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Managing your Medicare Benefit

Wednesday, September 14, 2011

Since 1965 seniors have benefited from a great health insurance program known as Medicare.  Designed specifically for the needs of seniors, Medicare has played an important role in improving the lives of older adults.  Over the decades, numerous changes have occurred to the Medicare program and a number of innovations have been tried.  Here is a short description of what you need to know about your Medicare benefit.

Social Security Amendments of 1972
Signed into law by President Nixon, the key change brought about by this amendment made Medicare available to anyone who had paid into Social Security for a short period of time and then became disabled, after a two year waiting period.  This is the first of many changes that weakened Medicare financially.

Catastrophic Medicare Act of 1988  
The first sweeping change that occurred with Medicare was the passing of the Catastrophic Medicare Legislation in the late eighties.  While the name implied an improvement in Medicare benefits, it actually resulted in a catastrophic financial impact, resulting in its repeal just one year later - one of the only instances of the Federal Government recognizing its error and addressing it in a timely manner.

Medicare Modernization Act of 2003
The next major change to Medicare was the Medicare Modernization Act, adding a prescription drug program to Medicare.  While the act improved access to drugs, the complexity of the program makes it very difficult for most seniors to utilize it fully and the unfunded cost has actually further destabilized the Medicare program.

Medicare HMOs and Advantage Programs
As part of the Balanced Budget Act of 1997, the Medicare Choice program was established.  These programs are either HMOs or PPOs that bundle Medicare services into a cost effective program. The programs often entice older adults to leave their traditional Medicare plans with the promise of lower monthly premiums and enhanced prescription drug benefits; but the shortcomings of the plan are revealed when residents need it most.  Some plans only contract with certain providers for services such as long term care, often forcing retirement community residents to use a different nursing home for rehabilitation.  Many plans only approve very short stays before cutting the Medicare benefit, putting the burden on the resident or their advocate to fight for the benefits that by rights they should already have.  While these programs promise to save enrollees money, they often fall short of expectations when real medical needs arise.  For this reason, Homestead Village believes traditional Medicare is the best choice for retirement community residents.

Patient Care Protection and Affordability Act (PCPAA)
The PCPAA, also known as Health Care Reform, makes fundamental changes to the program, including the reduction of nearly $500 billion dollars from the program over the next ten years.  While politicians promise older Americans that their health insurance will not be harmed, many of these cuts threaten the quality of care and even access to medical care.  The PCPAA earmarks nearly $148 billion in cuts to hospitals, nearly $40 billion in cuts to home health care, $15 billion in cuts to nursing homes and nearly $7 billion in cuts to hospice.  The Medicare Advantage Plans are scheduled to receive $132 billion of cuts over the next ten years.  Already, the federal government has announced an 11% cut for nursing home residents in 2011 - even in the face of rising expenses.  This will result in severe pressure on providers to maintain quality in an extremely challenging fiscal environment.

With the difficult financial challenges that both state and federal governments face, the pressure on Medicare will only increase over the next decade.  The PCPAA actually uses reductions in Medicare to help fund uninsured Americans.  This will most likely result in some form of rationing similar to what seniors in countries such as Canada face where medical care is rationed based on the age of the patient and the funding available.  If Medicare is going to remain a high quality health insurance program for seniors, then some tough decisions will need to be made by our leaders in Washington.  While there are some cost savings from the implementation of electronic record keeping and fraud reduction, fundamental changes need to occur with the program (along with all of Social Security), including age restrictions as well as premiums based on both income and the real cost of health care.  Washington's unwillingness to address this political hot potato will end up jeopardizing the program.

If you have any questions about your Medicare benefits, please check out www.medicare.gov.  It is a great source of information.  Homestead Village's staff will also help you find answers to your Medicare questions.