By Mark Miller
CHICAGO Aug 15 Mitt Romney's selection of U.S. Rep. Paul Ryan as his running mate guarantees a fierce debate about the future of Medicare during the presidential campaign this fall.
Ryan is the author of several plans to slash the cost of Medicare, the U.S. health insurance program for the elderly and disabled. He would do that by transforming it into a voucher program that would provide seniors a fixed annual benefit, so-called premium support. That plan is overwhelmingly unpopular among all Americans, and especially seniors, because it would more than double their current out-of-pocket Medicare costs over the coming decade.
The debate already is generating plenty of claims and counter-claims about what is and is not working - often based on misinformation about how Medicare actually functions today. So let's take a look at the six biggest myths about Medicare, along with the facts.
MYTH ONE: MEDICARE COSTS ARE OUT OF CONTROL
Facts: Medicare spending will soar in the years ahead as the number of seniors grows, but its per-capita growth is slower than private health insurance - and it is getting better. "We may be reaching the point now where Medicare healthcare expenses are growing no more quickly than growth of the economy overall," said John Rother, chief executive officer of the National Coalition on Health Care (NCHC). "That's important, but it might as well be a state secret as far as the public and Congress goes."
The average annual per-capita spending growth rate through 2019 is projected at 3.1 percent for Medicare, compared with 4.9 percent for private insurance plans, according to the Kaiser Family Foundation. The 3.1 percent projection even includes higher payments to doctors as part of a long-term solution to the long-running problem of the sustainable growth rate (SGR) used under current law to control Medicare spending on physician services.
The 3.1 percent projection also is smaller than the 3.7 percent annual growth in gross domestic product for that period projected by the Congressional Budget Office.
Although we hear plenty about fraud and abuse in Medicare - which is a legitimate area of concern - the program is dramatically more efficient than private insurance. Medicare spent just 1.4 percent of every dollar on administrative overhead, even including money spent to fight fraud and abuse, compared with 25 percent overhead in private plans, according to Richard Kaplan, a professor at the University of Illinois College of Law who specializes in elder law matters.
MYTH TWO: MEDICARE IS GOVERNMENT HEALTHCARE
Facts: The government funds Medicare, but healthcare delivery is entirely private.
The phrase "government healthcare" implies that the Medicare program actually delivers the care - as the National Health Service does in Great Britain, or the U.S. Department of Veterans Affairs does here. Medicare is simply a government-financed health insurance provider.
"The government provides the financing, so it's appropriate to say the government is the health insurance company," Kaplan said. "But all the doctors, pharmacies, and nursing homes are private. The provider sends a bill - instead of Blue Cross Blue Shield, the federal government writes the check. But you go to whatever hospital you want."
MYTH THREE: OBAMACARE SLASHES $700 BLN FROM MEDICARE
Facts: The Romney-Ryan campaign has trotted out this scary-sounding number to deflect attention from Ryan's voucher plan. But it is largely a false claim because it implies that the health reform law slashes benefits.
The Affordable Care Act actually delivers expanded benefits to seniors. It closes the prescription drug donut hole over time, with 3.6 million seniors saving a collective $2.1 billion last year; it also expands preventive services, including an annual wellness visit, mammograms and prostate cancer screenings with no out-of-pocket cost.
Obamacare does cut $700 billion in Medicare spending over a 10-year period. But the cuts are adjustments in payments to Medicare providers, which are mostly meaningless to patients. According to the CBO, the ACA's 10-year cuts include $415 billion in fee-for-service payments to healthcare providers, $156 billion in reduced payments to Medicare Advantage plans, $56 billion to hospitals, and $114 billion in other miscellaneous cuts far too numerous to detail here.
MYTH FOUR: DOCTORS WILL NOT ACCEPT MEDICARE BECAUSE OF ALL THESE CUTS
Facts: Most Medicare patients do not have trouble finding doctors who will see them, but there is growing concern about access to primary care physicians.
This issue is monitored closely by the Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency charged with advising Congress on Medicare. The agency's most recent annual survey of Medicare patients found that just 2 percent of beneficiaries had problems of any kind finding a new primary care doctor willing to accept Medicare - the same percentage of patients aged 50-64 with private insurance who report problems.
Likewise, just 2.1 percent report trouble of any kind finding specialists willing to accept Medicare, compared with 2.3 percent for patients with private insurance.
MYTH FIVE: THE WEALTHY ARE GETTING A FREE RIDE
Facts: Medicare has been means-tested since 2003, when the Medicare Modernization Act established higher premiums for Part B (outpatient services) for individuals with $85,000 or more in annual income, and joint filers with income over $170,000.
The ACA expanded these income-related premiums to the Part D prescription drug benefit, and to the Part C Medicare Advantage program. Wealthy Americans - of all ages - also will start paying a new 3.8 percent Medicare contribution tax on unearned income. The tax affects individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.
MYTH SIX: RISING LONGEVITY WILL SINK MEDICARE
Facts: It is true that people are living longer, and Medicare's eligibility age is fixed for everyone at 65. But that does not mean Medicare costs are rising as a result. That is because nursing homes, which are the biggest area of expense incurred in advanced age, are not covered under Medicare.
Medicare covers most hospital costs, but a very limited amount of nursing home expenses. A study published in the New England Journal of Medicine found that the cumulative cost borne by the Medicare program plateaus at age 80.
"It's logical that longer living means more cumulative healthcare expense," Kaplan said. "But what happens is we need more nursing care, and less hospital care."