Medicare’s 48th anniversary

For many older Americans, it is hard to picture life without Medicare. Imagine living in retirement without access to hospital or physician coverage or spending your entire retirement savings to pay for care. Before President Lyndon B. Johnson signed Medicare into law on July 30, 1965, this was often a reality for many older Americans.
Now, workers pay into Medicare throughout their working lives so that Americans age 65 and older, as well as people living with disabilities and end stage renal disease, can get health coverage. Here in Maine, more than 270,000 individuals are enrolled in Medicare and these numbers are growing. Fifty Mainers are turning 65, that magic Medicare number, every day.
Americans count on Medicare to help protect their financial and health security as they age. Yet Medicare faces a number of challenges because of rising health care costs and changing demographic realities. There is, however, a right way and a wrong way to strengthen Medicare for current and future generations.
Some in Washington believe the way to address the long-term challenges facing Medicare is to cut benefits or force seniors to pay more. They also fail to acknowledge Medicare’s connection to the larger health care system. AARP believes there’s a better way. We can stabilize Medicare for future generations and keep the promise we’ve made to current enrollees with commonsense ideas that will improve care, reduce costs, and find real savings for taxpayers.
One of the ways to save Medicare dollars is to stop drug companies from “gaming” the system. Some brand name drug companies are actually driving up the cost of health care by entering into agreements with generic drug companies that pay the generic companies to delay bringing a competing product to the market. These agreements have delayed consumers’ access to less expensive generic drugs resulting in some patients not being able to afford the drugs they need to treat their medical conditions.
Additional savings could be realized by allowing Medicare to use the bargaining power of its 50 million enrollees to negotiate lower drug prices. Unlike private insurance plans, Medicare is legally prohibited from negotiating with pharmaceutical companies for lower drug costs. Allowing Medicare to negotiate for lower prescription drug prices, particularly for high priced brand name drugs, would save money for seniors and reduce the cost of health care.
One of the biggest cost drivers for Medicare that has also been a huge burden on patients and families is hospital readmissions. Nearly two million Medicare beneficiaries are readmitted to the hospital within 30 days of being discharged, at a cost of $17.5 billion annually. More must be done to improve care coordination when a patient leaves the hospital. Transitional care models that provide a set of services such as meals, medication management, respite or light housecleaning to patients and caregivers after a hospital discharge can save Medicare money and improve patient outcomes. Early studies indicate improved health and cost outcomes for high risk older adults when compared to standard care.
There are also responsible solutions that crack down on waste and fraud in Medicare. An April 2012 RAND study estimated that fraud and abuse contributed as much as $98 billion to Medicare and Medicaid spending in 2011. Each day, Medicare processes 4.5 million patient claims. The program pays health claims up front and then reviews them for fraud and abuse. If fraud or an error is detected, Medicare has to chase down providers after the fact making it much harder to catch providers who are defrauding the program. All too often, the improper payment is never recovered. By implementing the latest technology available in the marketplace, we can flag fraudulent claims before they are paid, saving billions of dollars. Imagine an additional $98 billion going towards health care services instead of being wasted year after year. Another simple change, removing Social Security numbers from Medicare cards, would also help to prevent fraud and protect beneficiaries.
For 48 years, Medicare has provided health security to millions of Americans. Unfortunately, several proposals being discussed in Washington would greatly impact enrollees without addressing the major cost drivers to the program. Raising the Medicare eligibility age, for example, would shift thousands of dollars in costs to seniors, while also driving up private health insurance costs for families and employers.
Our elected leaders owe it to all of us to take responsible action to keep Medicare strong. As we celebrate Medicare’s birthday, let’s work together to find commonsense ways to improve this extraordinary program for future generations without hurting today’s seniors. Go to www.earnedasay.org to make your voice heard.
Happy Birthday, Medicare. Here’s to 48 more years!
Lori Parham is AARP Maine state director.