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Thursday, 17 November 2016 08:16

No, Medicare Is Not an "Entitlement," and It Is Not Free

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savemedicareMedicare is neither an entitlement nor free. (Photo: Glyn Lowe)

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House Speaker Paul Ryan wants to raise the Lazarus of privatizing (and phasing out) Medicare from the dead. Paul Waldman of The Washington Post writes of the latest Republican effort to put a dagger through the heart of Medicare:

As part of his strategy, Ryan must convince people that Medicare is all but dead already, so we don’t actually lose much by putting it out of its misery. That’s why he says things like, “Because of Obamacare, Medicare is going broke.” This is not just a lie but the precise opposite of the truth, and Ryan knows full well it is; in fact, the ACA extended the solvency of the Medicare trust fund by over a decade. And be warned: Any time you hear Republicans say the phrase “entitlement reform,” understand that phasing out Medicare is what they’re talking about....

If Ryan gets his way, Medicare as a universal insurance program will cease to exist. It will be replaced by “premium support,” or vouchers which seniors will use to buy private insurance. If you can’t afford any of the available plans with what the voucher is worth, tough luck. The whole point is to transfer the expense from Medicare to the seniors themselves. Half a century after Medicare brought health security to America’s seniors, Republicans would snuff it out, leaving some unknown number without any coverage at all and breaking the fundamental promise the government made.

The first deception here is calling Medicare an "entitlement" program. US workers pay into Medicare -- as do their employers -- through the FICA payroll tax, which is deducted from every paycheck. Self-employed individuals have to pay the full FICA tax (which includes) Social Security as part of their income tax. Therefore, Medicare is not a gift. It is an earned benefit.

Furthermore, one of the biggest deceitful conservative talking points about Medicare is that it is "free." Nothing could be further from the truth.

Medicare is an extensive program with a lot of details, so this is not meant to be an exhaustive analysis. And of course, I'm not claiming that Medicare can be as costly in out-of-pocket expenses as commercial private insurance plans. However, I do want to offer some illustrative costs that come with Medicare for many elderly consumers, depending upon their specific needs and supplementary policies. I am using the 130-page "Medicare & You 2017" publication issued by the Centers for Medicare and Medicaid Services as my main resource for this commentary.

First of all, Medicare has two major government components: Part A (in general, for hospitalization) and Part B (in general, for physician and out-of-hospital services and medical equipment). Right off the bat, Medicare charges all recipients approximately $1,600 a year in premiums for Part B.

Then there is a modest Medicare Part B deductible of $183, but an individual must pay 20 percent of the Medicare-allotted payment to a physician, for therapy and other non-hospital services after the deductible is met. The only way to cover that 20 percent of Part B costs is to get what is called a Medicare supplemental policy. In general, these are called Parts G or F. They mostly cover the gap in physician and non-hospital costs (excluding drugs, which I'll get to in a moment). However, one has to be able to afford Parts G or F -- which are administered by commercial insurance companies. Fees for these polices range from approximately $1,200 a year to $2,800 or more. Yet, these policies only cover health care, rehab or durable equipment. And no Medicare plan covers every procedure or durable equipment need; many such costs are to be borne solely by the Medicare recipient.

Now we get to prescriptions, which are still of such high cost to many seniors that they must scrimp to survive. Why is that? Medicare Part D provides discount on prescriptions, but individual providers (again, insurance companies) are free to not cover costly prescriptions, leaving the Medicare consumer on the hook for the cost.

I interviewed an insurance salesman who sells Medicare policies. He told me that he had a friend who had a lung operation, then went to a pharmacy to pick up his post-operation prescriptions. Although the pharmacy was a "preferred pharmacy" for his Part D carrier, he was told that one of his prescriptions was more than a $1,000 per month, because his Part D insurance company did not cover payment for that particular medication. The insurance salesman told me that his wife takes a drug whose Part D copayment is too expensive, so they order it from Canada.

The reality is that infirm seniors are stuck paying thousands of dollars in copays, or even retail prices, before reaching the Medicare "donut hole." You go into the "donut hole" when you spend $3,700 on medications. (Remember, this is with insurance for Part D.) At that point, prescriptions actually become more expensive, until you reach the "catastrophic coverage" level, once you've spent approximately $5,000 in prescription costs.

Part D was largely crafted by Big Pharma and passed into law in 2006 and signed by George W. Bush. Why was Big Pharma behind a prescription plan for a "socialist" Medicare program? The answer is simple: Follow the money.  Big Pharma had inserted into the legislation a prohibition on the government negotiating with drug manufacturers on prescription prices, as is done by the Veterans Health Administration. In short, Big Pharma sets its own prices on medication -- and in the end, the Medicare consumer pays dearly.

I am a big supporter of Medicare. This column isn't meant to diminish the value of Medicare one iota. Rather, it is meant to refute those who claim that Medicare is a free entitlement. Costs for Medicare recipients should be lowered. Over the longer term, this reduced-cost Medicare should be transitioned into a single-payer system for everyone -- whether they are above or below the age of 65 -- with no costs unless the recipient seeks care outside of the system. Pharmaceutical costs should and must be lowered. This could be accomplished through a competitive bidding system, and through shortening patent protections to allow less expensive drugs into the market.

As for Congress members like Paul Ryan, who receive excellent insurance for themselves and their families courtesy of US taxpayers, it's time for them to stop misleading the public into believing Medicare is free. Medicare recipients have paid their fair share in FICA taxes, and pay additional Medicare costs as recipients. Repeating the same lie over and over again doesn't make it true.

Not to be reposted without the permission of Truthout.