Font Size

Privatized Medicare Isn’t Working

When the Bush administration and their allies in Congress rammed Medicare privatization legislation through Congress in 2003, the new Part D drug prescription benefit was what garnered the most attention. After all, seniors had been without drug coverage in Medicare and were eager for help.  Little did they know what a poison pill the Medicare Modernization Act would be for them and their families.  Two new reports out this week provide yet another glimpse into the ongoing problems with privatized Medicare Advantage plans and Part D.  The first comes from the Health and Human Services Department's own Inspector General.  According to federal auditors, the vast majority (about 85%) of the marketing materials that private insurers use for their Part D prescription drug plans don't even meet Medicare's guidelines.  The Associated Press reports:
"A frequent violation was a failure by plans to note that customers could get their prescriptions at a pharmacy other than the one advertised on the marketing product. In some cases, there was no alphabetical index of drugs that a plan covered, potentially hindering beneficiaries' ability to find information about their drugs."
 What a surprise...drug insurers who are in business to sell their products (versus Medicare which exists to provide coverage) aren't mentioning their competitors or providing information which might fully educate their consumers.  Is this the "magic of the market" we've been promised?   The second report comes from the Commonwealth Fund.  The issue brief entitled "The Continuing Cost of Privatization: Extra Payments to Medicare Advantage Plans in 2008"  provides new information on the billions of dollars of wasteful subsidies still flowing to private insurers in Medicare.  The report details: 
"The authors calculate that payments to MA plans in 2008 will be 12.4 percent greater than the corresponding costs in traditional Medicare-an average increase of $986 per MA plan enrollee, for a total of more than $8.5 billion. Over the five-year period 2004-2008, extra payments to MA plans are estimated to have totaled nearly $33 billion. Although Congress recently enacted modest reductions in MA plan payments, these changes will not take effect until 2010. Moreover, while the new legislation removes a few factors contributing to the extra payments, a number of other factors remain unaffected."
 Lastly, here's a discussion at Healthcare Policy and Marketplace Review of  privatized Medicare's long-term viability (or lack thereof).

Social Security Sent Early to Beat Gustav

Courtesy: gisuser-Flickr

Nearly 400,000 people in Texas, Louisiana, Mississippi, Alabama, and Florida received their Social Security checks early (last Friday and Saturday) so that Gulf state beneficiaries could receive help before Gustav hit the coast.  Just as during Katrina, Social Security has once again proven to be an effective and efficient responder during times of crisis.  Commissioner Mike Astrue said:

"Delivering these checks early to residents from Texas to Florida eliminates one concern people might have as they prepare for the storm. As beneficiaries take steps to ensure their own safety, this is one step we can take to help them in a difficult time. In the future, beneficiaries should be mindful that Direct Deposit is a more secure and convenient way to receive payments, particularly when natural disasters strike."
Social Security worked closely with the U.S. Postal Service and the Department of the Treasury to make the early delivery of checks possible. People living in areas with the following first three digits in their zip codes received early delivery:  Alabama 364-366 Florida 323-325 Louisiana 700-708 Mississippi 393-395 Texas 770-779 and 783-785  The Health and Human Services Department has also declared a public health emergency to ensure that individuals, including those enrolled in Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP), in Gulf Coast states receive their health care.  For Medicare beneficiaries that means rules preventing early refills for Medicare Part D beneficiaries are waived.  CMS says this should help seniors who left their prescriptions in evacuated homes or lost their prescriptions when they had to leave their homes. Beneficiaries in Medicare health plans will also be able to go out of network during this emergency. CMS says it's working with the health insurance industry to ensure there are no barriers to this service for those enrolled in these plans.  Some rules in Critical Access Hospitals, Nursing Homes, Long-Term Care Hospitals and Inpatient Rehabilitation Facilities will also be waived.   HHS also has a Hurricane assistance page for Gulf Coast residents.


