women (78 percent) receiving Medicare also have some
form of supplemental insurance, which can provide coverage
to meet some of these needs. Only the most costly plans pro-
Figure 4
vide coverage for services such as prescription drugs.
Out-of-Pocket Spending on Health Care by
However, Medicare-related costs for individuals have
Medicare Beneficiaries as a Percent of Income
60
risen quite dramatically over the last three decades. In fact,
53%
50
older Americans today are spending a higher proportion of
40
their incomes for health care than they were prior to the
33%
30
28%
27%
enactment of the Medicare program-and today they
22%
20
17%
spend three times the share of household income that
10
younger families spend on health care (Families USA
0
Men
Women
Fair/Poor
ADL
85+
Poor
Foundation 1992).
Total
Total
Health
Non-Medicaid
Because women have lower incomes and greater health
Characteristics of Women
care needs. the proportion of their income spent on out-of-
Source: Gibson & Brangan 1998
Supplemental
Health
Coverage
eventy-eight percent of women on Medicare have some
(S7 percent) compared to 1991 (92 percent). In addition,
form of supplemental health insurance-either private
the scope of covered benefits in many retiree health plans
insurance through a former employer, an individual
has been reduced (Hewitt Associates LLC 1997).
Medigap policy, or Medicaid. These supplemental insur-
Moreover, large employers who do provide retiree health
ance plans pay for the deductibles and coinsurance costs
benefits are shifting a larger share of the costs to retirees.
faced by Medicare enrollees and some offer coverage for
Between 1966 and 1991, the proportion of large employers
outpatient prescription drugs. However, these private and
requiring post-65 retirees to pay premiums increased from
public plans have limitations as well.
72 to 88 percent. And during this time period, an increasing
share of large employers increased deductibles, raised retiree
Medigap
contributions for dependent coverage, and moved retirees
S
lightly more women (27 percent) than men (23 percent)
into managed care plans (Hewitt Associates LLC 1997).
have individually-purchased Medicare supplemental
insurance policies, known as Medigap coverage. Medigap
Medicaid
policies help older women by helping to defray Medicare's
ower income individuals are much less likely than their
cost-sharing requirements, and in some cases, paying for
higher income counterparts to have Medigap or retiree
some prescriptions (Kaiser Family Foundation, forthcom-
health coverage. For approximately six million low-income
ing).
Medicare beneficiaries, Medicaid is the primary source of
In recent years, premiums for Medigap policies have
supplemental health coverage (Kaiser Family Foundation
increased dramatically, especially for policies that
1997). More older women (17 percent) receive assistance
cover some prescription drugs. If premiums continue
from Medicaid than do older men (11 percent) (Kaiser
to rise, these policies may be priced out of reach for
Family Foundation 1999).
many older women.
Medicaid differs from Medicare in a number of ways.
Medicare is an entirely federal program that provides a
Retiree Health Coverage
standardized package of health services to the aged and
M
any people on Medicare have traditionally relied on
certain disabled individuals. Eligibility is not based on
employer-sponsored retiree health benefits that "wrap
income or resources. Medicaid is a combined federal-state
around" Medicare coverage. Women are somewhat less like-
program. Although general program requirements for
ly (33 percent) than men (36 percent) to have retiree health
Medicaid are dictated by federal law, Medicaid is operated
coverage (Kaiser Family Foundation 1999).
and administered by the states. Eligibility for Medicaid is
Retiree health coverage is an important source of cover-
based on income and resources below specified ceilings
age for the women who have it. However, this type of cover-
that differ greatly from state to state.
age has been eroding in recent years and health benefits for
While 78 percent of women have some type of private
future retirees are uncertain. A declining proportion of
supplemental coverage, 22 percent have no coverage except
large employers offered health benefits to retirees in 1996
for Medicare. Forty-six percent of older women below the
9
poverty line are not enrolled in Medicaid (Gibson and
welfare office. Senior citizens report how difficult it is to
Brangan 1998).
find someone in welfare offices or Social Security offices
Depending on the state in which they reside, and their
who knows about the special programs for low-income
income level, low income Medicare recipients can be either
individuals (General Accounting Office 1994; Nemore 1997;
fully Medicaid eligible, or receive partial Medicaid coverage
Families USA Foundation 1993).
through other programs. For those fully eligible for
A recent White House initiative has focused attention on
Medicaid, the program will pay their Medicare coinsurance
efforts to enhance the enrollment of the low-income elderly
and deductibles, as well as for services covered by Medicaid
in the QMB and SLMB programs. Mailings and other pub-
but not Medicare, such as prescription drugs.
lic education programs have been undertaken by the Health
For the elderly and disabled poor who do not receive full
Care Financing Administration to inform those already
Medicaid benefits, they may have partial Medicaid coverage
receiving Medicare that these programs exist. Additionally,
to cover some of Medicare out-of-pocket costs. The most
two demonstration projects are underway by the Social
important of these programs are the Qualified Medicare
Security Administration, one through which the Social
Beneficiary Program (QMB) and the Specified Low-Income
Security Administration office will set up appointments for
Medicare Beneficiary Program (SLMB).
eligible Medicare recipients with state Medicaid offices, and
Individuals on Medicare with incomes below the poverty
another through which Social Security will directly enroll
level and limited assets (less than $4,000 per person) are
qualified individuals in the programs.
eligible for the QMB program which pays Medicare's premi-
Medicaid fills the long-term care gap left by Medicare.
ums, deductibles, and in some instances, cost-sharing.
However, in order to qualify for Medicaid coverage of long-
Individuals with incomes between 100 and 120 percent of
term care, individuals must first exhaust most of their
poverty and limited assets are eligible to have Medicaid pay
assets and annual family incomes-or at least "spend
their Part B premiums only (SLMB).
down" these resources to a very low level and leading to
For Medicare beneficiaries who are not low income, but
premature institutionalization. Essentially, Medicaid offers
have exceptionally high medical bills, a majority of the
long term care protection after catastrophe has occurred
states have "medically needy" programs through which
(Moon 1996).
these individuals may become eligible for Medicaid bene-
Medicaid is today the largest payer of long-term care
fits, including outpatient prescriptions.
services, comprising nearly one-half of all national health
The QMB and SLMB programs offer crucial protection to
payments for nursing home care. Medicaid primarily pays
low-income women and men. Unfortunately, almost a
for nursing home services and, to a limited extent, for
decade after the enactment of the program, about half
home-community-based-care services. As discussed
those eligible for this protection are not receiving these
above, however, Medicaid only covers long-term care for
critical benefits (Moon, Kuntz, and Pounder 1996; Families
those who are poor or who have spent much of their
USA Foundation 1998).
income and assets on health and long-term care. In
A major reason for the low participation has been lack of
essence, the Medicaid program has become the long-term
knowledge about the programs-on the part of both bene-
care insurance program of last resort for many of those on
ficiaries and social service workers. Although individuals
Medicare-largely because the costs of long-term care are
must visit a Social Security office to enroll in Medicare,
out of reach for so many individuals. The annual cost of a
they are not allowed 10 apply for low-income benefits at
nursing home stay ranges from $30,000 to more than
that office. Instead. they must make a separate trip to a
$60,000 in high cost areas (Moon 1996). Most women and
10
families cannot afford to bear these costs.
(Long Term Care Campaign 1998). The women most in
Private long-term care insurance is not an option for
need of long-term care are also very likely to have low
most women. The average annual premiums for a five-year
incomes. These women are unlikely to have assets on which
policy for an individual age 65 to 69 were over $2,500 in
they can draw to pay for private, long-term care insurance.
1998 and over $8,000 per year for a 75-year-old person
Medicare and Managed Care
Figure 5
Medicare Managed Care and Traditional Enrollment, 1987-1997
T
The Medicare program is facing the challenge
3.81
4.04
5.50
40 00
2.61
3.03
of continuing to guarantee access to health
2.00
2.15
2.34
8%
10%
11%
145
1.73
1.82
1.71
6%
7%
7%
5%
6%
care and economic security to elderly and dis-
5%
5%
30.00
abled citizens while bringing costs under con-
trol (Davis 1996). Many policymakers see
20.00
moving individuals into managed care plans
30.70
3126
31.76
32.21
32.72
33.24
33.69
33.91
33:72
34.02
33.10
as part of the solution.
10.00
In recent years, the managed care industry
0.00
has moved aggressively to enroll individuals
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
in Medicare managed care plans develop-
Beneficiaries Enrolled in Medicare
Beneficiaries in Traditional
ment that has important implications for
Managed CarePlans (in Millions)
Medicare Programs (in Millions)
% in Managed Care Plans
older women (OWL 1997). In 1997, 5.5 mil-
Source: 1987.94 3r.d 1996 data from Health Care Financing Administration, Profiles of Medicare 30th Anniversary (May 19981. 95
lion individuals were enrolled in Medicare
1995 data from Health Care Financing Administration Office of Prepaid Health Care Operations and Oversight. 1997 data from
Helath Care Financing Administration Managed Care in Medicaid and Medicare Fact Sheet' (represents enrollment as cl August 1997i
managed care plans. Between 1987 and
1997, enrollment in Medicare managed care plans almost
costs for covered health care services.
tripled from five percent to 14 percent of the Medicare pop-
Under managed care, physicians, hospitals, and other
ulation.
providers agree to the rules, guidelines, and payment levels
Defining managed care is becoming an increasingly com-
set forth by the managed care plans in exchange for access
plex process. From its origins in health maintenance orga-
to plan enrollees. A primary care doctor often serves as a
nizations (HMOs). managed care now includes many
"gatekeeper" in the managed care plan, controlling access to
hybrid forms. At the broadest level, managed care organi-
specialists and procedures (Schoen 1995).
zations encompass a wide array of organizational strue-
Managed care contains built-in incentives to underuse
tures which restrict enrollees' choice of physicians and cer-
services, particularly specialty care. A capitated fee system
tain expensive treatments but charge lower out-of-pocket
creates incentives for gatekeepers to limit specialty care and
11
expensive treatments. A common practice in managed
fact, the evidence suggests that managed care does coordi-
care plans, capitation pays physicians and hospitals a fixed
nate care better than fee-for-service plans. A 1994 study of
amount per person enrolled in the physician practice or
primary care found that coordination of care was highest
physician-hospital mini-network.
among HMO patients (Meyer, Wilow-Carroll, and
Regenstein 1996).
Implications for Women
At the same time, Medicare managed care has given rise
W
omen represent the majority of Medicare managed care
to il variety of concerns. Payment of a capitated fee for each
enrollees, most of whom are enrolled in Medicare health
enrollee can encourage providers to deliver fewer or less-
maintenance organizations, a reflection of their overall par-
expensive services. This is a serious problem for older
ticipation in the Medicare program. As of March 1997,
women, especially those with disabilities, many of whom
approximately 2.9 million women and 2.2 million men were
have complex health conditions that require care from a
enrolled in Medicare managed care plans (HCFA 1997).
number of specialists (Meyer, Wilow-Carroll, and
Managed care has produced mixed results for older
Regenstein 1996).
women. On the plus side, women enrolled in Medicare
HMOs have, on average, lower cost-sharing and increased
There is evidence of poorer health outcomes for
benefits. Access to preventive and screening services
chronically ill older people participating in
(recently added to traditional Medicare benefits)-includ-
managed care-an issue of particular concern
ing mammography, clinical breast exams, Pap smears, bone
to older women who often have one or more
chronic conditions.
scans, and blood pressure screening-is crucial to ensur-
ing women's health as they age. Importantly, most HMOs
provide coverage for prescription drugs, hearing, vision and
There is evidence of poorer health outcomes for chroni-
dental services. By providing these important health ser-
cally ill older people participating in managed care-an
vices to women, often with minimal cost-sharing require-
issue of particular concern to older women who often have
ments and low additional premiums, managed care has
one or more chronic conditions. A recent study which
improved access to certain health services for many women
tracked Medicare beneficiaries over a four-year period
( Wyn, Brown, and Yu 1996).
found that declines in physical health were more common
With its emphasis on prevention and screening, managed
among those in HMOs (54 percent) than among those indi-
care has the potential to identify and treat discases at early
viduals in fee-for-service plans (28 percent) (Ware et al.
stages. One study showed that HMOs diagnosed certain
1996).
diseases-colon cancer, cervical cancer, and melanoma-
Another study showed that stroke patients enrolled in
at an earlier stage than fee-for-service plans (Riley, Tudor,
Medicare managed care were more likely to be discharged
and Chiang 1994). A second study just released by the
to a skilled nursing facility than to a rehabilitation hospital
Health Care Financing Administration reported that women
than those in traditional Medicare. The authors suggest
enrolled in Medicare HMO plans were diagnosed at an ear-
that care in a rehabilitation hospital, which is more expen-
lier stage of breast cancer than were women in Medicare
sive than a skilled nursing facility, can improve the health
fee-for-service plans (Boodman 1999).
outcomes of stroke patients (Retchin et al 1997).
One of the promises of managed care IS improved coordi-
Additionally, continuity of care may be disrupted in
nation of services. This feature is particularly important to
Medicare managed care plans when physicians leave plans
older women with chronic conditions and those who
or when plans leave Medicare. Older women often have
require many, complex services from different sources. In
long-term relationships with providers who are familiar
12
with their medical and family histories. If women are
required to switch to a new provider in a managed care net-
Medicare+ Choice Options
work, the benefits derived from having a physician knowl-
HMO: Individuals enrolled in an HMO obtain services from a
edgeable about the patient's health condition can be lost
designated network of doctors, hospitals, and other health care
(Meyer, Wilow-Carroll, and Regenstein 1996).
providers usually with little or no out-of-pocket payments.
A study of Medicare beneficiaries by the Inspector
PPO: Individuals obtain services from a network of health care
General's Office of the US Department of Health and
providers established by a health plan. Unlike an HMO, individ-
Human Services found substantial dissatisfaction among
uals can choose to go to providers who are not in the plan's
individuals enrolled in managed care plans. Problems
network and the plan will pay a portion of the costs.
included a lack of awareness about their appeal rights,
PSO: PSO's are similar to HMOs except they are set up by a
delays in getting medical appointments, and difficulties
group of doctors and hospitals who assume the financial risk
getting referrals to specialists. Many of those who had dis-
of providing comprehensive services to Medicare enrollees
enrolled from managed care plans reported a decline in
Private Fee-for-Service: A private indemnity health insur-
their health status while enrolled in managed care plans
ance policy which does not limit individuals to using a network
(Department of Health and Human Services 1995).
of providers. Under this type of plan, there is no limit on the
monthly premium that individuals may be charged for basic
Medicare+Choice
Medicare benefits.
Act of 1997 created
MSA: With this option, offered on a demonstration basis,
a Part C of Medicare, which broadens
individuals select a high deductible catastrophic plan.
the range of private health plans that may contract with
Medicare pays the monthly premium for this plan and makes
Medicare to provide care. The goal of Medicare+Choice is
a deposit into a tax-free medical savings account for the
to increase participation in HMOs and other private plans.
individual, who then may draw from their MSA to meet any
Under the new program, the range of plan options that will
health care expenses.
be available will expand to include preferred provider orga-
Source: The Henry J. Kaiser Family Foundation 1999.
nizations (PPOs), provider-sponsored organizations
(PSOs), private fee-for-service plans, and on an experimen-
basic Medicare benefit package.
tal basis, medical savings accounts (MSAs) together with a
Through the year 2002, individuals who opt for the new
high-deductible insurance plan (see box).
