Insurelane Insurance Blog

The Medicare buy-in plan announced last week is the new alternative public option plan that is currently arousing more debate among Democrats as well as losing Democrat votes. This new plan comes from a compromise that surfaced last week from Senate Democrats changing their federal health insurance plan that would compete with private insurance companies.

The Medicare buy-in plan would allow people between the age of 55 to 64, purchase health insurance from private nonprofit plans. This age group is often left without insurance when they are dropped from their employers plans. However, these plans have would create large premiums and also pay health care providers less for their services, causing louder outcries from the health care provider industry.

Many liberals are in support of the plan but that negates the support of Democrats who will not vote on this plan along with Republicans. Right now Senate lawmakers are awaiting the estimated costs of the new plan from the Congressional Budget Office and these costs will sway many lawmakers on the fence.

This compromise does little to ease opposition to the federal health insurance plan, and has increased fear of the single-payer plan among the debating Senators.

Now, it looks like the idea might be abandoned altogether.

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The Annals of Internal Medicine recently published a study that found the creation of the Medicare Prescription Drug plan — informally, Medicare Part D — lowered the out-of-pocket expenses for seniors.

After one year of Medicare Part D, seniors enrolled in the plan saved an average of $9 per month for their prescriptions, reported the Chicago Tribune.

Because Medicare beneficiaries were able to save every month, it was the same as 14 days of free medication, the study found. It was also determined that seniors with the prescription drug benefit also were much better about obtaining and taking their medications.

“We found that it had a modest but significant effect on both savings and drug use,” said Dr. G. Caleb Alexander, of the University of Chicago Medical Center. Dr. Alexander is also a co-author of the study.

More than just the reduction in out-of-pocket expenses, the study suggested that the savings for beneficiaries could save in healthcare costs.

Dr. Alexander argues that when more people are taking their medications as directed, it can cut down on visits to the doctor and to the hospital.

The success of the Medicare Part D program is a clear sign that preventive care actually can help slow our ever-rising healthcare costs.

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A recent study conducted by the University of Michigan’s Institute for Social Research (ISR) found that more than 90% of Americans over the age of 65 are enrolled in a prescription drug plan. Compared to numbers in 2004, when only 75% of seniors had drug coverage, the increased enrollment shows the success of Medicare Part D. The study also found that seniors with lower incomes were no less likely to enroll in a drug plan than seniors with higher incomes.

Medicare Part D opens an enrollment period once a year allowing seniors to purchase drug coverage from private insurance companies. During the enrollment period, all seniors are guaranteed to be accepted in a plan. Part D went into effect January 1, 2006.

According to the study, most beneficiaries were able to easily navigate through their options and had no problem finding satisfactory coverage — 69% were very or somewhat confident they made the right decision.

“Despite widespread complaints that the Part D plan is complex and confusing, our findings suggest that older Americans have been able to make good choices,” said David Weir, the University of Michigan economist who directed the ISR Health and Retirement Study.

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Both houses of U.S. Congress voted on legislation to allow the federal government and the Secretary of Health and Human Services to negotiate prescription drug prices with drug and pharmaceutical companies.

Negotiating prices with private companies, which is currently prohibited by law, could help further drive down drug prices for senior citizens whose health is dependent on prescription medications.

The House of Representatives passed their version of the bill in a 255-170 vote, but the Senate came 5 votes short of the required 60 to move their measure to the floor. President Bush said that he would veto both the House and Senate versions if they arrive at his desk.

It’s a polarized debate among federal lawmakers, voting mostly among party lines.

Republicans opposed to the measure argue that allowing the government to negotiate prices with private companies would undermine competition and drive the market to a one-payer, government-controlled system. They also said negotiating prices would not be effective in lowering prescription drug prices.

“Without the authority to establish a formulary or other tools to reduce drug prices, we believe that the secretary [and the government] would not obtain significant discounts from drug manufacturers across a broad range of drugs,” the Congressional Budget Office said in a statement.

Republicans also pointed out that it would be very difficult to compromise on amendments and bill specifics with Democrats, the New York Times reported.

Current Health and Human Services Secretary Mike Leavitt said he would not negotiate prices even if he were allowed to. He also warned the bill could lead to price controls from future administrations.