Two National Advocacy Groups challenge the film's position on Social Security and Medicare



For years, Americans have been told revenue-slashing tax cuts are the answer to our financial woes and a borrow-and-spend economy is not a problem.  Now, when faced with the ensuing budget deficits and an economic meltdown we're being told we can't afford Social Security and Medicare.  This is not "speaking the truth" as David Walker has claimed. Instead, we are seeing the same old anti-Social Security and anti-Medicare ideology now masquerading as fiscal responsibility. We must talk about tax reform, spending and responsible healthcare reform if we're serious about controlling our fiscal future. Unfortunately, that balance is still missing in this debate."...Barbara B. Kennelly, President/CEO, National Committee to Preserve Social Security and Medicare

"Medicare suffers from the same skyrocketing healthcare costs seen nationwide.  Yet David Walker, Pete Peterson and others would rather talk about Medicare as if it's the cause of our problems rather than a victim.  Billions of dollars in subsidies are being wasted to try to privatize Medicare, even though the private healthcare system has run amok.  Destroying safety net programs like Medicare rather than tackling nationwide healthcare reform threatens the safety and security of millions of seniors, the disabled and their families who care for them and does nothing to solve one of the root causes of our fiscal problems...escalating healthcare costs." ...Judith Stein, Executive Director, Center for Medicare Advocacy

 The National Committee to Preserve Social Security and Medicare and the Center for Medicare Advocacy represent millions of seniors nationwide.  We see first hand the critical role these programs play in the lives of retirees and their families.  We've also seen Social Security and Medicare increasingly demonized as a primary source of our current fiscal mess.  No doubt about it, the film I.O.U.S.A. calls attention to the fact that America faces budget deficits which will require the next President and Congress to make very difficult choices about our national priorities; however, the myth that we "can't afford" Social Security and Medicare is just that...a myth.

  • The fuzzy math of "Unfunded Liabilities". David Walker and the Peterson Foundation use worst-case assumptions about Medicare and Social Security, add the national debt, assume no changes in either program or tax revenues and then extend these costs into the indefinite future rather than the customary 75-year horizon. In a letter to the Social Security Trustees, the American Academy of Actuaries, the leading professional organization of actuaries, warned that infinite-horizon projections "provide little if any useful information about the program's long-term finances and indeed are likely to mislead anyone lacking technical expertise". 
  • National Healthcare Reform must be part of the solution. Cutting Social Security and Medicare benefits at the same time our nation's aging population is growing is short-sighted and ignores a primary source of our fiscal problem-the unchecked rise in healthcare costs. Congressional Budget Office Director Peter Orszag has testified: "The rate at which health care costs grow relative to income is the most important determinant of the long-term fiscal balance; it exerts a significantly larger influence on the budget over the long term than other commonly cited factors, such as the aging of the population".
  • Fomenting Generational Warfare through the "greedy geezer" myth is destructive and divisive. Contrary to this too-often expressed view, America is not facing our current fiscal challenges because baby-boomers will drain federal resources. In fact, our financial picture would look much bleaker if not for the Social Security surplus built up over the past 25 years. There have been adjustments made to Social Security in the past and they will be made again. Social Security is not bankrupt, it's not in crisis and with modest and manageable changes, it will be there for generations to come.
  •  The National Committee and the Center for Medicare Advocacy believe slowing the growth in healthcare spending nationwide, raising more revenue, passing reasonable Medicare reforms, and closing the long-term Social Security shortfall are critical steps to addressing our federal debt and deficit challenges.  However, those who consider social insurance programs an "entitlement monster" which is "bankrupting" our nation should not be allowed to use our current debt and deficits as political cover for supporting massive cuts that will hurt millions of America seniors, the disabled, and their families.

I.O.U.S.A.-Fiscal Fortitude or Trojan Horse?