Medicare+Choice program will continue to be able to enroll
To date, the Health Care Financing Administration has
in a plan, switch plans, or disenroll from a plan at any time
received only a few applications from managed care plans
during the year. After that time, certain restrictions will go
and insurance companies interested in offering new
into effect. Beginning in 2003, those in Medicare+Choice
Medicare+Choice options. However, older women need to
plans will generally not be allowed to switch plans until the
pay close attention to developments in this area. A key issue
next annual enrollment period (Kaiser Family Foundation
for women requiring care for chronic conditions is whether
1999).
the plan will remain affordable, and provide necessary ser-
Important questions remain about whether managed
vices without limitations.
care will be able to deliver quality health services to elderly
Individuals who enroll in Medicare+Choice plans will
and disabled Americans while achieving financial savings.
continue to pay their Part B premium, but a private plan
It is crucial that women educate themselves about how to
will deliver all Medicare-covered benefits. For the most
protect themselves in this rapidly shifting health care envi-
part, Medicare+Choice plans are required to provide the
ronment.
13
Making Wise Decisions About a Medicare Plan
Before enrolling in a Medicare plan, whether traditional fee-for-service or a managed care option, women
need specific information about whether a particular plan offers a choice of doctors, easy access to special-
ists without unexpected bills, coverage when away from home, prescription drug coverage--and whether
the plan is affordable and can be coordinated with Medicaid. Women should ask the following questions
before selecting a Medicare plan:
1. Does this option offer a choice of any doctor?
4. Does the option cover prescription drugs?
The traditional Medicare program offers Medicare
Traditional Medicare does not cover outpatient pre-
allows choice of any doctor, whereas managed care
scription drugs, whereas many managed care plans
plans typically limit that choice. Increasingly. man-
do. However, many managed care plans only cover
aged care plans allow enrollees to see doctors out-
those prescription drugs included on the plan's list.
side the plan's network at extra cost to the enrollee.
Women need to find out whether the pharmaceuti-
Before enrolling in a managed care plan, a woman
cals they currently use are on the plan's formulary,
should find out whether her current physician is a
and what would happen if they needed a drug out-
member of the plan-how limited her choices will
side the plan's list.
be-and how much it will cost to see doctors out-
5. Is the option affordable for someone on a fixed
side the plan's network.
budget?
2. Does the option provide easy access to special-
Women with traditional Medicare can incur signifi-
ists, without additional charges?
cant costs from premiums, deductibles, and the costs
Traditional Medicare does not limit access to special-
of uncovered services such as prescription drugs.
ty care whereas most managed care plans require a
Combining original Medicare with a Medigap policy
referral from a primary care provider before a spe-
can help defray these costs. Typically managed care
cialist can be seen. Women need to learn the man-
plans are less expensive than original Medicare-
aged care plan's procedures for referring patients to
and provide some additional benefits-although the
specialty care. They also should find out if the plan's
costs of these plans is rising.
network includes the specialists they may need to
6. Will the option work with Medicaid?
see and whether those specialists are physically
Medicaid covers some of the Medicare out-of-pocket
accessible.
costs incurred by many low-income women. If a
3. Does the option provide coverage away from
woman receives Medicaid, she should make sure
home?
that switching to a managed care plan will not jeop-
Traditional Medicare covers health care anywhere in
ardize her eligibility. She should also make sure that
the United States, whereas many managed care
Medicaid will continue to cover her copayments.
plans require prior authorization before health care
can be received from providers outside the plan's net-
work or geographic area. Women need to ask what
the plan's rules are for getting emergency care when
away from home.
Medicare Reform Proposals
The rapidly growing Medicare population-program rolls
amount of money that would be applied by the elderly and
are projected to swell to 76 million by the year 2030-
disabled toward the cost of health coverage. Individuals
and the cost of providing services, have raised concerns
would have a choice of private plans which would offer at
about how to provide and pay for health care in the years
least a basic level of benefits. Regardless of the health plan
ahead. A broad array of proposals has been made to reform
selected, or the cost of premiums for the plan, the govern-
Medicare in recent years.
ment would pay a specific amount for each enrollee, based
Some of the proposals would retain Medicare's basic
on the cost of the average plan.
framework, but make changes to reduce government
Transforming the Medicare system into a "premium sup-
spending and individuals' contributions to the program.
port" consistency program would jeopardize the guaranteed
Other proposals call for a more radical restructuring of
Medicare benefits women have come to rely on. As a social
Medicare, replacing the social insurance features of the pro-
insurance program, Medicare is a program of clearly defined
gram with a system of premium supports. And still other
benefits. In the "premium support" model, as described by
proposals would enhance individuals' protections and
Sen. Breaux and Rep. Thomas, a range of plans would be
access to heath care under Medicare.
offered with higher-cost plans providing a broader range of
benefits. While wealthier individuals would probably be able
National Bipartisan Commission
to afford the higher premiums associated with better plans,
ON the Future of Medicare
those with modest means, primarily women, would have
n 1997, Congress established the National Bipartisan
strong financial incentives to enroll in low-cost plans with
Commission on the Future of Medicare to recommend
limited benefits.
proposals for strengthening and improving the Medicare
a premium support program would
program. While this 17-member panel of lawmakers, poli-
jeopardize the guaranteed Medicare benefits
cy experts, and citizens failed to achieve consensus on any
women have come to rely on
recommendation, several parts of the plan presented to the
Commission by the two Chairmen, Sen. John Breaux (D-
People are spending a rising share of their income on
LA) and Rep. Bill Thomas (I)-CA), are now under consider-
health. With "premium supports," individuals could face
ation by the Congress, and could have adverse conse-
even higher out-of-pocket spending (Moon 1999). This is
quences for women.
because premium supports would undermine the ability of
Restructuring the Program into Premium Supports.
Medicare to pool risk. With any proposal that suggests
The centerpiece of the Breaux-Thomas proposal would fun-
using multiple risk pools, there is the danger that plans, in
damentally restructure Medicare, replacing the social insur-
order to save money, would avoid the sickest patients.
ance nature of the program with a "premium support"
While this problem can be addressed by making higher
payments to plans that enroll sicker individuals,jany
m
model. Under this system, Medicare would provide a fixed
15
experts agree that it continues to be difficult to accurately
certain. If healthier individuals are the majority of those 1111-
calculate and adjust such payments to plans (risk adjust-
lizing this option, the costs of prescription drugs could
ment). Women, with their lower incomes and chronic
decline. However if only the sickest individuals enroll. the
health problems, would be at greater risk than men for
cost of coverage for prescription drugs could increase.
much higher out-of-pocket costs for the difference between
Others have proposed to provide prescription drug cover-
Medicare's payment and the plan's cost.
age 10 the Medicare population without limiting it to the very
Raising Eligibility Age for Medicare. The Breaux-
poorest. Such proposals would clearly benefit a large share of
Thomas plan proposes to raise the eligibility age for Medicare
women on Medicare who have incomes above 135 percent of
to conform with that of the Social Security program. The age
poverty and are without other insurance that covers their
for full Social Security benefits will gradually rise in the next
prescription expenses.
century, until it reaches age 67 in the year 2027 for people
born in 1960 or after. Increasing the age for Medicare eligi-
Federal Initiatives
bility from 65 to 67 would have a disproportionately negative
A
number of proposals have been introduced by the
impact on women-large numbers of whom would be left
Administration and lawmakers in both chambers cover-
without any insurance coverage at all until age 67.
ing some of the issues discussed in this report.
In 1996, three out of five uninsured persons between the
In his fiscal year 2000 budget, President Clinton included
ages of 62 and 65 were women. The high cost of premiums
several initiatives that affect Medicare and the health of
in the individual market is the most common reason these
older Americans:
women are uninsured (Smolka, Brangan, and Figueiredo
A proposal to apply 15 percent of the projected federal
1998). Raising the Medicare eligibility age would leave
surplus to the Medicare Trust Fund in order to extend
many more women without insurance coverage. Some have
its solvency to 2025.
proposed that these individuals be given the option of
A package of programs, including respite care, counseling
"buying in" to the Medicare program by paying the full
and information initiatives, as well as a $1000 tax credit,
costs of the Medicare premiums themselves. However, their
10 provide some federal assistance for the enormous
lower incomes would prevent many women from paying
financial and personal burdens long-term care places on
the full premium price of $5,041 a year (McDevitt 1998).
those requiring assistance as well as on their caregivers.
Provide limited coverage for prescription drugs.
A Medicare early buy-in plan that would enable indi-
Another proposal being explored would provide some cov-
viduals between the ages of 62 and 65 to receive
crage for prescription drugs. The Breaux-Thomas plan
Medicare coverage by paying the full premium for the
includes paying for the medicine of all elderly persons with
program, including an add-on to Part B premiums
incomes up to 135 percent of poverty. The proposal also
after retirement.
would require health plans to make available a "high
A managed care bill of rights that would provide a
option" plan which would offer coverage above Medicare's
package of consumer protections to private health care
standard benefit package. and include coverage for outpa-
plans similar to that covering all federal health care
tient prescription drugs. Any effort to extend prescription
programs since 1998.
drug coverage is a step in the right direction, but the conse-
In addition, legislators have introduced a number of bills
quences for women, who have significant out-of-pocket
that would enhance Medicare to cover prescription drugs,
spending for prescriptions. are uncertain.
add low-income protections to the early Medicare buv-in,
Those with low incomes could benefit from the initiative.
and extend protections to those enrolling in
but outcome for those choosing the "high option" plan is less
Medicare+Choice plans.
to
Recommendations and Conclusions
Figure 6
The debate over how to strengthen Medicare will continue
Most Women Say it's Very Important to Preserve Medicare
well into the 21st century as the baby boom moves into
retirement and Medicare costs continue to rise. Older
women have a stake in preserving and enhancing the
Medicare program to ensure that they and future genera-
15% Somewhat important
tions will have access to quality, affordable health care. In
fact, 82 percent of women of all ages say it is very impor-
2% Not too/at all important
1% Don't know/refused
tant to preserve Medicare (Kaiser Family
Foundation/Harvard School of Public Health 1998; see
82% Very important
Figure 6).
OWL supports proposals that would improve Medicare's
Source: Kaiser Family Foundation/Harvard School of Public Health
National Survey on Medicare. October 20. 1998
benefit package, enhance financial protections for low-
income women, improve protections in managed care,
contribution to making the program a more comprehensive
expand access to Medicare coverage, and address fiscal
health insurance plan for women.
problems to preserve Medicare for the next generation.
Increasing long-term care coverage in the Medicare
program would fill the most glaring gap in the program.
Improve Medicare benefit pachage
Women's long life expectancy and high incidence of chronic
M
edicare's benefit package could be improved in several
illness increase their probability of needing long-term care
ways that would benefit women: the addition of cover-
assistance. The current patchwork system of private insur-
age for prescription drugs; the expansion of Medicare to
ance and Medicaid is far from adequate. Enhancing
include long-term care; and the introduction of stop-loss
Medicare coverage for services such as home and commu-
protection.
nity-based care and respite care could provide women and
Prescription drugs are a crucial component of chronic
families with greater peace of mind in old age.
care management for older women today. Seventy-eight
percent of all women receiving Medicare use prescription
Improve financial protections
drugs regularly. Because Medicare does not cover them
improving access to the Medicare low-income protec-
(except when used in a hospital or other health care institu-
tions (QMB and SLMB) would greatly benefit low-income
tion), women's out-of-pocket costs for prescription drugs
women. Because women are overrepresented among the
are substantial. Guaranteeing full coverage of prescription
elderly poor, QMB and SLMB programs are of particular
drugs for all those on Medicare would make a significant
importance 10 them. However, many women who qualify
IT
for these benefits still do not receive them-either because
covers, and options they may pursue if dissatisfactions
they are unaware of the program or because they are reluc-
arise.
tant to go to welfare offices to apply. An important option
Additionally, it is particularly important for women that
for reform would be to enable individuals to apply directly
whatever safeguards are adopted are designed to protect
through the Medicare or Social Security programs for low-
those who are chronically ill. One important example of a
income benefits.
proposal that would benefit chronically ill women is one that
The lack of stop-loss protection-a cap on the maxi-
would allow the use of specialists as primary care physi-
mum amount individuals must pay for covered health
cians, without requiring referral from a "gatekeeper" each
care-exposes older women with serious health problems
time care is needed. Another example would be support to
to the risk of catastrophic medical expenses. This is partic-
the number of counseling programs available to those
ularly a problem for women who are not covered by retiree
requiring assistance with their health care choices or plans.
health insurance, Medigap, or Medicaid. The addition of
stop-loss protection to Medicare would help defray the high
Expand access to Medicare coverage
costs of health care for millions of women.
W
omen make up the majority of uninsured persons
between the ages of 62 and 65. Expanding Medicare
Guaranteeing full coverage of prescription
coverage to people in this younger group would provide
drugs would make a significant contribution
insurance protection to women who are at risk of signifi-
to making the program a more comprehensive
cant health care costs. Bringing early retirees into the
and affordable health insurance plan for
Medicare program would have other advantages as well,
women.
including broadening the base of support for the program.
Improve protections for individuals in managed care
Low-income subsidies are necessary if such a program is to
be accessible to most women.
S a result of federal law, those in Medicare managed care
enjoy greater statutory protections than those avail-
Address fiscal problems to preserve Medicare
able in private managed care plans. For example, the law
II those on Medicare-women as well as men-have a
permits women in Medicare managed care plans to self-
stake in ensuring that the Medicare program is fiscally
refer to a women's health specialist for routine and preven-
sound, both for themselves and for future generations.
tive women's health care services. However, the Health Care
Many experts agree that the fiscal challenges facing
Financing Administration needs to enforce these protec-
Medicare are due to the rise in the number of people who
tions to ensure that individuals in managed care plans get
will be covered by Medicare, rather than a failure of the pro-
the protections to which they are entitled. The laws pro-
gram to control the growth in per capital spending. While
tecting Medicare managed care enrollees could be further
Medicare faces real fiscal problems, it is not necessary or
strengthened.
desirable to radically restructure the program. Such a "cri-
Further, as consumer choices in health care continue to
sis" response would, in fact, succeed only in eroding the
proliferate, in order to enhance consumer education and
benefits and protections Medicare currently affords to older
protect the vulnerable from misleading information about
Americans. (Feder and Moon 1999) Applying some of the
their health care choices, the Health Care Financing
budget surplus to the Medicare program would make it pos-
Administration should undertake, and strictly enforce, ini-
sible 10 extend the program well into the 21st century-
tiatives to ensure that enrollees receive unbiased, objective.
providing new revenues to cover a generation of retiring
and standardized information about what a particular plan
baby boomers. This would provide time for careful consid-
is
eration of reforms that would strengthen Medicare without
Yes, changes are needed to preserve and strengthen
harming women or other vulnerable groups.
Medicare for future generations. But the way to shore up
It is also important to explore strategies for controlling
the Medicare program for the 21st century is not by taking
costs within Medicare. In the past, policymakers have
away the protections it offers today. Reducing Medicare
effectively contained Medicare costs by restraining the
benefits, exposing the vulnerable to added financial costs.
growth of payments to doctors, hospitals, and other health
and restricting access to quality health services could "fix"
care providers. Since its inception, Medicare has, on aver-
Medicare's fiscal problems while creating new and more
age, controlled costs as well as private insurance. limiting
serious problems for the most vulnerable elderly and
increases in payments to physicians and hospitals, and by
Americans with disabilities.
paying for inpatient care on a prospective basis (under
Any changes made to Medicare must not threaten
which Medicare pays providers a predetermined amount
women's ability to get the health care they need. As one of
per unit of service). The Balanced Budget Act of 1997 fur-
our nation's most vulnerable groups of citizens, women
ther restrained payments to providers and plans. Medicare
present policy-makers with an opportunity to make sure
must carefully build on its successes and expand its efforts
that reforms do not backfire. When considering options for
to control costs without reducing or eliminating needed
reform, lawmakers must ask themselves: how will these
services. Efforts to streamline program administration and
reforms affect women? If they benefit women, then they
eliminate fraud and abuse should be enhanced.
will benefit the majority of Americans. A sound Medicare
As our nation's leaders debate the future directions which
program for women is a sound program for all.
