Money out the Window

Tony Garr, the Executive Director of the Tennessee Health Care Campaign, has an op-ed today in The Tennessean. The Tennessee Health Care Campaign is a member of the Prescription Access Litigation coalition. We here at the PAL Blog aim to highlight the work of our coalition members.

In his op-ed (reprinted below), Tony challenges the Administration’s plan to cut the cost of the Medicare Part D drug benefit by charging higher premiums to higher-income recipients. He points out the absurdity of charging them more to save $640 million when $16 BILLION could be saved by ending the ridiculous overpayments to Medicare Advantage plans. The Government Accountability Office released a report yesterday, Medicare Advantage: Higher Spending Relative to Medicare Fee-for-Service May Not Ensure Lower Out-of-Pocket Costs for Beneficiaries. This report found that “Medicare spends more per beneficiary in Medicare Advantage than it does for beneficiaries in the original Medicare fee-for-service program, at an estimated additional cost to Medicare of $54 billion from 2009 through 2012.” Or, $16 Billion per year over that 4 year period.

Here’s Tony’s excellent op-ed. Food for thought:

Pay HMOs less to get real savings


A basic value that most Americans believe in is fairness. Most Americans are willing to pay their fair share.

However, imagine that on Oct. 1, 2008, people making more than $82,000 annually or families making more than $164,000 would begin to pay extra property tax so their children could go to public schools, or to pay an extra fee for police and fire protection, or to pay a higher fee for water and sewer services.

Lower- and lower-middle-income families would pay a base fee for these services, but higher-income families would pay extra. If such fees were really imposed, most Americans, even middle-income Americans, would be up in arms.

Recently, President Bush proposed that wealthier elderly and disabled Americans on Medicare pay higher fees to reduce the cost for the Medicare Prescription Drug Program, Part D. His proposal would supposedly save about $600 million per year.

$16 billion, or $640 million?

When Part D was created in 2003, it had been projected that Part D premiums and co-payments would not be adequate to fund the program. In fact, the current deficit for Part D far exceeds $600 million per year. The extra fees proposed by the president for wealthier Americans push more costs onto the Medicare beneficiary and do very little to slow the skyrocketing costs for this program. At the same time, the Medicare Advantage Plans (Medicare health-maintenance organizations) are making record profits.

If President Bush is really serious about controlling and reducing the costs for Part D, he needs to follow the money. According to the Congressional Budget Office, the Medicare Advantage Plans are being overpaid by as much as 13 percent, a figure that is increasing spending by more than $16 billion a year.

If the president is serious about real savings, there is no contest. Save $640 million a year by making wealthier Americans pay more. Or save $16 billion a year by paying the Medicare Advantage Plans less — the same as what is being paid for beneficiaries in traditional Medicare. The choice is obvious.

Our Medicare system is already too complicated. When we consider that Medicare serves our elderly parents and grandparents and others who have disabilities, all of whom may have difficulties completing more forms, then it is easy to see that our Medicare system needs to be simplified and not made even more complicated.

Already, the Medicare Advantage Plans can be a barrier to seeing the doctor whom we may want to see. Now, the president is asking wealthier Americans to pay extra fees. In the larger view of Medicare savings, Bush’s plan does not add up.

Follow the money and take “Advantage” of the real savings. This is where the real savings are — Medicare Advantage Plans.