The Democrats contend that the Senate bill failed because of the close relationships between big businesses and Republicans.

“Senate Republicans have resorted to obstructionism in an effort to protect the drug industry at the expense of our seniors,” said Democratic Senate majority leader Harry Reid of Nevada.

Democrats argue that negotiating prices could provide necessary medications for seniors at more affordable prices, and there’s little reason to block Medicare from doing so.

“The Department of Veterans Affairs is able to negotiate for lower-priced drugs,” added Senator Reid. “HMOs can negotiate. Wal-Mart can negotiate. Why in the world shouldn’t Medicare be able to do that?”

A majority of voters seem to favor the government negotiating drug prices. An AARP poll of 500 Minnesota voters found that 93% were in favor of negotiating drug prices. Another AARP poll of Tennessee voters found that 87% of respondents supported government bargaining.

Overall, the AARP polls found that an average of almost 90% of Americans over the age of 18 wanted to give the government power to negotiate prices.

The drug negotiation issue is predicted to come to the Senate floor again, possibly as an amendment to another spending bill, according to Democratic Senator Ron Wyden of Oregon.

“The fight will go on,” promised Wyden.

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The Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human services are set to launch a nationwide campaign to promote senior health.

Called A Healthier US Starts Here, the national initiative will tour the country this spring and summer, hitting all 48 states in the continental U.S. The campaign will help educate senior citizens about the preventive care services that Medicare provides.

“Preventive health care can help people live healthier lives and can help reduce costs associated with treating chronic disease,” said of Health and Human Services Secretary, Mike Leavitt.

It will focus on disease prevention, awareness, and healthy living.

“From Seattle to Miami and Boston to San Diego, A Healthier US Starts Here will enlist the support of local organizations to help Medicare beneficiaries and all Americans learn how to live longer, healthier, and happier lives,” added Leavitt.

“Many beneficiaries are unaware that Medicare covers preventive screenings and other benefits, sometimes at no cost. New demands will be placed on the Medicare system as vast numbers of baby boomers begin reaching Medicare eligibility.” said CMS Administrator Leslie V. Norwalk.

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Frank N. Darras, one of the United States’ most prominent disability lawyers, has issued a statement in support of presidential candidate Barack Obama’s recent comments on the state of long-term care.

“Barack Obama has it right, and it is encouraging to see a presidential candidate focusing on truly helping hard working senior Americans,” says Darras.

Obama said in a pres release that “it's about time Washington stood up to insurance companies so that families and seniors across the country can get the care they deserve.” Obama’s comments come on the heels of a recent New York Times article about senior citizens who purchased long-term care policies, only to face denied claims and bureaucratic red tape when they needed the coverage those policies were supposed to provide.

“It is a shame, plain and simple,” says Darras, “and a fraud against the folks who don't have any fight left in them.”

“Your surest bet,” continues Darras, “know the claim paying history and how often the carrier has sought rate increases in your state. Get reliable competent advice and a sound second opinion from someone you trust before you shell out those hard earned premiums. Understand how your policy works and make sure when you file your claim, you don't give up till you get paid.”

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Over the next 5 years, legislators want to increase spending for children’s health insurance by as much as $60 billion. The problem is that current Federal budget rules require all increases to be paid for with tax increases, cuts in other programs, or both.

One program on the chopping block is government reimbursement for Medicare Advantage plans, which helps seniors pay for care regular Medicare does not cover. Cutting spending for Medicare Advantage reimbursements could save $65 million in 5 years, but would leave seniors paying for more of their care.

“It’s getting to the point where you are going to have to ask the dreaded question: Is it children or the elderly?” said an analyst from the Urban Institute. “The way we have allocated our spending, it’s coming down to an either-or proposition.”

Some lawmakers proposed cutting spending on managed care plans. Both the insurance industry and the White House are opposed to the idea. They want Congress to find different ways to pay for children’s insurance, the Los Angeles Times reported.

“I don’t think a choice between adequate care for seniors and adequate care for kids is the right debate.” said Health Net CEO, Jay Gellert. “I think that is a false choice, and each program has to be debated on its own merits.”