Medicare might take, it is imperative that the impact of dif-
ferent options for change on women be given careful con-
sideration. Millions of women depend upon Medicare
today-and millions more will depend upon the program
in the future. More often than not, the face of Medicare is a
woman's face. And that woman is likely to have limited
income and significant health care needs.
Reducing Medicare benefits, exposing the
vulnerable to added financial cost, and
restricting access to quality health services
could "fix" Medicare's fiscal problems while
creating new problems for the most
vulnerable
Medicare was enacted almost 35 years ago to provide our
nation's elderly with access to high quality, affordable health
care. The demands on the program have grown over time.
Longer lives, the aging of the baby boom generation, and
the rising costs of medical technology and specialized care
will continue to place considerable strain on the Medicare
program in the years ahead.
19
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''''
T
his OWL Mother's Day Report is an outgrowth of a series of forums held during the fall of 1998 and the winter of 1999.
Presentations by experts at these forums provided much of the material for this report. OWL gratefully acknowledges the
support of The Henry 1. Kaiser Family Foundation and the contributions of the following individuals at these forums:
Diane Archer, Esq.
Charlene Harrington, Ph.D.
Marilyn Moon, Ph.D.
Medicare Rights Center
University of California at San Francisco
Urban Institute
New York, NY
San Francisco, CA
Washington, DC
Deborah Briceland-Betts. Esq.
Michelle Kitchman, M.H.S
Patricia Neuman, Sc.D.
one
Henry 1. Kaiser Family Foundation
The Henry 1. Kaiser Family Foundation.
Washington, DC
Washington, DC
Washington, DC
Timothy Diamond, Ph.D.
Helene Lipton, Ph.D.
Betty Lee Ongley
University of California ill San Francisco
University of California at Sun Francisco
0111.
San Francisco, CA
San Francisco, CA
Kalamazoo, MI
Martha Eaves
Eleanor Lukazewski
Dorothy Rice, Sc.D.
Medicare Beneficiary
Medicare Beneficiary
University of California at San Francisco
Conyers, GA
Chicago, IL
San Francisco, CA
Carroll Estes, Ph.D.
Clara Bell Martin
Robyn I. Stone, Ph.D.
Institute for Health and Aging, University
Medicare Beneficiary
International Longevity Center
of California at San Francisco
Atlanta, GA
New York, NY
San Francisco, CA
Wendy Max, Ph.D.
Fernando Torres-Gil, Ph.D.
Lenore Gerard, Esq.
University of California at Sill Francisco
University of California at Los Angeles
Legal Services for the Elderly
San Francisco, CA
Los Angeles, CA
San Francisco, CA
Dorothy Mertz
Mary jo Gibson
Medicare Beneficiary
AARP
Chicago, IL
Washington, DC
Women and the Future of Medicare Advisory Committee
Judith Feder, Ph.D.
Marilyn Moon, Ph.D.
Institute for Health Policy and Research.
The Urban Institute
Georgetown University
T
his report was researched and written by
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Subject: remarks of the President on Medicare
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
June 29, 1999
REMARKS OF THE PRESIDENT
ON STRENGTHENING MEDICARE
The East Room
3:23 P.M. EDT
THE PRESIDENT: Thank you very much, and good afternoon. I would like
to welcome all of you to the White House. I appreciate the presence here of Secretary Shalala,
Secretary Rubin, Deputy Secretary Summers, Social Security Commissioner Apfel, OPM
Director Janice Lachance. I thank all the people on the White House staff who are here who
worked so hard on this proposal, including our OMB Director, Jack Lew; and Gene Sperling,
Bruce Reed, Chris Jennings, and of course, John Podesta.
I welcome the leaders of groups representing seniors, the disability community
and the health care industry. I would especially like to welcome the very large delegation of
members of Congress who are here today. Four of them were here at the inception of
Medicare -- Senator Kennedy, Congressman Dingell, Congresswoman Mink, and
Congressman Conyers. This must be a particularly happy day for them.
I thank the Senators who are here -- Senator Daschle, Senator Roth, Senator
Kennedy, Senator Conrad, Senator Baucus, Senator Dorgan, Senator Rockefeller, and Senator
Breaux.
I thank the members of the House here. There are a large number of
Democrats here and I think virtually all the members of the leadership -- Mr. Gephardt, Mr.
Bonior, Congresswoman DeLauro, Mr. Frost, Congressman Rangel, Congressman Lewis. I
would like to thank the Republican House members who have come -- Mr. McCrery, Mr.
Whitfield and Mr. Thomas, especially.
When Senator Breaux and Congressman Thomas issued their commission
report, I said that I would do my best to build on it; that I had some concerns about it, but that
I thought that there were elements in it which deserved support and serious consideration.
Their presence here today indicates that we can all raise concerns about each other's ideas
without raising our voices; and that if we're really committed to putting our people first, we
can reach across party lines and other lines to work together.
And I am very grateful for their presence here and for the presence of all the
members of Congress here from both parties. It augers well for this announcement today and
for the welfare of our republic. (Applause.)
In just a few days we will celebrate the last 4th of July of the 20th century --
223 of them. Our government, our country was created based on the ideal that we are all
created equal, that we should work together to do those things that we cannot do on our own,
and that we would have a permanent mission to form a more perfect union.
The people who got us started understood that each generation of Americans
would be called upon to fortify and renew our nation's most fundamental commitments -- to
always look to the future. I believe our generation has begun to meet that sacred duty, for, at
the dawn of a new century, America is clearly a nation in renewal.
Our economy is the strongest in decades, perhaps in our history. Our nation is
the world's leading force for freedom and human rights, for peace and security -- with our
Armed Forces showing once again in Kosovo their skill, their strength, and their courage.
Our social fabric, so recently strained, is on the mend, with declining rates of welfare, crime,
teen pregnancy and drug abuse, and 90 percent of our children immunized against serious
childhood diseases for the first time in our history.
Our cities, once in decline, are again vibrant with economic and cultural life.
Even our rutted and congested interstate highways, thanks to the commitments of this
Congress, are being radically repaired and expanded all across America -- I must say,
probably to the exasperation of some of our summer travelers.
This renewal is basically the consequence of the hard work of tens of millions
of our fellow-citizens. It is also, however, clearly the result of new ideas and good decisions
made here in this city -- beginning with the fiscal discipline pursued since 4993, the reduction
in the size of government and controlling spending while dramatically increasing investments
in education, health care, biomedical research, the environment and other critical areas. The
vast budget deficits have been transformed into growing budget surpluses. And America is
better prepared for the new century.
But we have to use this same approach of fiscal discipline plus greater
investment to deal with the great challenge that we and all other advanced societies face, the
aging of our nation, and, in particular, to deal with the challenge of Medicare, to strengthen
and renew it.
Today, I ask you here so that I could announce the details of our plan to secure
and modernize Medicare for the 21st century. My plan will use competition and the best
private sector practices to secure Medicare in order to control costs and improve quality. And
it will devote a significant portion of the budget surplus to keep Medicare solvent.
But securing Medicare is not enough. To modernize Medicare, my plan will
also create a much better match between the benefits of modern science and the benefits
offered by Medicare. It will provide for more preventive care and help our seniors afford
prescription drugs. The plan is credible, sensible and fiscally responsible. It will secure the
health of Medicare while improving the health of our seniors. And we can achieve it.
The stakes are high. In the 34 years since it was created, Medicare has eased
the suffering and extended the lives of tens of millions of older and disabled Americans. It has
given young families the peace of mind of knowing they will not have to mortgage their homes
or their children's futures to pay for the health care of their parents and grandparents. It has
become SQ much a part of America it is almost impossible to imagine American life without it.
Yet, life without Medicare is what we actually could get unless we act soon to strengthen this
vital program.
With Americans living longer, the number of Medicare beneficiaries is growing
faster much faster than the number of workers paying into the system. By the year 2015,
the Medicare trust fund will be insolvent -- just as the baby boom generation begins to retire
and enter the system, and eventually doubling the number of Americans who are over 65.
I've often said that this is a high-class problem. It is the result of something
wonderful -- the fact that we Americans are living a lot longer. All Americans are living
longer, in no small measure because of better health care, much of it received through the
Medicare program,
President Johnson said when he signed the Medicare bill in 1965, "The benefits
of this law are as varied and broad as the marvels of modern medicine itself." Yet modern
medicine has changed tremendously since 1965, while Medicare has not fully kept pace.
The original Medicare law was written at a time when patients' lives were more
often saved by scalpels than by pharmaceuticals. Many of the drugs we now routinely use to
treat heart disease, cancer, arthritis, did not even exist in 1965. Yet Medicare still does not
cover prescription drugs.
Many of the procedures we now have to detect diseases early, or prevent them
from occurring in the first place, did not exist in 1965. Yet Medicare has not fully adapted
itself to these new procedures.
Many of the systems and organizations that the private sector uses to deliver
services, contain costs, and improve quality -- such as preferred provider organizations and
pharmacy benefit managers did not exist in 1965. Yet, under current law, Medicare cannot
make the best use of these private sector innovations.
Over the last six and a half years we have taken important steps to improve
Medicare. When I took office, Medicare was scheduled to go broke this year. But we took
tough actions to contain costs, first in '93, and then with a bipartisan balanced budget
agreement in 1997. We have fought hard against waste, fraud and abuse in the system, saving
tens of billions of dollars.
These measures have helped to extend the life of the trust fund to 2015. But
with the elderly population set to double in three decades, with the pace of medical science
quickening, we must do more to fully secure and modernize Medicare for the 21st century.
The plan I release today secures the fiscal health of Medicare, first, by
providing what every objective expert has said Medicare must have if it is to survive -- more
resources to shore up its solvency. As I promised in the State of the Union address, the plan
devotes 15 pereent of the federal budget, over 15 years, to Medicare -- federal budget surplus.
That is the right way to use this portion of the surplus.
There are a thousand ways to spend the surplus, all of them arguable attractive,
but none more important than first guaranteeing our existing obligation to secure quality health
care for our seniors. First things, first. (Applause.)
In addition to these new resources, we must use the most modern and innovative
means to keep Medicare spending in line while rigorously maintaining -- indeed, improving
quality So the second part of the plan will bring to the
traditional Medicare program the best practices from the private sector. For instance, doctors
who do a superior job of caring for heart patients with complex medical conditions will be able
to offer patients lower co-payments, thus attracting more patients, improving more lives,
saving their patients, and the system money.
Third, the plan will use the forces of competition to keep costs in line, by
empowering seniors with more and better choices. Seniors can choose to save money by
choosing lower-cost Medicare managed care plans under our plan, without being forced out of
the traditional Medicare program by larger than normal premium increases.
And we will make it easier for seniors to shop for coverage based on price and
quality, because all private plans that choose to participate in Medicare will have to offer the
same core benefits. Consumers shouldn't be forced to compare apples and oranges when
shopping for their family's health care.
Fourth, we will take action to make sure that Medicare costs do not shoot up
after 2003, when most of the cost containment measures put in place in 1997 are set to expire.
And to make sure that health care quality does not suffer, my plan includes, among other
things, a quality assurance fund, to be used if cost containment measures threaten to erode
quality. And given the debates we're having now on the consequences of the decisions we
made in 1997, I think that is a very important thing to put in this plan. (Applause.)
These steps will secure Medicare for a generation. But we should also
modernize benefits as well. Over the years, as I said earlier, Medicare has advanced
medical care has advanced in ways that Medicare has not. We have a duty to see that
Medicare offers seniors the best, and the wisest, health care available.
One such rapidly advancing area of treatment is preventive screening for
cancer, diabetes, osteoporosis, and other conditions -- screenings which, if done in time, can
save lives, improve the quality of life, and cut health care costs.
Therefore, my plan will eliminate the deductible in all co-payments for all preventive care
under Medicare. (Applause.)
It makes no sense for Medicare to put up roadblocks to these screenings and
then turn around and pick up the hospital bills that screenings might have avoided. No senior
should ever have to hesitate -- as many do today -- to get the preventive care they need.
To help cover the cost of these and other crucial benefits and strengthen the
Medicare Part B program, we will ask beneficiaries to pay a small part of the cost of other lab
tests that are prone to overuse, and we will index the Part B deductible to inflation.
Nobody would devise a Medicare program today, if we were starting all over,
without including a prescription drug benefit. (Applause.) There's a good reason for this:
We all know that these prescription drugs both save lives and improve the quality of life. Yet,
Medicare currently lacks a drug benefit. That is a major problem for millions and millions of
seniors -- and not just those with low incomes. Of the 15 million Medicare beneficiaries who
lack prescription drug benefits today, nearly half are middle class Americans. And with
prescription drug prices rising, fewer and fewer retirees are getting drug coverage through
their former employer's health programs.
My plan will offer an affordable prescription drug benefit to all Medicare
recipients, with additional help to those with lower incomes, paid for largely through the cost
savings I have outlined. It will cover half of all prescription drug costs, up to $5,000 a year,
when fully phased in, with no deductible -- all for a modest premium that will be less than half
the price of the average private Medigap policy.
It's simple: If you choose to pay a modest premium, Medicare will pay half of
your drug prescription costs, up to $5,000. (Applause.) This is a drug benefit our seniors can
afford at a price America can afford.
Seniors and the disabled will save even more on their prescription drugs under
my plan because Medicare's private contractors will get volume discounts that they could
never get on their own. By relying on private sector managers, I believe that my plan will
help Medicare beneficiaries and ensure that America continues to have the most innovative
research and development oriented pharmaceutical industry in the world. (Applause.)
With the steps I have outlined today, we can make a real difference in our
people's lives. And I believe the good fortune we now enjoy obliges us to do so. In a nation
bursting with prosperity, no senior should have to choose between buying food and buying
medicine. But we know that happens. (Applause.) I'll never forget the first time I ever met
two seniors on Medicare who looked at me and told me that they were choosing, every day,
between food and medicine. That was almost seven years ago, but it still happens today.
At a time of soaring surpluses, no senior should wind up in the hospital for
skimping on their medication to save money. But that also happens today, in 1999. At a
moment of such tremendous promise for America, no middle-aged couple should have to
worry that Medicare will not be there when they retire, that a lifetime's worth of investment
and savings could be swallowed up by medical bills. If we want a secure life for our people,
we must commit ourselves, as a country, to secure and modernize Medicare, and to do it now.
In the months before the election season begins, we can put partisanship aside
and make this a season of progress. With our economy strong, our people confident, our
budget in surplus, I say again, we have not just the opportunity, but a solemn responsibility, to
fortify and renew Medicare for the 21st century.
It's the right thing to do for our parents and our grandparents. It's the right
thing to do for the children of this country. It is the right thing to do so that, when we need it,
the burden of our health care costs does not fall on the children, and hurt their ability to raise
our grandchildren.
Like every generation of Americans before us, our generation has begun to
fulfill our historic obligation to strengthen our fundamental commitments, and keep America a
nation of permanent renewal. Just a few days before our last Independence Day of this
century, let us commit again to do that with Medicare.
Thank you, and God bless you. (Applause.)
