Medicare is our national health insurance program for individuals 65 and older and permanently disabled people under the age of 65. Created in 1965, Medicare has made health care for seniors significantly more affordable and given elderly people peace of mind regarding their medical expenses. Medicare can be broken up into Medicare Part A (hospital insurance, skilled nursing, home health services and hospice care) Part B (doctor’s visits, lab tests, surgeries, wheelchairs and walkers), Part C (private health insurance plans) and Part D (prescription drug coverage). Given how vital Medicare is for seniors, it’s important to analyze how legislative proposals in Congress can impact the health care program’s long-term financial viability.
Throughout the year, Congress has spent time trying to repeal and replace the Affordable Care Act (ACA) through various health care proposals. One of the proposals, the American Health Care Act (AHCA), would have dissolved the .9 percent Hospital Insurance trust fund payroll tax. This tax is directly responsible for helping fund the Medicare Part A Trust Fund. Recently, the Medicare Board of Trustees reported that Medicare Part A will be able to pay 100 percent of its obligations until 2029. However, had the ACHA become law, revenue for Part A would have been reduced by $59 billion, and caused the trust fund to be less solvent.
When members of the House of Representatives voted for the AHCA, I often wonder how they could explain voting for a health care bill which makes Medicare more insolvent. Members of Congress are always talking about Medicare’s fiscal future, well, cutting off the program’s funding is a sure fire why to guarantee insolvency.
Furthermore, Congress’ attempts to repeal and replace the ACA, whether through the AHCA or the Graham-Cassidy bill, would have been severely damaging for older Americans (55 to 64). Some older adults could have found their private health insurance to be cost prohibitive. The Congressional Budget Office (CBO) estimated that older Americans would have suffered greatly if the AHCA became law. For example, a 64-year-old making $26,500 a year would have seen an increase in premiums by an astronomical $14,400 in 2026. Furthermore, a 60-year-old earning $40,000 would receive a tax credit under the AHCA of $4,000 compared to $6,750 under the ACA to purchase insurance.
In addition, the recent proposals in Congress would have eliminated Medicaid expansion (ACA allows states to increase eligibility for people under 65 who were at or below 138 percent of the federal poverty line) which could have left low-income older Americans without viable health care. Evidence demonstrates that Medicare eligible seniors with prior health insurance as older adults require less expensive health care than people who were uninsured before they enrolled in Medicare. Whether it’s the ACHA or Graham-Cassidy, had these bills become law, Medicare spending across the board (Part A, B, C and D), could have seen an unnecessary spike.
A study published by the New England Journal of Medicine, entitled “Use of Health Services by Previously Uninsured Medicare Beneficiaries” found that uninsured persons between the ages of 50 to 64, were more likely to experience worsening health and die younger compared to persons of the same age who were otherwise uninsured. Consequently, once the uninsured population became Medicare eligible they required more expensive health care. The study found that the costlier care resulted from 23.4 percent doctor visits and 37 percent hospitalizations. In conclusion, the study stated, “These findings support the hypothesis that previously uninsured adults used health services more intensively and required costlier care as Medicare beneficiaries than they would have if previously insured.”
To further the point, the United States Government Accountability Office published a similar study that examined the impact of having continuous health insurance prior to joining Medicare entitled, “Continuous Insurance before Enrollment Associated with Better Health and Lower Program Spending.” This report found that people with continuous health insurance coverage for about six years prior to being Medicare eligible were more likely to be healthier for their first six years on Medicare as compared to their insured counterparts. Financially during the first year on Medicare, people with prior continuous coverage had about $2,300, or 35 percent less in predicted spending than the previously uninsured population.
Overall, Medicare helps 57 million people in America gain access to health care, with half of its recipients having incomes of less than $24,150 a year. Recent health care proposals would have purposefully defunded Medicare and made health care less accessible for the majority of older Americans.
While reasonable people can disagree on health care fixes to the ACA, I hope Congress does not champion policies that put Medicare’s long term financial future into question.
Evan Carmen, Esq. is the Assistant Director for Aging Policy at the B’nai B’rith International Center for Senior Services. He holds a B.A. from American University in political science and a J.D. from New York Law School. Prior to joining B’nai B’rith International he worked in the Office of Presidential Correspondence for the Obama White House, practiced as an attorney at Covington and Burling, LLP, worked as an aide for New York City Council Member Tony Avella and interned for Congressman Gary Ackerman’s office. Click here to read more from Evan Carmen.
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