Medicare and the Economy

In order to fully understand Medicare, we first have to look at how the whole Government program started. To do this, we will first look at Social Security.
Franklin D. Roosevelt signed the Social Security Act in August 1935. The first one-time, lump-sum payments were made in January 1937, and regular monthly benefits were first paid in January 1940. (http://www.ssa.gov)
Franklin Delano Roosevelt was quoted on August 14, 1935 to say: "This law represents a cornerstone in a structure which is being built but is by no means completed--a structure intended to lessen the force of possible future depressions, to act as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy--a law to flatten out the peaks and valleys of deflation and of inflation--in other words, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness." (http://www.ssa.gov)
The act created a uniquely American solution to the problem of old-age pensions. Unlike many European nations, U.S. social security "insurance" was supported from "contributions" in the form of taxes on individuals’ wages and employers’ payrolls rather than directly from Government funds. The act also provided funds to assist children, the blind, and the unemployed; to institute vocational training programs; and provide family health programs. As a result, enactment of Social Security brought into existence complex administrative challenges. The Social Security Act authorized the Social Security Board to register citizens for benefits, to administer the contributions received by the Federal Government, and to send payments to recipients. Prior to Social Security, the elderly routinely faced the prospect of poverty upon retirement. For the most part, that fear has now dissipated. (http://www.usnews.com)
Due to Social Security being enacted, the economy got better for the elderly. The poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939. While poverty was once far more prevalent among the elderly than among other age groups, today's elderly have a poverty rate similar to that of working-age adults and much lower than that of children. (http://www.nber.com)
Medicare wasn't enacted until July 1965, with the first beneficiaries signing up one year later. The Medicare and Medicaid programs were signed into law on July 30, 1965. President Lyndon B. Johnson is in the picture taken at the signing ceremony in Independence, Missouri at the Truman Library. Former President Truman is seated beside him. Lyndon B. Johnson held the ceremony there to honor President Truman's leadership on health insurance, which he first proposed in 1945. You can read Lyndon B. Johnson's speech at the signing ceremony and listen to his taped conversations relating to Centers for Medicare and Medicaid Services programs. (http://www.medicare.gov)
The most significant legislative change to Medicare since it was created--called the Medicare Modernization Act or MMA--was signed into law by another President from Texas, George W. Bush, on December 8, 2003. This historic legislation adds an outpatient prescription drug benefit to Medicare and makes many other important changes. (http://www.medicare.gov)
Medicare Part A and B are available free to those eligible for Medicare. Medicare coverage consists of two parts: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). A third optional part, Medicare Part C (Medicare Advantage), is a program that allows you to choose among several types of health-care plans. These are plans that individual health insurance plans offer to Medicare eligible beneficiaries. Benefits for Medicare Part A and B are specific and cannot be altered unless the Government makes changes to the plans. Part C is different. The health insurance companies are required to offer a minimum benefit that was established by the government but they then can offer additional benefits and price the plans accordingly. This has become the health insurance industries bread and butter plan because many senior feel they need the extra coverage.
The most recent Medicare program started was Part D. Part D was developed to help our senior population with their drug costs. After being in place for 3 years, what has been discovered is that this program is failing in many different ways. The seniors are having a hard time understanding the program and being hounded by brokers to purchase different programs and sometimes being enrolled multiple times in one enrollment period. Centers for Medicare and Medicaid Services decided in the beginning of this program that they would reimburse any monies to the beneficiaries and not the health insurance plans. What has happened is that some of the Medicare recipients, if enrolled in multiple plans are being billed multiple times or if their premiums are decreased or zeroed out, are continuing to be billed the original premium. These deductions are being made for at minimum six months and are putting the beneficiaries in a position where they have no money to pay other bills. The health insurance organization is put in a catch-22. They are receiving the angry phone calls from the beneficiaries and are unable to do anything. This is such a new program that the left-foot does not know what the right foot is doing. The beneficiaries are calling Social Security and Centers for Medicare and Medicaid Services and being told that they need to call their health insurance organization.
Medicare Part D beneficiaries are upset because the no longer are getting some of the medications they used to be able to receive and in some cases are required to try alternative medications to see if the less expensive drugs will work. Beneficiaries are fighting this because they feel that they should not have to change medications that they have been on for a long period of time.
The donut hole, which is how the co-payments work for the beneficiaries, is extremely hard for many to understand. The beneficiary must pay a co-payment up to a certain amount and then they receive their drugs with no co-pay and then after a certain amount has been spent, the beneficiary must pay co-pays again. Each plan can set up the donut hole in whatever manner they wish but ultimately the beneficiary still pays out of pocket costs. The differences are that some plans offer more or less drugs. The beneficiary must decide which plan offers the majority of the drugs that they need and then decide based on price.
In 2005, Congress decided that Social Security had too much of a backlog in eligibility cases. They created a new department called Department of Health and Human Services – Office of Medicare Hearings and Appeals. Not only did they create this new office but they broke them completely away from Social Security and Centers for Medicare and Medicaid Services. They did this, so that Office of Medicare Hearings and Appeals could operate as an independent organization. (Office of Medicare Hearings and Appeals)
When a beneficiary or provider (both known as appellant) has a denial for a claim, they have different levels of appeals. The first level is the health insurance organization for re-determination of the denial. If the health insurance organization, still denies the claim(s), the appellant, has 90 days to request a re-consideration from the second level of appeals, known as the Qualified Independent Contractor (QIC). If the appellant receives another denial and as long as the appeal is for $120 or more, they have 60 days to request an Administration Law Judge hearing from the Office of Medicare Hearings and Appeals. The hearing is De Novo, which means that the Administrative Law Judge can look at the prior decisions but is not held to them, when making their decision. What has been found, in the cases received, are that the majority are Part B cases, then Part A, Part C and very few Part D. (Office of Medicare Hearings and Appeals)
The effect of Medicare on the economy, is that currently there is enough money in the government system to pay for eligible recipients to receive these benefits but as the population ages, the money will eventually run out due to the fact that there will not be as many individuals working as there are eligible recipients. Our population is growing older due to cures for illnesses, healthier lifestyles, and easier living conditions. As of now, no one has come up with fail safe plan to ensure that the Medicare eligible recipients will be taken care of. If this program is like any other, the benefits will continue to be cut and promises broken. References
Centers for Medicare and Medicaid Services (CMS), http://www.cms.hhs.gov
Medicare, http://www.medicare.gov
Office of Medicare Hearings and Appeals
Social Security Administration, http://www.ssa.gov http://www.nber.com/aginghealth/summer04/w10466.html http://www.usnews.com/usnews/documents/docpages/document_page68.htm