END
3:44 P.M. EDT
OVERVIEW:
PRESIDENT'S PLAN TO STRENGTHEN AND MODERNIZE MEDICARE
FOR THE 21st CENTURY
On June 29, 1999, President Clinton unveiled his plan to modernize and strengthen the Medicare program
to prepare it for the health, demographic, and financing challenges it faces in the 21st century. This
historic initiative would: (1) make Medicare more competitive and efficient; (2) modernize and reform
Medicare's benefits, including the provision of a long-overdue prescription drug benefit and cost sharing
protections for preventive benefits; and (3) make an unprecedented long-term financing commitment to
the program that would extend the estimated life of the Medicare Trust Fund until at least 2027. The
President called on the Congress to work with him to reach a bipartisan consensus on needed reforms this
year.
MAKING MEDICARE MORE COMPETITIVE AND EFFICIENT. Since taking office, President
Clinton has worked to pass and implement Medicare reforms that, coupled with the strong economy and
the Administration's aggressive anti-fraud and abuse enforcement efforts, have saved hundreds of
billions of dollars and helped to extend the life of the Medicare Trust Fund from 1999 to 2015. Building
on this success, his plan:
Gives traditional Medicare new private sector purchasing and quality improvement tools. The
President's proposal would make the traditional fee-for-service program more competitive through
the use of market-oriented purchasing and quality improvement tools to improve care and constrain
costs. It would provide new or broader authority for competitive pricing within the existing Medicare
program, incentives for beneficiaries to use physicians who provide high quality care at reasonable
costs, coordinating care for beneficiaries with chronic illnesses, and other best-practice private sector
purchasing mechanisms. Savings: $25 billion over the next 10 years.
Extends competition to Medicare managed care plans by establishing a "Competitive Defined
Benefit" while maintaining a viable traditional program. The Competitive Defined Benefit
(CDB) proposal would, for the first time, inject true price competition among managed care plans
into Medicare. Plans would be paid for covering Medicare's defined benefits, including the new drug
benefit, and would compete over cost and quality. Price competition would make it easier for
beneficiaries to make informed choices about their plan options and would, over time, save money
for both beneficiaries and the program. The CDB would do so by reducing beneficiaries' premium by
75 cents of every dollar of savings that result from choosing plans that cost less than traditional
Medicare. Beneficiaries opting to stay in the traditional fee-for-service program would be able to do
so without an increase in premiums. Savings: $8 billion over the next 10 years, starting in 2003.
Constrains out-year program growth, but more moderately than the Balanced Budget Act
(BBA) of 1997. To ensure that program growth does not significantly increase after most of the
Medicare provisions of the BBA expire in 2003, the proposal includes out-year policies that protect
against a return to excessive growth rates, but are more modest than those included in the BBA.
These proposals along with the modernization of traditional Medicare would reduce average annual
Medicare spending growth from an estimated 4.9 percent to 4.3 percent per beneficiary between 2002
and 2009. Savings: $39 billion over next 10 years (including interactions and premium offsets).
Takes administrative and legislative action to smooth out the BBA provider payment
reductions. The proposal includes a 7.5 billion "quality assurance fund" to smooth out provisions in
the BBA that may be affecting Medicare beneficiaries' access to quality services. The
Administration will work with Congress, outside groups, and experts to identify real access problems
and the appropriate policy solutions. The plan also includes a number of administrative actions to
moderate the impact of the BBA on some health care providers' ability to deliver quality services to
beneficiaries. Finally, it contains a legislative proposal to better target disproportionate share
hospitals. Cost: $7.5 billion over 10 years.
MODERNIZING MEDICARE'S BENEFITS. The current Medicare benefit package does not include
all the services needed to treat health problems facing the elderly and people with disabilities. The
President's plan would take strong new steps to ensure that Medicare beneficiaries have access to
affordable prescription drugs and preventive services that have become essential elements of high-quality
medicine. It also would address excess utilization and waste associated with first-dollar coverage of
clinical lab services and would reform the current Medigap market. Finally, it integrates the FY 2000
President's Budget Medicare Buy-In proposal to provide an affordable coverage option for vulnerable
Americans between the ages of 55 and 65. Specifically, his plan:
Establishes a new voluntary Medicare "Part D" prescription drug benefit that is affordable and
available to all beneficiaries. The historic outpatient prescription drug benefit would:
Have no deductible and pay for half of the beneficiary's drug costs from the first prescription filled
each year up to $5,000 in spending ($2,500 in Medicare payments) when fully phased-in by 2008.
Ensure beneficiaries a price discount similar to that offered by many employer-sponsored plans for
each prescription purchased - even after the $5,000 limit is reached.
Cost about $24 per month beginning in 2002 (when the coverage is capped at $2,000 in spending)
and $44 per month when fully phased-in by 2008. (This is one-half to one-third of the typical cost of
private Medigap premiums.)
Ensure that beneficiaries with incomes below 135 percent of poverty ($11,000/$15,000 single/
couples) would not pay premiums or cost sharing for Medicare drug coverage. Those with incomes
between 135 and 150 percent of poverty would receive premium assistance as well. The Federal
government would assume all of the costs of this benefit for those above poverty.
Provide financial incentives for employers to develop and retain their retiree health coverage if it
provides a prescription drug benefit to retirees that was at least equivalent to the new Medicare
outpatient drug benefit. This approach would save money for the program because the subsidy given
would be generous enough for employers to maintain coverage yet lower than the Medicare subsidies
for traditional participants.
Most Medicare beneficiaries will probably choose this new prescription drug option because of its
attractiveness and affordability. Because older and disabled Americans rely so heavily on
medications, we estimate that about 31 million beneficiaries would benefit from this coverage each
year. Cost: $118 billion over the next 10 years, beginning in 2002.
2
Eliminates all cost sharing for all preventive benefits in Medicare and institutes a major health
promotion education campaign. This proposal would cost $3 billion over 10 years and would:
Eliminate existing copayments and the deductible for preventive service covered by Medicare,
including colorectal cancer screening, bone mass measurements, pelvic exams, prostate cancer
screening, diabetes self management benefits, and mammographies.
Initiate a three-year demonstration project to provide smoking cessation services to Medicare
beneficiaries.
Launch a new, nationwide health promotion education campaign targeted to all Americans over the
age of 50.
Rationalizes cost sharing. To help pay for the new prescription drug and preventive benefits, the
President's plan would save $11 billion over 10 years by rationalizing the current cost sharing
requirements for Medicare by:
Adding a 20 percent copayment for clinical laboratory services. The modest lab copayment would
help prevent overuse, and reduce fraud.
Indexing the Part B deductible for inflation. The Part B deductible index would guard against the
program assuming a growing amount of Part B costs because, over time, inflation decreases the
amount of the deductible in real terms. Compared to average annual Part B per capita costs, the
deductible has fallen from 28 percent in 1967 to about 3 percent in 2000.
Reforms Medigap. The President's plan would reform private insurance policies that supplement
Medicare (Medigap) by: (1) working with the National Association of Insurance Commissioners to
add a new lower-cost option with low copayments and to revise existing plans to conform with the
President's proposals to strengthen Medicare; (2) directing the Secretary of HHS to determine the
feasibility and advisability of reforms to improve supplemental cost sharing in Medicare, including a
Medigap-like plan offered by the traditional Medicare program; (3) providing easier access to
Medigap if a beneficiary is in an HMO that withdraws from Medicare; and (4) expanding the initial
six month open enrollment period in Medigap to include individuals with disabilities and end stage
renal disease (ESRD).
Includes the President's Medicare Buy-In proposal. The plan includes the President's proposal to
offer American between the ages of 62-65 without access to employer-based insurance the choice to
buy into the Medicare program for approximately $300 per month if they agree to pay a small
additional monthly payment once they become eligible for traditional Medicare at age 65. Displaced
workers between 55-62 who had involuntarily lost their jobs and insurance could buy in at a slightly
higher premium (approximately $400). And retirees over age 55 who had been promised health care
in their retirement years would be provided access to "COBRA" continuation coverage if their old
firm reneged on their commitment. The $1.4 billion cost over 5 years is offset in the President's FY
2000 budget.
3
STRENGTHENING MEDICARE'S FINANCING FOR THE 21st CENTURY. The President's
Medicare plan would strengthen the program and make it more competitive and efficient. However, no
amount of policy-sound savings would be sufficient to address the fact that the elderly population will
double from almost 40 million today to 80 million over the next three decades. Every respected expert in
the nation recognizes that additional financing will be necessary to maintain basic services and quality for
any length of time. Because of this and his strong belief that the baby boom generation should not pass
along its inevitable Medicare financing crisis to its children, the President has proposed that a significant
portion of the surplus be dedicated to strengthening the program. Specifically, his plan:
Extends the life of the Trust Fund until at least 2027. Dedicating 15 percent of the surplus ($794
billion over 15 years) to Medicare not only contributes toward extending the estimated financial
health of the Trust Fund through 2027, but it will also lessen the need for future excessive cuts and
radical restructuring that would be inevitable in the absence of these resources.
Responsibly finances the new prescription drug benefit through savings and a modest amount
from the surplus. The new drug benefit would cost about $118 billion over 10 years. Its budgetary
impact would be fully offset by:
Savings from competition and efficiency. About 60 percent of the $118 billion Federal cost of the
new Medicare prescription drug benefit would be offset through these savings.
Dedicating a small fraction of the surplus. About $45.5 billion of the surplus allocated to Medicare
would be used to help finance the benefit. To put this amount in context, it is:
Less than one eighth of the amount of the surplus dedicated for Medicare (2 percent of the entire
surplus); and
Less than the reduction in the Medicare baseline spending between January and June, 1999.
Policy experts advising the Congress (MedPAC, CBO, and the Medicare Trustees) have
consistently stated their belief that much of the recent decline in Medicare spending beyond
initial projections is due to our success creating a strong economy and in combating fraud and
waste. Reinvesting the savings that can be reasonably attributed to our anti-fraud and waste
activities into a new prescription drug benefit is completely consistent with the past actions of the
Congress and the Administration utilizing such savings for programmatic improvements.
4
PRESIDENT'S PLAN TO STRENGTHEN AND MODERNIZE
MEDICARE FOR THE 21st CENTURY
Goals for Reform:
Make Medicare More Competitive and Efficient
Modernize Medicare's Benefits
Strengthen Medicare's Financing for the 21st Century
Reduces Medicare spending for current services by $72 billion over 10 years. About half of
these savings come from innovative proposals to adopt successful private sector tools and
competition. As a result of these policies, Medicare growth per beneficiary from 2003 to 2009 would
slow from 4.9 percent to 4.3 percent.
PRESIDENT'S PROPOSAL
(Dollars in Billions, Trustees' Baseline)
Adds an optional prescription drug benefit.
00-04
00-09
This benefit would cost $118 billion over 10 years.
This cost is only about 5 percent of total Medicare
COMPETITION & EFFICIENCY
spending in 2009 (net of premiums).
Medicare Modernization
-5
-25
Competition
-0
-8
Over 60 percent of the costs are offset by the
Provider Savings
-4
-39*
proposal's savings.
Provider Set-Aside
+4
+7.5
The remaining $45.5 billion would come from the
Total
-5
-64.5
Medicare allocation of the surplus. This amount is
one-eighth of the $374 billion over 10 years
MODERNIZING BENEFITS
dedicated to Medicare, and less than 2 percent of
the overall surplus.
Prescription Drug Benefit
+29
+118
Cost Sharing Changes
-2
&
Extends the life of the Medicare Trust Fund to
Total
+27
+110
at least 2027. The President's plan would
dedicate 15 percent of the surplus to strengthen
DEDICATING FINANCING
Medicare. This amount, when combined with the
offset for the drug benefit and Part A savings,
Contribution to Solvency
-28
-328.5**
would extend the estimated life of the Medicare
Surplus for Drug Benefit
-22
-45.5
Trust Fund for a quarter century from now,
through at least 2027.
Surplus Allocation
-50
-374
*Includes $5.7 billion in interactions/premium offset
** Does not count toward package
5
PRESIDENT'S PLAN TO
MODERNIZE & STRENGTHEN
MEDICARE
July 16, 1999
President's Plan To Modernize
and Strengthen Medicare
Make Medicare More Competitive & Efficient
Modernize Medicare Benefits, Including a Long-
Overdue Prescription Drug Benefit
Strengthening Medicare's Financing for the 21st
Century
Modernizing and Strengthening
ME DICARE
Extending The Solvency Of Medicare To 2027
2030
2027
Reducing Fraud & Waste
2020
1997
2015
1993
Budget
2010
2008
Budget
2002
1999
2000
1990
1980
1993
1995
1998
1999
Plan
President's Proposal For Medicare
Prescription Drug Coverage
Meaningful coverage. Beginning in 2002, beneficiaries
have the option to enroll in Part D:
- No deductible -- coverage with first prescription
- 50% copay with access to discounted prices
- Benefit limited after $5,000 in costs (phased-in)
Affordable premiums: $24/month, rising to $44/month
when fully phased in. Includes low-income protections
Private management, and incentives for retaining retiree
health coverage
All Types of Beneficiaries Lack
Coverage For Prescription Drugs
Over 40% of Beneficiaries
Without Drug Coverage Have
Disproportionately affects
Income Above 200% of Poverty
rural beneficiaries. About half
(Millions of People)
of rural beneficiaries have no
coverage
15
Older beneficiaries are less
10
>200%
likely to have coverage. Over
<200%
40 percent of beneficiaries older
5
than 85 pay for their prescription
drug costs out-of-pocket,
0
compared to about one-third of
beneficiaries ages 65-69
200% of Poverty = $16,000 for singles, $22,000 for couples
Prescription Drug Coverage:
Private Sources Declining
Firms Offering Retiree
Health Coverage
Individual Medigap coverage
is becoming even more rare --
40%
and expensive. Premiums for
drug coverage through Medigap
30%
can be $90 per month -- and
twice as high for older
20%
beneficiaries. Only about one in
20 beneficiaries have drug
10%
coverage through Medigap.
0%
1994
1998
Making Medicare Managed Care
More Competitive
Current System
Competitive Defined Benefit
No price competition
Plans paid based on price
and quality
Plans compete by offering
Plans compete by lowering
hard-to-compare benefits
premium & cost sharing
Over 1 in 4 beneficiaries do
Explicitly pays for drugs in
not have access to managed
managed care as well as
care -- or the extra benefits
traditional Medicare
they offer
Smoothing Out Balanced Budget
Act Policies In The Short Run
Immediate Administrative Actions, that
moderate the impact on hospitals, academic health
centers and home health agencies
Targeting Disproportionate Share Hospital
Payments Directly to Hospitals
$7.5 Billion Quality Assurance Fund
Keeping Medicare's Growth In Check
Spending Growth Per Beneficiary
8.0%
6.9%
6.0%
4.9%
4.3%
3.8%
4.0%
2.0%
0.0%
1988-92
BBA
Post-BBA
Plan
BBA is for 1998-2002; Post-BBA is for 2002-2009; Plan is for 2002-2009 under the President's plan
MEDICARE:
THE PRESIDENT'S PLAN TO
MODERNIZE AND STRENGTHEN MEDICARE
FOR THE 21st CENTURY
July, 1999
mude
THE PRESIDENT'S PLAN TO
MODERNIZE AND STRENGTHEN MEDICARE FOR
THE 21st CENTURY
I.
Overview
Importance of Medicare
Challenges Facing Medicare
II. President's Plan for Modernizing and Strengthening Medicare
Making Medicare More Competitive and Efficient
Modernizing Medicare's Benefits, Including Adding a Prescription Drug Benefit
Strengthening Medicare's Financing for the 21st Century
2
I. OVERVIEW
IMPORTANCE OF MEDICARE
Medicare now pays for health care for 39 million elderly and disabled Americans: About
34 million elderly and 5 million people with disabilities receive Medicare.