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Florida’s top insurance regulator has taken aim at Universal Health Care’s popular “Any, Any, Any” Medicare plan, claiming the plan doesn’t have a large enough budget surplus to meet its financial obligations.

Universal missed a March 23rd deadline to come up with an extra $160 million in cash reserves. The following day, Florida Insurance Commissioner Kevin McCarty recommended beginning delinquency proceedings against the company.

Universal — who has been in business since 2002 — introduced the “Any, Any, Any” Medicare Advantage plan in January. The plan was rolled out in 7 states, and far more people enrolled than were expected. With all the additional enrollment, state regulators began to suspect that Universal didn’t have the resources to pay all it’s members claims. Universal stopped accepting new members in mid-February.

Universal’s CEO, Dr. Akshay Desai, said that a judge’s ruling gives them 60 days before delinquency proceedings can begin. Universal had asked a judge to issue an injunction blocking the liquidation of the company. Judge Thomas H. Bateman III denied the motion, but allowed Universal to move forward with its demand that the state “show cause” for the company’s liquidation.

Said Universal spokesperson Bob O’Malley: “All the talk on the (Office of Insurance Regulation’s) part about insolvency is improper because it is based on disputable calculations. We get $90-million per month from the federal government from which we pay claims. We’re a financially stable and secure company.”

The “Any, Any, Any” plan featured the choice of any healthcare provider, no additional plan premiums, and no prescription drug premium. In some locations, the plan actually contributed $93.50 to the beneficiary’s Medicare Part B premiums.

Medicare Advantage plans act as supplements for traditional Medicare coverage. Under Medicare Advantage, plan members continue to pay their Medicare Part B premiums, and may pay an additional premium for the supplemental coverage provided by their Advantage plan.

If the “Any, Any, Any” plan is liquidated by the state, plan members will have the option of switching to a different Medicare Advantage plan or returning to traditional Medicare coverage.

“The important thing is that members are going to have a number of options and choices,” said Centers for Medicare and Medicaid Services spokesperson Lee Millman. “They are not ever going to lose their coverage.”

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House calls by doctors are a thing of the past, right? Independence Blue Cross is bringing them back.

Under a pilot program, 500 Medicare patients in southeastern Pennsylvania will receive monthly visits from a physician. Their doctors will also be available 24 hours a day by cellphone.

Independence Blue Cross hopes that the visits will improve the overall health of the program members, and cut down on emergency room visits and hospitalizations.

“The way to look at this is, if we’re able to provide a continuum of care for patients so they wouldn’t get so ill and they could avoid the emergency room or hospitalization, that would have a definite impact on health care,” said Richard Snyder, the senior vice president for health services at Independence Blue Cross.

Similar programs are being tested in California and Florida, and have gotten positive reviews from patients and doctors. If the Pennsylvania program is successful, it could be expanded to cover all Medicare recipients throughout the southern Pennsylvania region.

Independence Blue Cross is the Philadelphia region’s largest health insurance company. They have over 3.5 million members.

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The Missouri House of Representatives has introduced new legislation that would provide incentives for residents to invest in long-term care insurance as they approach retirement. The Missouri House gave the bill initial approval by voice vote.

The bill includes increased income tax deductions for long-term care insurance premiums — from 50% to 100% of the annual LTC premiums. The legislation also would provide more protection for the assets of long-term care insurance buyers.

The bill, designed by Republican State Representative Chuck Portwood, has taken some criticism from the other side of the aisle. Democrats claim people with lower incomes can’t afford long-term care insurance even with the tax deductions, and would still need state and federal help for care. The state wouldn’t end up saving money because residents who benefit the most from the tax deductions can already afford long term care insurance.

But Representative Portwood pointed out that “the ultimate goal of the legislation is to encourage personal responsibility.”

The estimated budget for the new legislation would cost roughly $2.8 million for the state. The bill requires a second vote to be sent to the Senate for approval, then on to the governor to be signed. Last year a similar bill was approved in the House, but killed in the Senate.

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Medicare Part D beneficiaries are using generic drugs at rates higher than expected, according to the Centers for Medicare & Medicaid Service. Many health officials are excited about the increased generic drug usage, which could save billions of dollars on drug spending. The move toward generics will also lower premiums for beneficiaries.