Let us say, right up front that we haven't seen I.O.U.S.A yet...but soon will.  We're very curious to see if the movie sticks to its billing and delivers the facts about borrow-and-spend policies run amuck.  No doubt about it, there is an important message there to deliver.  However, what worries us is the inevitable next step promised by the billion-dollar Peterson Foundation to target Social Security, Medicare, and Medicaid as the "entitlement monster" that founder and conservative financier Pete Peterson says is bankrupting our nation.   As we all head to the theaters for a dose of fiscal "truth", it's important to know who's delivering the message.  So, here's some background on the organization and its founder.   Peter Peterson is no stranger to the battle over America's retirement safety net.  For decades, the conservative financier and Nixon Commerce Secretary has been writing books, giving speeches, and crusading against social insurance programs. The multi-billionaire co-founder of the Blackstone Group has committed $1 billion to broaden his nationwide "entitlement crisis" campaign through a foundation bearing his name, the Peter G. Peterson Foundation.  I.O.U.S.A is the Foundation's first project out of the box.   Former U.S. Comptroller General, David Walker, is the Peterson Foundation's President.  As a leading voice on the so-called "entitlement crisis", Walker says this new position allows him to campaign even more aggressively than he could in his government role.  According to the foundation's website, its goal is to "target undeniable, unsustainable, and untouchable threats to the nation's future and to future generations of Americans".  Much like President Bush's failed efforts to privatize Social Security, the foundation will focus its message towards young people, business leaders, and the media.  It is headquartered in New York to be closer to the Wall Street and media opinion makers Walker says are critical to their campaign to cut funding for Social Security and Medicare.  According to the New York Times, Peterson also wants to organize an anti-entitlement youth group to counter seniors' advocacy organizations.  With more than a billion dollars at its disposal, the Peterson Foundation is positioning itself to take up where the Bush administration failed, continuing the attack on Social Security and Medicare.  Many of Peterson's reform ideas will sound familiar because they were also a part of the President's privatization plan.  Among them, raising the retirement age (Peterson suggests to 73), means testing, and massive benefit cuts. Peterson has called the current cost of living increases in Social Security, which provide adjustments of roughly 3% a year, "one of the greatest fiscal tragedies of American history" because he considers them excessive.  At the same time, he steadfastly defends a controversial private equity tax break that benefits America's wealthiest investors.  The Peterson Foundation is preparing to pick up where the Bush administration started...launching a nationwide campaign to convince Americans, particularly our younger generations that we can't afford the nation's retirement safety net.  Except this time there's a billion dollars invested to sell that anti-"entitlement" argument.

Double Digit Premium Hikes for Part D

CMS has announced next year's Part D premiums for seniors.  The 12% increase will hike the average monthly premium to $28 for standard coverage in 2009.   CMS says seniors should  be glad this is less than their original estimate 5 years ago which said Part D premiums would be even higher.  Gee, thanks. This is from the CMS Press Release:
The estimated average monthly premium for 2009 of roughly $28 for basic coverage is far below the original estimate for 2009 of $44.12, which was made at the time the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) was enacted in 2003.  
CMS Acting Administrator, Kerry Weems, also offered this not so subtle reminder to seniors that they better plan on shopping for plans again this year since drug insurers may (read that will) be making changes which could dramatically effect coverage.
"Of course, individual plans' premiums and benefits may change. Given their past record of making smart choices, I expect beneficiaries will continue to compare their plan options in the upcoming enrollment period based on cost, coverage and convenience." 
 Lastly CMS says:
Average plan bids have increased at roughly the same rate as drug costs.
And that's part of the problem. Healthcare costs systemwide have been skyrocketing with no end in sight, not just in Medicare but nationwide.  That's one reason we continue to advocate the need for national healthcare reform and drug price negotiation for seniors in Medicare in the short term.  Establishing Medicare as the collective buyer of prescription drugs-rather than thousands of individual private plans-would better harness the purchasing power of Medicare's 43 million beneficiaries and provide substantially lower prices for seniors.

Get the Latest

Indicates required fields


Have a Social Security or Medicare question?


Media Contacts

Pamela Causey
Communications Director 216-8378
(202) 236-2123 cell

Kim Wright
Assistant Director of Communications
(202) 216-8414

Entitled to Know

Medicare's Top 10


Copyright © 2014 by NCPSSM
Login  |