Helps those who would otherwise be uninsured: Before Medicare, almost half (44 percent)
of the elderly were uninsured and millions more had substandard coverage. Given the recent
rapid rise of the uninsured ages 55 to 65 who are even healthier than seniors, this problem
would have been worse today.
Improves life expectancy, access to care and reduces poverty: Since 1965:
Life expectancy of people who reach age 65 has increased by 20 percent (79 to 82 years)
Access to care has increased by one-third (elderly seeing doctors: 68 to 90%)
Poverty has declined by nearly two-thirds (29.0 to 10.5%)
3
MEDICARE'S FINANCIAL STATUS HAS IMPROVED
In the early 1990s, Medicare spending growth outpaced private health insurance growth.
When President Clinton took office, the Hospital Insurance (HI) trust fund was projected to
be exhausted in 1999.
In response, the President advocated for Medicare reforms in 1993 and 1997, and instituted an
unprecedented crack-down on fraud and abuse. These actions, in combination with a strong
economy, constrained cost growth and extended the life of the trust fund until 2015.
The slow Medicare spending growth is expected to continue through 2002 -- when many
policies in the Balanced Budget Act (BBA) of 1997 expire and cost growth goes up.
Medicare & Private Spending Growth Per Capita
10%
9%
Medicare
Private
7%
8%
7%
6%
6%
5%
4%
4%
2%
0%
1990-1995
1995-2000
2000-2005
4
CHALLENGES FACING MEDICARE:
FINANCIAL STRAIN OF CHANGING DEMOGRAPHICS
More beneficiaries: Enrollment in Medicare will
Medicare Hospital Insurance Enrollment:
80
76
climb when the baby boom generation retires --
80
2000-35
69
61
from 39 to 80 million by 2035 -- from 14 percent to
60
53
47
about 22 percent of the population.
40
42
Millions
40
Fewer workers: The ratio of workers who support
20
Medicare beneficiaries is expected to decline by over
0
2000
2005
2010
2015
2020
2025
2030
2035
40 percent by 2030 (from 3.6 workers per
beneficiary in 2010 to 2.3 in 2030).
Cost growth will rise: Although Medicare has recently reined in cost growth, as recent
policy changes wear off, it is expected to rise to the level of private health growth.
Inadequate financing: Medicare's Trust Fund will become insolvent in 2015 -- about 20
years earlier than Social Security and just as the baby boom generation starts to retire. Even
with reforms that substantially slow cost growth, the revenues coming to the Medicare Trust
Fund will not support this larger number of beneficiaries.
5
ADDITIONAL CHALLENGES FACING MEDICARE:
LACK OF PRESCRIPTION DRUG COVERAGE
Millions have no coverage for prescription drugs. Prescription drugs have become
central to modern medicine, yet nearly 15 million Medicare beneficiaries have no coverage.
About 40 percent of beneficiaries without drug coverage (about 6 million) have income
above 200 percent of poverty (about $16,000 for a single, $22,000 for a couple).
Current prescription drug coverage is unstable and declining rapidly.
Employer-sponsored retiree health insurance is declining. The number of firms offering
retiree health insurance coverage dropped by 20 percent between 1993 and 1998.
Medigap, the individually purchased supplemental policies, has grown very expensive and
less common. Medigap premiums have been rising rapidly, are often set so to increase
with age, and typically cost at least twice as much as the premium as the President's plan.
Medicare managed care plans frequently cover drugs, but 11 million beneficiaries do not
have access to any managed care plans. Drug coverage is typically limited (e.g., $1,000
cap), and many plans are dropping or severely limiting coverage.
Drug coverage today resembles hospital coverage before Medicare. Before 1965, 56% of
the elderly had insurance, but this coverage was expensive, inadequate and unreliable.
Medicare would not have been created if this coverage was considered adequate.
6
OUTDATED AND INEFFICIENT PAYMENT SYSTEMS
Insufficient flexibility in traditional Medicare to adopt best private sector practices to
reduce costs and increase quality. Medicare is governed by statutory constraints that limit
its ability to adopt innovative payment and management strategies.
Medicare pays managed care plans a flat rate, set by a complex statutory formula, that
has nothing to do with plan prices.
Overpaid. A June 1999 report from the General Accounting Office found that the
Balanced Budget Act has not eliminated managed care plan overpayments. For example,
managed care plans in Los Angeles can provide the traditional Medicare benefits package
for 79 percent of what they are currently paid.
No price competition - only competition on providing extra benefits. Managed care plans
offer extra benefits with the overpayment - they cannot compete on price.
-
Hard for beneficiaries to comparison shop on benefits
-
Easy to attract healthy or avoid sick beneficiaries by custom-designing benefits
-
Unfairly subsidizes benefits in high-cost / high-payment areas: 75 percent of rural
beneficiaries do not even have the option of joining managed care.
7
II. PRESIDENT'S PLAN TO MODERNIZE AND STRENGTHEN
MEDICARE FOR THE 21st CENTURY
Goals for Reform:
PRESIDENT'S PROPOSAL
Make Medicare More Competitive and Efficient
(Dollars in Billions, Trustees' Baseline)
00-04
00-09
Modernize Medicare's Benefits
COMPETITION & EFFICIENCY
Strengthen Medicare's Financing for the 21st
Medicare Modernization
-5
-25
Competition
-0
-8
Century
Provider Savings
-4
-39*
Provider Set-Aside
+4
+7.5
Reduces Medicare spending by $72 billion /10 years.
About half of these savings come from innovative
Total
-5
-64.5
proposals to adopt successful private sector tools and
MODERNIZING BENEFITS
competition.
Prescription Drug Benefit
+29
+118
Cost Sharing Changes
-2
-8
Adds an optional prescription drug benefit. This
Total
+27
+110
benefit would cost $118 billion over 10 years, fully
financed by the offsets in the proposal.
DEDICATING FINANCING
Contribution to Solvency
-28
-328.5**
Surplus for Drug Benefit
-22
-45.5
Extends the life of the Medicare trust fund for a
quarter of a century, to at least 2027. This will
Surplus Allocation
-50
-374
*
Includes $5.7 billion in interactions/premium offset
significantly reduce the need for excessive reductions in
Does not count toward package
Medicare spending when its costs explode as the baby
boom generation retires.
8
I. MAKING MEDICARE MORE EFFICIENT
Private Sector Purchasing & Quality Improvement Tools for
Traditional Medicare
Allowing Traditional Medicare to Adopt Best Private Practices. This proposal would
build on the President's commitment to give traditional Medicare the ability to adopt
payment and quality improvement tools that are frequently used in the private sector.
Promoting the use of high-quality, cost-effective providers. Give beneficiaries a financial
incentive (e.g., lower cost sharing) to choose selected providers (like a PPO); pay facilities
that meet quality and cost standards a single price (Centers of Excellence).
Primary care case management and disease management. Structure payments to promote
coordination of services for certain diseases or beneficiaries who have high health costs to
reduce hospitalizations.
Coordinating care for dual eligibles. The 17 percent of beneficiaries who are Medicare-
Medicaid dual eligibles account for 28 percent of spending. Provide information to help
coordinate benefits; test models in traditional Medicare to coordinate services.
Using competitive pricing, selective contracting, negotiated discounts. These market-
oriented practices will make Medicare a stronger negotiator and more efficient manager.
9
Competitive Defined Benefit Proposal
Competitive defined benefit proposal. This proposal would pay managed care plans based
on competitive prices, not on fixed rates. If a plan's price is higher than 96 percent of
traditional program costs, the beneficiary would pay a higher premium. If it is less, the
beneficiary would pay a premium that is lower than the Part B premium.
Saves through competition, not rate reductions. Unlike the current system, Medicare
would save money when beneficiaries choose lower cost plans. For each dollar saved,
beneficiaries would receive 75 cents, the government 25 cents.
Price competition promotes informed beneficiary choice. By having plans compete over a
defined benefit, beneficiaries can make "apples-to-apples" comparisons over price and quality.
This eliminates the problem of plans designing benefits to attract healthy enrollees.
Example: Competitive Defined Benefit Proposal
Plan payments more rational. Rather than
Option
Plan Price
Split of Plan Payments
receiving a rate based on a complicated
(monthly)
Beneficiary
Government
formula, managed care plans would get paid
Low-Price Plan
$433.33
$0.00
$433.33
what they bid, although the higher the price,
0%
100%
the higher the beneficiary premium. The
Medium-Price Plan
$490.00
$42.50
$447.50
9%
91%
government payment includes the costs of
Price Equals 96%
$500.00
$50.00
$450.00
prescription drugs, risk adjustment and full
Of Traditional Costs
10%
90%
geographic adjustment in high-cost areas.
High-Price Plan
$520.00
$70.00
$450.00
13%
87%
10
Smoothing Out Balanced Budget Act Policies: Short- and Long-Term
Smoothing out the Balanced Budget Act of 1997 reductions. Some evidence suggests that
some BBA policies may have unintended effects. To address this, this plan includes:
Administrative actions. The plan includes immediate administrative actions to moderate
the impact of the BBA on hospitals, academic health centers, and home health agencies.
Better targeting disproportionate share hospital payments. These payments would be
removed from managed care payments and paid directly to qualifying hospitals.
$7.5 billion quality assurance fund. This fund would be used to modify BBA provisions
that have been determined by the Administration, Congress, and health experts to be
severely undermining providers' ability to delivery high-quality, affordable health care.
Medicare Spending Growth Per Beneficiary
Constraining out-year program growth, but more
8%
6.9%
moderately than BBA 1997. To moderate program
6%
4.9%
growth after most of the provisions of the BBA expire in
4.3%
3.8%
4%
2003, the proposal includes out-year policies that protect
against a return to excessive growth rates. They are
2%
more modest than those included in the BBA 1997 and
0%
1988-1992
BBA: 1998-
2002-2009
would result in a growth rate that is 15% higher than it
Proposal:
Note: Proposed growth does
2002
2002-2009
not include drug benefit
would have been had BBA rates continued.
11
Improving Medicare Management
Modernizing Medicare management. The President's plan includes a major modernization
reform of the management of Medicare. It would:
Increase accountability through public/private advisory boards. These include:
-
Management Advisory Council. Panel of public and private sector management
experts to identify and recommend best management practices for Medicare.
-
Medicare Coverage Advisory Committee. Experts in medicine and science,
consumer and industry representatives would provide advise on coverage policy.
-
Citizens' Advisory Panel on Medicare Education. Experts in consumer education
and health policy and health care providers would monitor and evaluate Medicare's
consumer education initiatives.
Increasing personnel flexibility. Medicare has taken strides in hiring experts from the
private sector to manage its programs. It has contracted with an outside evaluator to
determine how best it can prepare its staff for the challenges of the next century.
12
MODERNIZING MEDICARE BENEFITS
Prescription Drug Benefit
New Medicare prescription drug benefit. The President's plan includes a new, voluntary
Medicare drug benefit. Called Medicare Part D, it would offer all beneficiaries, for the first
time, access to affordable, high-quality prescription drug coverage beginning in 2002.
Meaningful coverage. Medicare would cover half of drug costs from the first prescription
up to $5,000 in spending per year ($2,500 in Medicare payments). The spending limit
would be phased in from 2002 to 2008 and, in subsequent years, adjusted for inflation.
Beneficiaries would have access to discounts negotiated by private managers.
Affordable premiums. Beneficiaries would pay separate premium for Medicare Part D -- an
estimated $24 per month in 2002, and $44 per month in 2008, when fully implemented.
Cost sharing protections for low-income beneficiaries would be expanded (no premiums
below 150% of poverty; no cost sharing below 135% of poverty).
Private management. Beneficiaries in managed care would be covered through their plan.
For the rest, Medicare would contract out with numerous private pharmacy benefit
managers or similar entities to manage the benefit. No price controls would be used.
Medicare support for retiree coverage. Medicare would pay a reduced premium subsidy
for beneficiaries who receive coverage through their employers' health plan.
13
Improving Preventive Benefits and Eliminating Cost Sharing
Promoting prevention for Medicare beneficiaries. This proposal would take a number of
steps to make preventive services more affordable, as well as to raise awareness of services
Eliminating all existing preventive services cost sharing. The deductible would be waived
for hepatitis B vaccinations, colorectal cancer screening, bone mass measurements, prostate
cancer and diabetes self-management benefits. Coinsurance would be waived for screening
mammography, pelvic exams, hepatitis B vaccinations, colorectal screening, bone mass
measurements, prostate cancer screening and diabetes self-management benefits. For the
rest of the preventive services covered by Medicare, cost sharing is already waived. Cost:
$3 billion over 10 years.
Smoking cessation demonstration. A three-year demonstration project would evaluate the
cost-effectiveness of smoking cessation services for Medicare beneficiaries.
Education campaign. A new, nationwide campaign would be launched to encourage use of
preventive services and promote healthy behaviors for all Americans over age 50.
U.S. Preventive Services Task Force study. This impartial panel of experts would evaluate
preventive services that are appropriate for the elderly, providing guidance for future
Medicare improvments.
14
Rationalizing Cost Sharing and Medigap
Rationalizing Medicare cost sharing. The plan would change Medicare cost sharing by:
Adding a 20 percent clinical laboratory coinsurance. Having beneficiaries contribute
towards their lab services would make cost-sharing requirements under Part B more
uniform. It also could cut down on fraud and help reduce over-use.
Indexing the Part B deductible to inflation. Medicare's Part B deductible of $100 would be
indexed annually to inflation so its value does not decline over time.
Reforming Medigap. The plan would update the private insurance policies called Medigap:
Adding a new plan option, with nominal cost sharing. This would better track the
coverage for the nonelderly, and could reduce premium costs for Medigap.
Updating existing plan options. In light of the new prescription drug policy and other
changes proposed in the plan, all of the Medigap plan options would be updated.
Reporting to Congress on policy alternatives to Medigap, since access problems are rising.
Improving access to Medigap for beneficiaries whose private plans withdraw from
Medicare.
15
Medicare Buy-In for Certain People Ages 55-65
Important insurance option for those nearing Medicare eligibility. The plan includes the
President's proposal to expand health options for people ages 55 to 65. Its costs are offset in
the context of the FY 2000 President's Budget submission.
People ages 62 to 65 without access to employer-sponsored insurance would have the
choice to buy into the Medicare program for approximately $300 a month if they agreed to
pay a small risk adjustment payment once they become eligible for Medicare at age 65.
Displaced workers between 55-62 who involuntarily lost their jobs and insurance could
buy in at a slightly higher premium (approximately $400).
Retirees over age 55 who had been promised health care in their retirement years would be
provided access to "COBRA" continuation coverage if their old firm reneged on their
commitment.
All three proposals are designed to be paid for by the people who benefit. People ages 62 to
64 who buy into Medicare will, over time, repay the amount that Medicare "loans" them
when they are buying in. Displaced workers will pay a premium that takes into account
participants' costs. And, the COBRA buy-in policy has no Federal budget impact
whatsoever. The initiative should help 300,000 to 400,000 people.
16
III. STRENGTHENING MEDICARE'S FINANCING
FOR THE 21st CENTURY
Surplus for Medicare Solvency
The President has renewed the commitment he made in the State of the Union Address
to dedicate 15 percent of the surplus to Medicare. Over the 15-year window covered by
the President's Framework, $794 billion would be dedicated to strengthening Medicare and
extending its solvency. This amount is more than the $686 billion from the budget since the
surplus has increased.
Modernizing and Strengthening
President's
MEDICARE
Reform
Extends the trust fund to 2027. The
Extending the Solvency of Medicine to 202
Proposal
2030
2027
combined effect of this reform package
2025
Reducing Fraud and Waste
would extend the life of the Hospital
2020
Insurance trust fund to at least 2027 -
2015
2015
1997 Budget
12 years longer than its current
2010
1993 Budget
2008
projected expiration in 2015.
