By the Old Guy Sitting on the Green Bench 

Florida’s population is constantly growing and changing. Our state’s population is aging faster many other states.  In 1960 roughly 11% of Florida’s population was over age 65 in 2010 the same age group comprised slightly more that 17% of the population which put us about 2% above the national average.  By 2040 the over 65 group will comprise 25% of the entire of our state’s population.  It is projected that the fastest growing demographic group will be the over 65 sector of the state’s population.  Today there are numerous counties on the west coast of the state that have more than 30% of the population over age 65.  This demographic group has vital and specific issues unique to them.  One item of there major concerns is Medicare.

Medicare was signed into law at the Harry Truman Library on July 30, 1965 by President Johnson.  Getting the original act passed in Congress took several years to overcome numerous hurdles that were constructed.  The AMA was adamantly opposed to the concept and took out newspaper ads in 100 newspapers to voice their opposition.  Senator Barry Goldwater was strongly opposed to Medicare.  Others claimed that Medicare would lead to the socialization of medicine or worst yet Armageddon.  Today Medicare is seen as one of the most vital services the government provides.

When Medicare was first passed, it had two parts, A & B which provided hospitalization and medical coverage.  There were and still are deductibles and co-pays which can substantial.  Shortly after the advent of Medicare private insurance companies put together a series of insurance policies to cover these costs.  Today Medicare requires that these policies, called Medicare supplement or Medigap, be standardized and meet a prescribed outline of benefits.  An individual can look at a plan offered by different companies and compare similar insurance products.

Recent legislation has added about 30 preventative services to Part B of Medicare.  These services are not free rather they are offered at no cost to the beneficiary.  The objective is to reduce overall costs to the program by preventing serious illness.  A person can get a “free” flu shot and then does not need to be hospitalized for pneumonia, that yields a cost savings to the program.  That is the objective of preventative medicine, long term cost savings and improved quality of life.  There is are situations were unfortunately were beneficiaries can be open to significant out of pocket costs.  For instance a colonoscopy is covered as a preventative service, however if polyps are found the removal and testing of those polys for cancer is a separate procedure that is not covered as a preventative service.  What is being seen is Medicare spending is expected to be $1,000 less per beneficiary this year and $2,400 lower in 2019 than was projected in 2010.  There are any number of causes for this reduction in costs, the long term question is can this trend be maintained.

In the early 90’s the insurance industry proposed that they could provide coverage for Medicare beneficiaries in a HMO or PPO format.  This lead to Part C or Medicare Advantage (MA) plans in 1996.  This combined Parts A&B into a single package.  Initially the idea was that by having people use this type of plan it would save Medicare money.  The original promise was that the private insurance companies could provide greater benefits at 95% of the cost that Medicare was paying for the same beneficiary.  The idea being that the insurance companies could better manage the beneficiaries needs.  What we saw happen was the cost of MA plans ballooned to about 117% of the Medicare base.  With the advent of recent healthcare legislation these additional payments to MA plan have been cut this year to 103% and next year the cost of an MA will be at parity with Medicare.  The net result is a significant savings to Medicare.  When you hear that that Medicare spending has been slashed, most likely this is the spending cuts people are talking about.  MA’s will likely have to operate in a very lean fashion going forward.

What we are seeing with MA’s is half of the new beneficiaries electing to enroll in one these private insurance plans.  The historical national average for enrollment in a MA is about 30% while on the west coast of Florida over half of the beneficiaries all ready use one of these plans.  This year an enrollee could save upwards of $2,000 by selecting certain plans.  However plans can and do change coverage yearly and they have the ability to change who they allow as providers through out the course of the year.  A person will often select one plan over another based on what doctors the plan has in its network.  Plans have dropped large physician groups nationally which has lead some plan participants to give up a trusted physician who they have had a long term relationship with to find a new provider.  There is legislation in Congress, which will likely not move, that would mandate changes of this nature occur only at year end not mid year as is currently the case.  That way the plan participant can make an informed decision regarding their doctors and plan participation going forward.

The newest part of Medicare is Part D, which became effective January 1, 2006, helps with the cost of prescription drugs.  Part D does have co-pays which can be very costly.  There are numerous plans which are offered by private insurance companies.  If an individual has an MA the Part D coverage is commonly folded into the total plan otherwise Part D is purchased separately.  The biggest problem with drug coverage is the dreaded “Doughnut Hole” when coverage for prescription drugs falls off.

The “Doughnut Hole” was an effort to limit to financial liabilities that prescription drug presented to Medicare.  There is good news on this point, first the doughnut hole is closing and will be closed by 2020 and secondly the advent of generic medications has provided many with a less expensive source of prescription medications.  The percentage of beneficiaries entering the doughnut hole has declined in large part due to the widespread use of generics.  It is generally recognized that the use of generics was not expected by large pharmaceutical manufactures.  The effect of Part D is to making consumers aware of the costs of their various drugs and what effective options that are available to them.  One of the major challenges facing Part D is covering the cost of so called designer drugs that often are life savers for a small population group.  There is a new medication for Hepatitis C which only costs $1,000 per pill the course of treatment is set at $84,000.  The story is repeated for MS were one month’s medication cost $5,000.  This type of situation is not unique.  The challenge to Medicare and private insurance companies is to devise methods that will provide prescription medications at the lowest overall cost.  Many people require various maintenance medications, perhaps using a mail order pharmacy might be more cost effective.  There is legislation in Congress, that is seemingly backed by the drug store industry, that would mandate any pharmacy be included in a MA network.  It is estimated that over a ten year period this legislation would cost Medicare beneficiaries $21 billion.   This is an efficiency that can ill be afforded.

There are holes, hell, some might argue tunnels in what is provided by Medicare.  Medicare does not provide needed medical services that beneficiaries often requires such as hearing aids, eye glasses except in very limited circumstances, dental or long term custodial care.  There has been discussions and in fact legislation introduced to address some of these gaps in coverage, the reality is that the gaps continue in place and impact seniors daily.   A major fear for many seniors is Alzheimer’s, which a progressive disease that becomes debilitating over time and is the sixth leading cause of death.  The reality is that care for the Alzheimer’s patient is often put on family members who frequently lack the ability to adequately care for their loved ones.  For beneficiaries 42% of out of pocket medical expenses was for long term care, often these expenses are financially crushing.

Another issue that bedevils Medicare is the three day rule.  Which mandates that an individual must be hospitalized for three days before they can be transferred to a rehabilitation facility and have Medicare cover the costs.  Medicare has begun a pilot program to review the effectiveness of waiving this rule.  Changing this will require Congress to act.

The future for Medicare is as we have seen, an array of questions and varying priorities.