“The high generic dispensing rate in Medicare Part D, after only one year, is a testament to the collaborative efforts of patients, clinicians, and policymakers to expand access to clinically proven, cost-effective prescription drugs,” said prescription drug expert Mark Merritt.

If the generic drug trend continues, Medicare Part D stands to cut costs substantially. Even a 5% increase generic drug use could reduce Medicare drug spending by $58 billion between 2007 and 2015.

“Increased generic drug utilization is helping to keep Part D premiums and program costs lower than originally forecast and is helping to prevent seniors from falling into the ’donut hole’ coverage gap,” Merritt also said.

The ’donut hole’ refers to a coverage gap in Medicare Part D prescription drug plans. Once beneficiaries reach $2,250 in drug benefits, they will receive no coverage until their individual spending reaches $3,600. That leaves seniors responsible for $1,350 in out-of-pocket costs.

Consumer advocates see the data as a call for policymakers and lawmakers to continue the expansion of lower-cost generic drugs and make it easier for safe, effective generic drugs to enter the market.

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There’s no lack of financial experts recommending a long-term care policy as part of a well-rounded retirement package. But LTC insurance remains a tough sell for most people. LTC has gotten a reputation as “nursing home insurance” — something people would rather avoid thinking about.

A new survey by the American Association for Long-Term Care Insurance is challenging that reputation. The survey found that a full third of claims filed on long-term care policies were for in-home care. 34% of the claims were for in-home care. An additional 30% were for assisted living care. The remaining 36% were for nursing home care.

AALTCI executive director Jesse Slome said the survey’s key finding was that people were more likely to use their LTC policies to pay for in-home or assisted living care.

“One of the most significant benefits of owning long-term care coverage is the fact that it can pay for care received in your own home, which is what people clearly prefer,” said Slome. “The bottom line is, long-term care insurance is not nursing home protection.”

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Enrollment for the Medicare prescription drug benefit has been extended until February 15, 2007 for any beneficiary who didn’t receive their notice-of-change informational packets by Nov 15, 2006.

Health plans that offer Medicare prescription drug programs were required to send information to members about the Medicare enrollment period. Packets were supposed to reach beneficiaries by Oct 31, 2006, but many were late.

Companies that did not send the information on time may be subject to penalty, reports the New York Times. Health plans that sponsor Medicare prescription drug coverage have until January 5 to inform members of the enrollment extension.

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This year WellPoint will start offering Medicare Medical Savings Accounts. These accounts will help senior citizens plan and manage their savings for future healthcare expenses.

Medical Savings Accounts (MSAs) are tax-deferred bank accounts, meaning deposits aren’t subject to Federal taxes. The money deposited earns interest over time. Withdrawals from the accounts can be made at any time, as long as they are for medical purposes.

MSAs are the forerunner of the popular Health Savings Account. They have been allowed under Medicare law for the past 10 years. But the WellPoint MSA plan is the first time they have been offered to Medicare beneficiaries.

“Medicare MSAs offer an important choice for Medicare beneficiaries in that they allow members to save for future healthcare needs and exercise direct control over how their health care dollars are spent,” said WellPoint president of senior services, Susan Rawlings.

Medicare enrollment began this year on November 15.

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Many Americans don’t know that long term care insurance (LTC) costs can be tax deductible. Sometimes, the full cost of a LTC policy can be deducted.

For 2007, the Internal Revenue Service (IRS) set the amount you can deduct even higher. It’s an incentive for people approaching retirement to invest in long term care insurance.

Under the new rules:

• Anyone 40 years old or under can deduct $290
• People over 40 but not yet 50 can deduct $550
• People over 50 but not yet 60 can deduct $1,110
• People over 60 but not yet 70 can deduct $2,950
• And anyone over 70 can deduct $3,680

About 50% of people over the age of 65 will need long-term care — and without LTC insurance, it can be extremely expensive. Now that much of the cost of LTC insurance can be tax deductible, it’s an even more affordable investment.

“Increased tax deductible limits are another indication of the government’s commitment to encourage Americans to purchase protection against the possible risk of needing long-term care,” said Jesse Slome, the Executive Director of the American Association for Long-Term Care Insurance.

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