2005
2002
1999
2000
1995
1990
1985
1993
1995
1998
1999
TODAY
17
Financing for the Prescription Drug Benefit
Prescription drug benefit designed to be fiscally responsible. To ensure that it does not
result in unsustainable spending growth in the out-years, this proposal's drug benefit's limit is
indexed to general inflation. Thus, Medicare offsets are able to keep pace with its growth.
Medicare savings are the primary source of funding for the new prescription drug
benefit. About 60 percent of the costs of the prescription drug benefit would come from
reducing Medicare cost growth, improving its efficiency, and beneficiary contributions.
Small fraction of the surplus used as financing. The remaining $45 billion would be
financed by using a fraction of the 15 percent of the surplus dedicated to Medicare. To put
this amount in context, it is:
Less than one-eighth of the amount for Medicare -- 2 percent of the entire surplus.
Less than one-fifth of the drop in Medicare baseline from 1998 to 1999.
Medicare baseline has dropped, in part because of administrative actions. Policy experts
advising the Congress (MedPAC, CBO, and Medicare Trustees) have credited our success in
combating fraud, waste, and abuse as a major reason for the $241 billion, 10-year drop in
Medicare spending from 1998 to 1999. Reinvesting savings that can be reasonably attributed
to our anti-fraud and waste activities in a new prescription drug benefit is completely
consistent with our precedent of using savings for programmatic improvements.
18
PRESIDENT'S PRESCRIPTION DRUG BENEFIT FOR MEDICARE
How It Would Work
The President has proposed giving Medicare beneficiaries the option of purchasing affordable,
meaningful prescription drug coverage through Medicare. Medicare would cover half of the
beneficiary drug costs, from the first prescription filled each year up to $5,000 in spending
(fully phased-in by 2008). This benefit would have no deductible and would cost about $24 per
month beginning in 2002 and $44 per month when fully phased-in.
This is how the new option would work for a Medicare beneficiary:
1. GIVES THE OPTION TO JOIN MEDICARE "PART D" (DRUG BENEFIT PROGRAM).
When they become eligible for Medicare, beneficiaries would be given information on the
Medicare prescription drug benefit and the option to join. This same option would be
presented to all beneficiaries in the first year that the program is running.
If interested, sign up for Part D. This would be done in the same way that beneficiaries
sign up for Medicare today - as part of the initial enrollment package.
If not interested - for whatever reason - beneficiaries don't have to sign up. Those
wanting to keep private retiree health coverage could. No premiums would be collected
from these beneficiaries Special financial incentives would be given to employers to
retain coverage and to reduce the trend of employers dropping coverage. If in the future
an employer drops retiree coverage, the beneficiaries would have the Part D option.
2. DECIDE WHETHER TO JOIN TRADITIONAL MEDICARE OR MANAGED CARE. As they do
today, beneficiaries would be given information and make the choice about how they want
their care delivered.
If staying in traditional Medicare, Part D premium treated like Part B premium - the
national premium amount would be deducted from their Social Security check.
If joining managed care, the Part D premium may be lower or nothing. Under the
President's Competitive Defined Benefit proposal, managed care plans could reduce or
eliminate premiums and/or copayments in order to be competitive. Since managed care
plans would be explicitly subsidized for drug coverage for the first time, most probably
would offer more affordable - and more generous coverage than today.
3. USE OF THE BENEFIT. Part D enrollees in managed care would get their drug benefit in the
same way that they do today - through their managed care plan. Those in traditional
Medicare would get a card from their local private benefit manager. This card:
Secures a discount every time it is used - even when the benefit limit is reached;
Pays for half of every drug prescription until total costs exceed the limit ($2,000 in 2002,
$5,000 in 2008); and
Tracks and monitors drug use, to assure that the right mix and right amount of
medications are used.
Noa A. Meyer
07/22/99 03:18:58 PM
Record Type:
Record
To:
Christine N. Macy/WHO/EOP@EOP
CC:
Subject: remarks at Medicare conversation
Forwarded by Noa A. Meyer/WHO/EOP on 07/22/99 03:19 PM
SUNTUM_M@A1
07/22/99 03:13:00 PM
Record Type:
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See the distribution list at the bottom of this message
CC:
Subject: remarks at Medicare conversation
THE WHITE HOUSE
Office of the Press Secretary
(Lansing, Michigan)
For Immediate Release
July 22, 1999
REMARKS BY THE PRESIDENT
IN CONVERSATION ON MEDICARE
Lansing Community College
Lansing, Michigan
11:45 A.M. EDT
THE PRESIDENT: Thank you, and good morning. I would like to
begin by saying I am honored to be here. I thank all of you for coming.
Somebody fell out of the chair -- are you all right? (Laughter.) I wish I
had a nickel for every time I've done that. (Laughter.) You okay now? Good.
(Laughter.)
Well, this is appropriate. I want to thank your Attorney General,
Jennifer Granholm, for joining us; and Mayor Hollister, the state legislators,
county commissioners and city council members who are here. And I thank
President Anderson of the Lansing Community College for making me feel so
welcome here.
I love community colleges, and I'm going to go visit with some of
the students after I finish here, and I'm going to tell them they should also
be for this. The younger they are the more strongly they should feel about
this, what we're trying to do here. (Applause.)
I would like to thank our sponsors today, the National Committee
to Preserve Social Security and Medicare -- the President, Martha McSteen; the
Executive Vice President, Max Richtman, are here. I thank the National
Council of Senior Citizens and their Executive Director, Steve Protulis, who
is here. The Older Women's League National Board President, Betty Lee Ongley;
Judith Lee of the Older Women's League; John DeGostino (phonetic) of the
Michigan State Council of Senior Citizens.
I'd also like to thank in her absence your
Congresswoman, Debbie Stabenow, who was going to come with me
today, but they're voting on an issue which is very critical to
whether we can do what I hope to do with Medicare. But she has
been a wonderful supporter of our efforts to preserve Medicare
and to add the prescription drug benefit. And I know she did a
study here in this district on seniors' prescription drug options
and cost, and some of you may have been responsible for the
position she is now taking in Washington. But I am very, very
grateful for it. And I know Debbie's mother, Ann Greer, is here.
So I thank her for coming.
And let me say to all of you -- and I want to thank
Jane for doing this. You know, I met her about three minutes
ago, and I -- she's got to come out here with me and do this
program. And I think the odds are she'll do better than I will.
(Laughter.) So I'm not worried.
Let me say, today I want to have this opportunity to
talk with all of you -- we have people of all ages here -- about
the great national debate going on not only in Washington, but in
our country -- a debate that we never thought we'd be having.
You know, I came to Lansing first when I was running for
President in 1992, and the people of Michigan have been very good
to me and to Hillary and to Vice President and Mrs. Gore. I'm
very grateful for that.
But it occurred to me if I had come here in '92 and I
said, I want you to support me because if you do we've got a $290
billion deficit today, but I'll be back here in six years and
we'll talk about what to do with the surplus -- (applause) --
now, I think it's fair to say that if I had said that people
would have said, he seems like a nice young man, but he's
terribly out of touch -- (laughter) -- he doesn't have any idea
what he's talking about. This guy is too far gone to have this
job. But that's what we're doing here.
Six and a half years ago, Michigan's unemployment rate
was 7.4 percent. Today, it's 3.8 percent. We've gone from a
$290-billion deficit to a $99-billion surplus. And we have done
it with a strategy that focused on cutting the deficit, balancing
the budget, eliminating unnecessary spending, but continuing to
invest in education and training. For example, we've almost
doubled our investment in education and training in the last six
years while we have cut hundreds of programs and reduced the size
of the federal government to its smallest point since 1962, when
President Kennedy was in office. So I think that's very
important. And the tax relief which has been given in the last
six years in focused on families and education.
I asked the President of this college when I came in, I
asked him what the tuition was, because now our HOPE Scholarship
tax credit give a $1,500 year tax credit to virtually all the
students in our country. And that makes community college free,
or nearly free, to virtually all the students in community
colleges in our country. It's an important thing.
But we've worked hard and the American people have
worked hard. Now we have the longest peacetime expansion in
history, with 19 million new jobs. We have the lowest minority
unemployment rates ever recorded. And we have to ask ourselves,
we've worked very hard as a country for this -- what are we going
to do with it? And I have argued that, at a minimum, we ought to
meet our biggest challenges -- the aging of America, the
obligation to keep the economy going, and the obligation to
educate and prepare our children for the 21st century.
Today, we're going to talk primarily about the aging of
America and Medicare. But I want to emphasize what a challenge
that is. The number of people over 65 will double between now
and the year 2030 will double. The fastest-growing group of
people in the United States in percentage terms are people over
80. Any American today who lives to be 65 has a life expectancy
of about 82.
Children being born today, when you take into account
all of the things that can happen -- illness, accident, crime,
everything -- have a life expectancy of 77 from birth now. We
expect to unlock the genetic code with the Human Genome Project
in the next three to four years, and it then will become normal
for a young mother taking a baby home from the hospital to have a
genetic map of that baby's body which will be a predictor of that
baby's future health. It will be troubling in some ways. It
will say, well, this young baby girl has a strong predisposition
to breast cancer. But it will enable you to get treatment, to
follow a diet, to do other things which will minimize those
risks; will say, this young boy is highly likely to have heart
disease at an earlier-than-normal time, but it will enable us to
prepare our children from birth to avert those problems. So this
is a very important thing.
The first thing I want to say to all of you and those
of you who are in the senior citizens' groups will identify with
this -- this is a high-class problem we have. This is a problem,
the aging of America, that is a high-class problem. It means
we're living longer and better. I wish all of our problems were
like this. It has such -- sort of a happy aspect to them.
But it does mean that there will be new challenges for
our country, and it means, among other things, that we'll have,
percentage-wise, relatively fewer people working and more people
drawing Social Security and Medicare.
When you look at the Social Security system, it's
slated to run out of money in about 34, 35 years. It ought to
have a much longer life expectancy than that. Everybody -- it's
fine for the next 35 years, but I've offered a plan to increase
the life of the Social Security trust fund for at least 54 years
and to go further if the Congress will go with me.
I have offered a plan to increase -- when I became
President, the Medicare trust fund was slated to go broke this
year. And we took some very tough actions in 1993 and again in
1997 to lengthen the life of the trust fund -- actions which, I
might add, most hospitals with significant Medicare caseloads,
and teaching hospitals which deal with a lot of poor folks,
believe went far too far. And we're going to have to give some
money back to those hospitals in Michigan and throughout the
country. But we now have 15 years on the life of the Medicare
trust fund. Under my proposal, we would take it out to 2027, and
that will give plenty of time for future Congresses and
Presidents to deal with whatever challenges develop in the
Medicare program after that.
Now, to do that and to do it without cutting our
commitment to education, to biomedical research, to national
defense, we have to devote most of the surplus to Social Security
and Medicare. We will still have funds for a substantial tax
cut, but not as big as the one being offered in Washington today,
which spends all the non-Social Security tax surplus funds on a
tax cut.
I believe the wise thing to do is to take care of the
21st century challenge of the aging of America, to do it in a way
that does not require us to walk away from the education of our
children; and under my plan, because we would save most of the
surplus, the side benefit we'd get is that in 15 years we could
actually take the United States of America out of debt for the
first time since 1835. (Applause.)
Now, why is that important -- and it's more important,
I would argue, than at any time in my lifetime. I was raised to
believe that a certain amount of debt for a country was healthy;
that just like businesses are always borrowing money to invest in
new business, a certain amount of debt was healthy. The
structural deficit has been terrible. The idea that we
quadrupled the debt in 12 years was an awful idea, because we
were borrowing money just to pay the bills.
But I'd like to ask you all to think about this,
because I don't think most Americans have focused on this part of
the plan, the idea of being debt-free. We live in a global
economy. Money can travel across national borders literally at
the speed of light. We just move it around in accounts.
Interest rates are set, therefore, in a global context. If we
become debt-free and we, therefore, don't borrow any money in
America just from the government, that means everybody else's
interest rates will be lower. That means for businesses, lower
business borrowing rates; it means more businesses, more jobs,
easier to raise wages. For families it means lower home mortgage
rates, lower credit card payment rates, lower car payment rates,
lower college loan rates.
It means that we will secure the economic strength of
America in ways that are unimaginable to us now. It means that
if other parts of the world get in trouble, the way Asia did a
couple of years ago, we'll be less vulnerable. And the people
that are in trouble and need to borrow money will be able to get
it at lower interest rates and they'll get up and go on again and
be able to do business the us again.
This is a very good thing to do. But it can only be
done if we set aside the vast majority of the surplus to fix
Social Security and Medicare. You can still have a tax cut,
focused on helping families save for their retirement or any
number of the other things that have been discussed within the
range we can afford, focused on helping people pay for long-term
care, focused on helping working families pay for child care.
And, I would hope, focused on helping us modernize our schools
for the 21st century and giving business people big incentives to
invest in the small towns, rural areas, urban neighborhoods and
Indian reservations that still haven't gotten any new business
investment in this recovery of ours.
But the fundamental decision is: Are we going to do
these things? Now, there does seem to be agreement in Washington
-- let's start with the good news -- there does seem to be an
agreement in Washington that we should set aside the portion of
the surplus produced by your Social Security tax payments for
Social Security. And if that, in fact, happens, under the way
that the Republicans and the Democrats have agreed on so far, we
will pay down the debt, we will continue to pay down the debt,
but we won't pay it off. And we won't extend the life of the
Social Security Trust Fund, as I would under my plan. But still,
that's something.
There is yet no agreement in Washington over setting
aside a significant portion of the surplus to save and modernize
Medicare. So today, we're here to talk about that. But I wanted
you to have a feeling for how the Medicare proposal fits into the
proposal to save Social Security, to keep investing in education,
to have a modest tax cut, and to make the country debt-free. I
want you to think about it, because the big debate is, what are
we going to do with the surplus?
And I don't even agree with the timing of what's going
on in Washington; I don't think we should even be talking about
the tax cut until we figure out what it costs to save Social
Security, what it costs to save and modernize Medicare, what we
have to do to keep the government going. (Applause.)
How would you feel -- now, one of my staff members, who
happens to be from Michigan, said to me the other day, this is
kind of like a family sitting around the kitchen table and said,
let's plan the fancy vacation of our dreams and then talk about
how we're going to make the mortgage payment. (Laughter.) Hope
we've got enough left over. So that's where we are.
To evaluate whether you agree or not, we need to talk
about what needs to be done about Medicare. So I'd like to tell
you what I think. The first thing my plan would do is to devote
a little over a third of the non-Social Security portion of the
surplus, $374 billion over the next 10 years, to strengthen
Medicare by extending the life of the trust fund to 2027. Now, I
think that is very, very important, because, keep in mind, all
the baby boomers will start turning 65 in the year 2011. That's
not that far away. To young people, that may seem like a long
way away. The older you get, that seems like the day after
tomorrow. (Laughter.) And we've waited a long time.
The last time we had a surplus was 1969. This is a
once in a lifetime opportunity we have here to deal with this.
So if we run it out to 2027 and then further complications arise,
or difficulties or challenges present themselves, there will be
time for future Congresses and Presidents to deal with them
without having to take drastic action. So that's the first thing
-- run the trust fund out to 2027.
No serious expert on Medicare believes that we can
stabilize Medicare without an infusion of new revenues. The
second thing we do is to employ some of the best practices in
health care today: competition and other practices now in the
private sector, to keep costs down that don't sacrifice quality
and don't require people to be forced out of the fee-for-service
Medicare plan if they don't want to be, into a managed care plan.
