Medicare Watch

LCAO Endorses Restoring Medicare Drug Rebates

In its recent issue brief, the Leadership Council of Aging Organizations (LCAO) recommends that Congress and the Administration restore drug rebate prices for low-income Medicare beneficiaries. LCAO urges policymakers to reject proposals that create federal savings by shifting costs onto older adults and people with disabilities. Instead Medicaid-level drug rebates should be restored for dually eligible Medicare beneficiaries and those with the Part D Low-Income Subsidy (LIS), also known as Extra Help.

More than half of all Medicare beneficiaries were enrolled in a Part D plan in September 2012. Yet, the federal government is limited in its ability to control drug prices in the Medicare program. By applying Medicaid-level drug rebates to low-income Medicare beneficiaries, policymakers can create $135 billion in federal savings over ten years. These savings are much greater than those found in harmful proposals that shift costs to Medicare beneficiaries, many of whom are in no position to pay more for their health care.

Read the LCAO brief.

HHS Brief Highlights Continued Decrease in Medicare Spending

In 2012, Medicare spending per beneficiary grew only 0.4 percent, substantially lower than the 3.4 percent increase in per capita GDP, according to an issue brief released by the Department of Health and Human Services (HHS) this week. The brief goes on to explain that the Affordable Care Act (ACA) helped to reduce Medicare’s rate of spending growth without any reduction in health care benefits for older adults and people with disabilities. Over the period of 2010-2012, Medicare spending per beneficiary grew at an unprecedented rate of 1.9 percent annually—more slowly than the average growth of GDP during the same time period.

Because of the ACA, Medicare spending is projected to continue to increase more slowly than GDP over the next ten years. The ACA controls the rate of growth of Medicare Advantage (MA) plan and hospital payments, promotes high value health care, meaning better quality care at a lower price, and reduces waste, fraud and abuse in the Medicare program. According to the HHS brief, the ACA is estimated to reduce the rate of growth of Medicare spending per beneficiary by one percentage point per year over the next ten years.

Read the HHS brief.

Medicare Reminder

For each 12-month period you delay enrollment in Medicare Part B, you will have to pay a 10 percent Part B premium penalty, unless you have insurance from your or your spouse's current job.

In most cases you will have to pay that penalty every month for as long as you have Medicare. If you are enrolled in Medicare because of a disability and pay premium penalties, once you turn 65, you no longer have to pay the premium penalty.

Although your Part B premium amount is based on your income, your penalty is calculated based on the standard Part B premium. The penalty is then added to your actual premium amount.

How do you calculate your premium penalty? Let’s say you turned 65 in 2007, and you delayed signing up for Part B until 2013 (and you did not have employer insurance that allows you to delay enrollment). Because you delayed enrollment for 6 years, your monthly premium would be 60 percent higher for as long as you have Medicare (6 years x 10 percent). Since the Medicare Part B premium in 2013 for most people is $104.90, your monthly premium including the added penalty would be $167.84 ($104.90 x 0.6 + $104.90).

Learn more about the Medicare Part B late enrollment penalty at www.medicareinteractive.org..

Spotlight

The Kaiser Family Foundation (KFF) recently released a visual timeline of Medicare’s history. The video, The Story of Medicare: A Timeline, spans the 1930s all the way to present day. It covers the health care debate leading up to Medicare’s creation in 1965, and also covers subsequent changes to the program, including the repeal of the Medicare Catastrophic Coverage Act in the 1980s and the gradual closure of the Part D coverage gap in the Affordable Care Act in 2012.

The video highlights the importance of Medicare to the 50 million older adults and people with disabilities served by the program. It also underscores the challenges policymakers faced in the past, and currently face today, in ensuring that the Medicare timeline is extended for future generations.

Watch the video.