We leave free choice open. No requirement. (Applause.)
The third thing about this plan that's gotten the least
publicity but is potentially very important for our country is
that we allow people between the ages of 55 and 65 who aren't
working anymore or don't have health insurance on the job and
don't have retiree health insurance to buy into Medicare in a way
that doesn't compromise the stability of the program. I think
that is terribly important. That's a huge problem in our country
today and a growing one. People who are out of the work force or
working for very small businesses without employer-sponsored
care, who can't get any health insurance because of their age or
their previous health condition.
The fourth thing the plan does is to modernize the
benefits of Medicare to match the advances of modern medicine.
That means, first, encouraging seniors and disabled Medicare
beneficiaries to take greater advantage of the available
prevention mechanisms in our country, preventive tests for
cancer, for osteoporosis, for other conditions, by eliminating
the deductible and the copay from those tests and paying for it
by charging a modest copay for lab tests that are often overused.
Now, why is this important? Well, if somebody develops
osteoporosis, a severe case and goes to the hospital and has a
prolonged medical regime under Medicare, the taxpayers pay for
all of it. But very often, the prevention is not done because of
the costs involved. It'll be far less expensive over the long
run to spend a little more on prevention now and keep people out
of the hospital and the expensive payments we're going to pay if
we don't do that. Very important issue. (Applause.)
And then, we provide, for the first time, for a
voluntary and affordable prescription drug benefit. Basically,
we propose to start with a $24 a month premium to pay half the
drug cost, up to $2,000, phasing up over the next five or six
years to a $5,000 ceiling, with the premium going up that way, in
a graduated way. For seniors at 135 percent of poverty or less,
we would waive the premium and the copay, and then the premium
would be phased-in, up to 150 percent of poverty. So there would
be subsidies there.
Now, there are those who say, well, this is good, but
I've got a good retiree health plan with prescription drugs, and
if you offer this my employer will drop it and it's better than
this deal. Well, I want you to know that one of the things we've
done in here is put substantial subsidies in here to employers
who offer drug benefits to their retirees. So I think it is less
likely that they will drop the benefits, not more -- because
they're going to get a real incentive to keep the employer-based
retiree programs. The second thing I want to say, again, is this
is an entirely voluntary program.
Now, the other big criticism of this program has been
that, well, they say, two-thirds of the people have prescription
drugs already who are retired. That is misleading. That is only
accurate by a stretch, and let me explain what I mean by that.
We have a report we are releasing today that shows that 75
percent of older Americans lack decent and dependable private
sector coverage for prescription drugs. And the problem is
getting worse.
Fewer than one in four retirees, 24 percent, have drug
coverage from their former employers. Now, the number of
corporations offering prescription drug benefits to retired
employees has dropped by a quarter, 25 percent, just since 1994.
Eight percent of the seniors have Medigap drug policies. But as
all of you know, Medigap premiums explode as people get older,
when they most need the benefits and can least afford the higher
prices.
Here in Michigan, for example, seniors over 85 must pay
over $1,100 a year in Medigap premiums for drug coverage, not
counting the $250 deductible. Those high costs are especially
hard on women, who tend to have lower incomes than men because
they didn't have as many years paying into Social Security or
retirement primarily. Seventy-two percent of the Americans over
85 are women. Seventeen percent of seniors have drug benefits
through Medicare managed care plans. But three-fifths of these
plans cap the benefits at less than $1,000 a year.
And listen to this, in just the last two years, the
percentage that capped drug benefits at only $500 per year has
grown by 50 percent. Anybody that's got any kind of medical
condition at all will tell you it doesn't take very long to run
through $500.
So what does this mean? it means that the vast
majority of our seniors either have no drug coverage or all, or
coverage that is unstable, unaffordable and rapidly disappearing.
It means, therefore, that we need a drug plan for our seniors
that is simple, that is voluntary, that is available to all and
that is completely dependable.
Securing and modernizing Medicare I believe is the
right thing to do for our seniors, but I also think it's the
right thing to do for all the young people here. And for the
next generation, the young parents in their 30s and 40s. Why?
First, because it guarantees we can get out of debt by 2015 -- I
explained why that's a good idea.
Second, because if we do this and we stabilize Social
Security and Medicare, we will ease the burden on the children of
the baby boom generation who will be raising our grandchildren.
It is a way of guaranteeing the stability of the incomes of the
children of the seniors on Medicare. And I think that is
profoundly important.
Now, I've already explained that that's what our budget
does. Today the Congress is voting, the House of Representatives
is voting on the Republican
tax plan which basically would
spend virtually the entire non-Social Security surplus on a tax
cut. And it would cost a huge amount of money, not just in this
10 years, but it triples in cost in the next 10 years, it
explodes.
And you say, I don't want to think about that. I want
to think about today. You have to think about that. The baby
boomers will be retiring in the second decade -- in the second
decade of the century we're about to begin. And we have to think
about that. This plan would give us no money to stabilize or
modernize Medicare, and it would require substantial cuts in
education, in national defense, in biomedical research, in the
environment. And I predict to you that the environment will be a
bigger and bigger issue for us all to come to grips with in the
years ahead.
So we have to figure out what we're going to do. I
believe that this plan that's being voted on in Washington will
not enable us to pay off our debt; it will not do anything to add
to the life of Social Security and Medicare; it will require huge
cuts in our other investments and taking care of our kids. And I
will veto it if it passes. (Applause.)
But the question is what are we going to do. You all
know that we fight all the time in Washington because that's what
you hear about. But I would like to reiterate that we joined
together to pass welfare reform -- and I did, I vetoed two bills
first because they took away the guarantee of food and medicine
for the poor kids. But I passed the welfare reform bill that
required able-bodied people to go to work and provided extra help
for child care, for transportation, for training and education
for people on welfare. We now have the lowest welfare rolls in
30 years -- the lowest welfare rolls in 30 years. (Applause.)
And big majorities of both parties in both Houses of
Congress voted for it. We fought over the budget for two years,
but in '97 we passed a bipartisan balanced budget amendment, with
big majorities in both parties of both Houses voting for it. And
the results have been quite good.
So don't be discouraged. You just have to send a clear
message. We are capable of working together to do big things.
Yesterday, 50 economists, including six Nobel Prize winners,
released a letter supporting my approach. Maybe it's easier for
me because I'm not running for election, but I don't think that's
right. I trust the American people to support those people in
public life who think of the long run, who tell them the truth,
who say, I realize it would be popular to spend this surplus, but
we've waited 30 years for it and we now have 30 years worth of
challenges out there facing us and we cannot afford to squander
that.
So what I hope to do today is to answer your questions
and hear your stories, and let's explore whether or not we really
need to do these things for Medicare, and whether or not they
really will help not only the seniors, but the non-seniors in the
country. And if you disagree, you ought to say that, too. But
my concern now is for what America will be like in 10 years, or
20 years, or 30 years.
We've got the country fixed now, it's working fine,
everybody is going to be all right now in the near-term. The
economy is working, things are stable, we're moving in the right
direction. But we now have a once in a generation opportunity to
take care of our long-term challenges and I believe we ought to
do it.
Thank you very much. (Applause.)
MS. SOUTHWELL: Now, with your plan, what's the period
of time before it's in effect and working? Because I think --
hurry! The checking account is going down, the savings.
THE PRESIDENT: Well, it will take us -- it takes a
couple of years -- first of all, we can stabilize the plan
immediately. If Congress passed the law and I sign it, we'll
have the funds dedicated and we can set the framework in motion
today that would do all the big things.
To put the prescription drug benefit in effect, it's a
complicated thing, as you might imagine, millions and millions of
people involved -- it will take probably a year, maybe a little
longer, two years, to actually start it.
But where we propose to start would be with a premium
of $22 a month and a co-pay of 50 percent up to $2,000, but it
would go up to $5,000. And I think it's very important to get up
to a higher level. But we have to learn to administer it and
make sure we've got the cost estimates right and all of that. So
it would be fully in effect at $5,000 about five years after we
start.
MS. ALDRIDGE:
And you did touch on the baby
boomer question, too. Does it concern you? Have you started to
think about what's going to happen in the future and what might
happen when you reach your senior years?
MS. SOUTHWELL:
Yes, we're already thinking about
that. And my daughter-in-law just last week said, will there be
Social Security when we get there. And it's up to our
government.
THE PRESIDENT: The answer to that is, there certainly
should be. There's no reason for us to let the trust fund run
out in 2034. What I have proposed to do, just so you'll know, is
-- what I propose to do is to allow the Social Security taxes
that you pay, which presently have been covering our deficit
since 1983 -- as big as these deficits have been, they'd have
been even bigger if it hadn't been for Social Security taxes.
You need to know that, because when we put the last Social
Security reform in, in 1983, we did it knowing that we would be
collecting more. I wasn't around then, but they did it knowing
they would be collecting more than they needed, and the idea was
to have the money there when the baby boomers retired, as well as
to relieve the immediate financial crisis.
Now, if you do that, you can pay down the debt some.
But in order to lengthen the life of the trust fund, what I have
proposed to do is, as the debt goes down, the interest we pay on
the debt goes down. Obviously, you know, if you've got smaller
debt, you have smaller interest payments. Well, you should know
that for most of the last 10 years, about 15 cents on every
dollar you pay in taxes comes right off the top to pay interest
on the debt.
So what I want to do, as the debt goes down, I want to
take the difference in what we used to pay and what we've been
paying and put that into the Social Security trust fund to run
the life of the trust fund out to 2053. And I've made some other
proposals and will make some more, because I'd like to see us
take it all the way out to 2075. That would be, in the ideal
world, we'd have 75 years in the Social Security trust fund.
That's what I'd like to see and I'm working on it. But if you
get over 50 years, we'll be in pretty good shape, and I'm hoping
we'll do that.
THE PRESIDENT: You might be interested to know that
the drug companies, a lot of them are worried about it and
they've come out opposed to my plan -- even though there's no
price control in my plan. But if we represent you and millions
of other people like you, we'll have a lot of market power, we'll
be able to bargain for better prices. And I think that's a good
thing, not a bad thing.
The other thing you should know is -- maybe most of you
do know this -- I didn't know this until a few years ago and my
former Senator, David Pryor, who is very interested in seniors
and drug prices told me this, and then when I became President
and began to manage the budget, I confirmed it -- Americans
sometimes pay many times higher prices for drugs than Europeans,
for example, pay for the same drugs. So our companies are only
too happy to sell in the European market at cost because -- much
lower cost -- and they make money doing it because they recover
all the cost of developing new drugs from Americans. And then
the Europeans put actual price controls on them and they sell
anyway.
Now, I honor the research and development of new drugs
by our pharmaceutical companies. The government spends billions
of dollars every year supporting such research and we should. If
America is on the cutting edge, maybe it's worth a premium for
it. But I also believe that elderly people on fixed incomes
should not be bankrupt for doing it.
That's what this -- so what I'm trying to do is to
strike the right balance here. I want to hold down future
increases as much as we can, not by price controls, but by using
the market power of the government. And we'll have to be
reasonable because we're not going to put those companies out of
business and we're not going to stop them from doing research
because we'd be cutting off our nose to spite our face. We
wouldn't do that. But we would be able to give people like you
some protection, as well as the guarantee of coverage. And I
think it will be a good thing.
MR. WITT: That's exactly what I'm getting at, Mr.
President, because my sister-in-law is a nurse and they go to
Texas every year and they go across the border and buy the same
prescriptions at a fraction of the cost of what we're paying here
in Michigan. And I read in the paper where they can do the same
thing in Canada. So what I'm getting at is I think that the
government should start purchasing these prescription drugs, many
of them, and make them available to seniors, the same way they
are in the hospitals, at a fraction of the cost that we as
seniors are paying. We're subsidizing a lot of other things out
of our meager retirement income.
THE PRESIDENT: You are subsidizing the pharmaceuticals
made in America, sold in virtually every other country in the
world, because they're made here and you're paying higher prices
for them than people in other places.
As I said, I understand their argument -- they say,
well, why shouldn't we go in there and sell if we can make some
money, but we have to recover our drug development costs. I'm
sympathetic to a point, but not to the point that people like you
can't have a decent living. So I think this will be a good
compromise and I hope the pharmaceutical companies will
reconsider their opposition. It would be a good thing, not a bad
thing, if we had the market power of large-bulk purchasers to
hold these prices down to.
THE PRESIDENT: You can actually figure out pretty much
what this plan would do for you. If you have, let's say, $2,000
a year in drug costs -- let's take the first year the plan goes
in -- let's say you've got $2,000 a year in drug costs, and let's
say your income is over 150 percent of the federal poverty level
-- 150 percent of the federal poverty level is $17,000 a couple
for seniors -- then, you would pay $1,000 for the drugs and $24 a
month for the premium, which is $288 a year, which is $1,288, so
you'd save $712 a year.
Now, if your income is under 135 percent of the federal
poverty level, which is $15,000 a couple, you would save $2,000 a
year because you wouldn't have to pay the copay or the monthly
premium. We've tried to take care of the really -- the kind of
people you're talking about at your complex who don't have enough
to live on. I wish I knew the numbers for seniors living alone.
I just don't have it in my head; I should, but maybe somebody
will slip it to me before I end.
If somebody, one of the people here with me, if you'll
slip me the numbers for what the 135 and the 150 percent of the
poverty level is for single seniors, I'll tell you what that is,
but you can figure it that way.
MS. FRETELL: It's just disheartening to see people
have to choose between their dignity or their quality of life and
their health. And I just feel that the program is a good start
towards providing meaningful pharmacy services to older
Americans. I think once older Americans have those drugs, it's
very essential that they're used appropriately, because right now
we're spending -- for every dollar that we pay in prescription
drug costs, we're spending one dollar to treat problems because
those medications are used inappropriately. And that's where my
role as a pharmacist really is important, is making sure that
those medications are used appropriately, because we all know
that they can save lives and improve quality of life, and
decrease overall medical costs.
MS. ALDRIDGE: Are you hearing that a lot around the
country?
THE PRESIDENT: A lot. And let me just say to all of
you, this fine, young woman is representative of where the
pharmacists of our country are. I want to -- I said that I
regretted the fact that the drug manufacturers were opposing our
program because they're afraid it will hold costs down too much.
The pharmacists who see the real, live evidence of this problem
have been, I think, the most vociferous supporters of this whole
initiative of any group not directly involved in getting the
benefits, and I can't thank you enough. Thank you. (Applause.)
But, wait, let me say one other thing. She made
another point the I didn't make in my remarks that I would like
to make to you. She said, you know, say it was your grandmother
or something, if she doesn't take this medication she'll have to
go to the hospital.
Now, suppose there were no Medicare program. Suppose
President Johnson hadn't created Medicare 34 years ago and we
were starting out today. Does anybody here even question that if
we were creating Medicare today, prescription drugs would be a
part of it? If we were starting all over again? Thirty-four
years ago, we didn't have anything like the range of medicines we
have today that could do anything like the amount of good and do
anything like the amount of prolonging our lives, our quality of
life, keeping us out of the hospital.
And here's the bizarre thing about this, if we manage
this program right over the long run, it's going to be a cost
saver because we'll be -- if you've got $2,000 in drug costs,
that's a lot -- that's what her costs are -- that $2,000; how
long does it take you to run up $2,000 in hospital bills? A lot
less than a year. A lot less than a week.
So I think that's another point that ought to be made
when this debate is unfolding, that, yes, this will be -- it's a
new program, so it will cost money. But eventually, particularly
if Heather is right and we can make sure a higher percentage of
our people use these drugs properly, you will save billions of
dollars in avoided hospital stays -- which we pay for. That's
the irony of this whole thing. That's the other reason I'm for
all these preventive tests being provided for free, because we
don't pay for the preventive tests, but when you don't get them
and you go to the hospital, we do pay for that.
So I think anything we can do to make people healthier
and keep them out of the hospital and keep them out of more
extensive and expensive care is a plus. So thank you very much.
(Applause.)
MS. ALDRIDGE: And it's interesting to note, since
1965, how far we have come in preventative medicine and what we
would do today to maybe help somebody with a disease or a
condition. It would be totally different 35 years ago.
THE PRESIDENT: It's amazing. The average life
expectancy in this country is almost 77 years now. I mean, that
shows you how far we've come in just 34 years.
THE PRESIDENT: First, let me say that we have made
dramatic increase in medical research one of the priorities for
the last two years for the millennium. We're trying to double
funding for the National Cancer Institute and eventually double
funding for all the National Institutes of Health.
And Vice President Gore gave a speech in Philadelphia
about 10 days, or so, ago now, where all the major associations
involved in the fight against cancer came to talk about long-term
plans that would really give us a chance of finding cures for
many, many types of cancer. I think it will be a big national
priority in the years ahead. And he gave, I thought, a very good
speech about what should be done to take advantage of what we
already know is out there on the horizon, just by accelerating
our investments and making sure we're doing the proper testing
and the proper range of population.
I'm quite encouraged about it. I think a lot of the
big breakthroughs will come after I I leave office. But I hope
that the groundwork is laid now, will bring them sooner. And I
think one of the things that I hope will be a big part of the
debate for all of you for all the elective offices when we come
up in the year 2000 -- I say this not in a partisan way, because,
actually, we've had very good Republican as well as Democrat
support for the National Institutes of Health funding -- but I
think this should be a major issue and a subject of debate that
all of us should talk about as Americans: What is our commitment
over the long run to doing this kind of research and getting the
answers as quickly as we can.
THE PRESIDENT: Let me say -- I think we're mostly
talking about this prescription drug issue today. But don't
forget, as important as it is, the most important thing that
we're doing is securing Medicare for 27 years. We've got to get
-- the basic program has to be secure, because that would
literally, as many people as are terrifically burdened by this
prescription drug benefit, if anything happens to the solvency of
Medicare, or we have to adopt some draconian changes that raise
the cost of the program so much that it's as out of reach as the
drugs are now for people, the consequences would be disastrous.
So let's not forget we have two things to do. We've got to
stabilize and modernize and secure the Medicare program itself
for the next 27 years as well as add this drug benefit.
And you made that point very eloquently and I thank
you.
MRS. SILK:
What can we as citizens do to help
you persuade the Congress?
THE PRESIDENT: I think tell the Congress that the
country's doing well now and that, yes, you would like to have a
tax cut, but you will settle for a smaller one rather than a
bigger one if the money goes to save Medicare and Social Security
and keep up our investment in the education of our children and
pay the debt off. I think that's a simple message. (Applause.)
Let me just say this. You know, Americans are a
country -- we are famously skeptical about the government, you
know. All those jokes, "I'm from the government, I'm here to
help you," and you slam the door and the guy says -- and I heard
the debate last night in the House of Representatives, and the
people that are for giving the surplus back to you in the tax cut
will -- they say, it's your money, don't let them -- i.e. us --
don't let them spend it on their friends. We'll we're spending
it on Medicare, Social Security and education and defense.
That's us, that's all of us, that's not our friends.
I mean, I hope you're my friends, but that's -- and I
think what you have to say is that the country has become
prosperous by looking to the future, by getting the deficit down,
by getting our house in order, by getting this budget balanced,
by investing in our people. And now, we have these big
challenges.
If this debate in Washington is about, you know, my tax
cut's bigger than your tax cut, well, that's a pretty hard debate
to win, you know? But if the debate is, yes, our tax cut is more
modest, although it's quite substantial, but the reason is we
think since we've got this big aging crisis looming and since
we've never dealt with the prescription drug issue, that we ought
to stabilize Social Security and Medicare, save enough money to
do our work in education and medical research and the environment
and defense and still have a modest tax cut, I think we can win
that argument, and I think -- you know, you really just need to
let people know, I don't think this should be a hostile debate at
all. I think you need to genuinely, in a very open and
straightforward way, tell all your representatives and senators
of all parties that you believe now is the time to look to the
long run.
If America were in economic trouble now, if people were
unemployed, if they were having terrible trouble, maybe we should
have a big tax cut to help people get out of the tights they're
in. But now that the country is generally doing well, we ought
to take the money and make sure we don't get in a tight in the
future. If you can just say that in a nice way, I think -- I'm
trying to keep the temperature down on this debate and get people
to think. I want to shed more light than heat. Usually, our
political debates in Washington shed more heat than light. And
you can help a lot. Just be straightforward and tell people
that's what you think.
MS. ALDRIDGE: And when you tell your lawmakers, write
them a letter, send them an e-mail.
THE PRESIDENT: Write them a letter, send them an
e-mail, send them an fax, do something to -- and say, I'm just a
citizen, but I want you to know that I will support you if you
save most of the surplus to fix Social Security and Medicare and
mae America debt-free. I will take the smaller tax cut and I
don't want you to have to cut education or national defense or
medical research or any of those other things. Let's do this in
a disciplined way, in a common-sense way. I think you just tell
him that that's what you want him to do, and don't make it a
partisan issue, don't make it a -- I don't want Americans do get
angry over this.
Like I said, this is a high-class problem. You would
have laughed me out of this room if I had come here seven years
ago and said, vote for me, I'll come back and we'll have a debate
on what to do with the surplus. So let's be grown up about this
and deal with it as good citizens.
THE PRESIDENT: Yes, I thank you for that. I agree
with that. Let me say, if you think about it, every time we do a
big change in this country, the people that are doing pretty well
under the status quo normally oppose it. And in the 15th
century, the great Italian statesman, Machiavelli, said there is
nothing so difficult in all of human affairs than to change the
established order of things, because the people who will benefit
are uncertain of their gain, and the people who will lose are
afraid of their loss.
Well, I don't think they will necessarily lose. Once
they go back to what this gentleman said over here about it, and
let's put what he said and what you said together. The profit
margins may go down some on heavily-used drugs where we have the
power to bargain per drug; but the volume will surely go up.
That's the point you're trying to make.
Look, none of us have an interest in putting the
American pharmaceutical companies out of business. They're the
best in the world and they're discovering all these new drugs
that keep us alive longer. And I wouldn't -- we'll never be in a
position where we're going to try to do that. But I've seen this
time after time after time -- not just in health care, in lots of
other areas. It will be fine if we just have to get the point
where they can't kill it. I think the pharmacists will help us,
and I think if we keep working, we'll wind up getting some
pharmaceutical executives who will eventually come out for it,
too, once they understand that nobody has a vested interest in
driving them out of business, we all want them to do well and
keep putting money into research and the increased volume -- if
the past is any experience of every other change, the increased
volume of medicine going to seniors who need it will more than
offset the slightly reduced profit margins from having more
reasonable prices.
Thank you very much.
MR. GRAHAM: My daughter is 44 years old, she has
rheumatoid arthritis. She cannot get medical insurance. Now,
she is fit, she plays golf a couple of times a week, and I think
she should be able to buy into Medicare because she is refused
insurance.
THE PRESIDENT: But she's not designated disabled?
MR. GRAHAM:
I beg your pardon?
THE PRESIDENT: Medicare covers certain -- the
disability population -- she's not disabled enough to cover, to
qualify.
MR. GRAHAM:
Correct.
THE PRESIDENT: 1 don't know if I can solve that or
not. I'll have to thank about it. (Laughter.)
MS. ALDRIDGE: But you obviously have other people that
you know that are dealing with the same type of issue that you
are right now, is that correct?
MR. GRAHAM:
Well, I know a lot of people that
are in the same situation. Although I have supplemental
insurance, there's no guarantee that that supplemental insurance
will continue. Because in our retirement, that's a part of it,
but there's nothing in writing that says we're going to get it
forever.
THE PRESIDENT: Let me say one thing. You said you
wanted Medicare to be around another 32 years. Another point I
should have made that I didn't about taking the trust fund out 27
years, you think how much health care has changed in the last 27
years. The likelihood is, it will change even more in the next
27 than it has changed in the last 27. And we may be caring for
ourselves at home for things that we now think of as terminal
hospital stays. They may become normal things where you give
yourself medication, you give yourself your own shots, you do all
the stuff that we now think of that would be unimaginable.
I think if we can get it out that far, the whole way
health care is delivered will change so dramatically that the
people who come along after me and the Congress and in the White
House will have opportunities to structure this in a different
way that will be even more satisfying to the people as well as
being better for their health.
But that's why, to go back to what you said, I want us
to do this prescription drug thing. I think it is critically
important. But we also have to remember that we've got to
stabilize the trust fund. We've got to take it out. It ought to
be more than 25 years. When you look ahead, you know it's going
to be there. Thank you.
THE PRESIDENT: Well, if it was up to me, I would
remove the age limits, the earnings limits on Social Security
recipients, because I think that's another good thing they ought
to do. But it ought to be voluntary; you shouldn't have to do it
just to pay for your medicine.
I promised the lady over there who said most of the
people who lived in your place were single. Now, keep in mind,
we start out with the premium of $24 a month, and that premium
covers half the prescription drug costs, up to $2,000 a year. It
will go eventually to a premium of about $44 a month that will
cover half prescription drug costs up to $5,000 a year. And I
think it's important to get up above $2,000, because a lot of
people really do have big-time drug costs.
Now, the people who wouldn't have to pay the premium or
the copay are people below 135 percent of poverty. That's
$14,000 for a couple, but $11,000 for individuals. That's a lot
of folks. And then, if you're up to $12,750 for an individual or
$17,000 for a couple, your costs would be phased in, so there
would be some benefit there.
But nearly everybody would be better off unless they
have a good -- the only plans that are better than this, by and
large, are those that you got from your employer if your employer
still covers prescription drugs. This is totally voluntary.
Nobody has to do this. And we also have funds in here to give
significant subsidies to the employers who do this to encourage
them to keep on doing it and to encourage other employers to do
it. So I think it's a well-balanced program and a good way to
start.
DR. SHAHNI:
-- I can tell you, Mr. President,
the list is very long of these patients who are out there
suffering because they cannot afford these medications. Drug
costs in this nation are skyrocketing. They are having dire
consequences on the health care system. We do need to do
something. We strongly support your health care plan.
The second point I wanted to make, Mr. President, is
the Medicare -- the payment system to the hospitals is having
dire consequences in our urban areas. The Detroit Medical Center
and Henry Ford Health System are premiere centers in the state of
Michigan. We are one of the best centers for taking care of
health care, and they are losing money -- $80 million to $100
million and it cannot go on. If something happens to
institutions like this in our area, we know the consequences on
our patients are going to be very, very serious.
We urge you to look at that part of the Medicare also
because if something happens to them, where will our patients go?
So, thank you very much for listening to me. (Applause.)
THE PRESIDENT: I'd like to make two points after your
very fine statement. First, on the second point you raised, I
had a chance to discuss that yesterday at my press conference.
When we passed the Balanced Budget Bill in 1997, the -- we had to
say, how much are we going to spend on Medicare over the next
five years. And we estimated what it would take to meet our
budget target. Then, the Congressional Budget Office said, no,
it will take deeper cuts than that, and we said if you do that it
will cost a lot more money. But we had to do it the way they
wanted.
Now, this is not a partisan attack; nobody did this on
purpose. There was an honest disagreement here. But it turned
out that our people were right, and so actually more money was
taken out of the hospital system in America than was intended to
take out. And to that extent by a few billion dollars, not an
enormous amount, but the surplus in that sense is bigger than it
was intended to be. And we have got to correct that. I have
offered a plan that will at least partially take care of it and
we're now in intense meetings with people who are concerned about
it; we are going to have to do that.
Now, let me make the point about the person you said,
the gentleman who died. I was aghast -- last week, we had
another health care debate on the patients' bill of rights, and
one of the people who was against our position said, these people
keep using stories -- you know, anybody can tell a story, that's
not necessarily representative.
Well, first of all, I don't know about you, but I think
people's stories are -- I mean, that's what life is all about.
What is life but your story. (Applause.) And, secondly, I --
but the point I want to make is this doctor -- the most important
point this doctor has made is that the man who died is not an
unusual case. That is the point I want to make. And that's --
the pharmacists, Heather was making the same point -- there are
lots of people like this.
And let me just use the example you mentioned.
Diabetes is one of the most important examples of this,
complications from diabetes can be, as you know, dire and can be
fatal. And you have a very large number of older people with
adult-onset diabetes that has to be managed. It is expensive,
but people can have normal lives.
The patients have to do a lot of the management of
diabetes. They have to do it. And if they don't do their
medication, the odds that something really terrible will happen
before very long are very, very high. Almost 100 percent.
But if you look at the sheer numbers of people with
diabetes alone, just take diabetes, then the story is about
statistics, too, big numbers of people.
I thank you very much, sir.
She says we've got to quit. You've been great. Are
you going to be the heavy? I should be the heavy.
MS. ALDRIDGE: No, they told me I had to tell you to be
quiet. I said, really? (Laughter.) I bet there are some
Republicans that might like that job.
THE PRESIDENT: Republicans -- Hillary would like it.
A lot of people would like it. (Laughter.)
MS. ALDRIDGE: We are, indeed, out of time. So sorry,
but they're telling me and I have to take my cues. But, Mr.
President, we want to thank you so much for being here. And did
you have some closing remarks that you'd like to make to us?
THE PRESIDENT: I just wanted to say again, this is a
wonderful moment. We told some sad, heart-wrenching stories
today, and I wish I could hear from all of you. But keep in
mind, this is a great thing. Our country is so blessed now.
We've got the lowest peacetime unemployment in 40 years; the
longest peacetime economic expansion in history. We've got this
big surplus, the biggest one we've ever had. We think it will
last for a decade or more. More, really, as long as we don't
mess up the budget.
We have to decide. I already said what to me the
choice is -- it is your money. If you want it back now, you can
tell your elected representatives. Nobody can say you didn't pay
it in, you want it back. I don't quarrel with that. But I think
it is much better for you to stabilize Social Security and
Medicare, add the prescription drug benefit at a price we can
afford, let people 55-65 pay into it who don't have health
insurance, have a modest tax cut that doesn't undermine our
ability to do that or our ability to invest in education and
medical research and defense -- and get the country debt-free.
You'd be amazed how many really wealthy businessmen
come up to me and say, you raised my taxes to balance the budget
back in '93 -- we did the top 1 percent, 1.5 percent got an
income tax increase -- and I was mad at the time, but I made so
much more money in the stock market than I paid in taxes, it's
not funny.
Low interest rates make people money. The flip side of
that is if interest rates went up 1 percent in this country, it
would cost you more money than I can give you in a tax cut if you
borrow any money for anything.
So what I think we have to say -- I just want you to
think about this, and then communicate your feelings. And again,
do it in a friendly way. Do it in the tone we've been talking
about today. Tell them the stories you know, Doctor. Every
doctor, every nurse, every pharmacist, every family should sit
down and take the time -- I know you think that members in the
Congress and the White House, the President I have a thousand
volunteers at the White House, most of them just read mail. And
then I get a representative sample of that mail every two or
three weeks. And we all calibrate that. And the members of
Congress, you'd be amazed how many members of Congress actually
read letters that they get. They do have an impact.
So these faxes and e-mails and letters and telephone
calls, they register on people, especially if they're not done in
a kind of harsh, political way, but just saying, this is what I
think is right for our country. And I hope you'll do it.
Thank you and God bless you. (Applause.)