Wednesday, June 09, 2010

HEALTHCARE - The Medicare Funding Issue

"Obama Touts Health Care Reform Progress as Election Looms" PBS Newshour Transcript (includes video) 6/8/2010


JUDY WOODRUFF (Newshour): It's been almost three months since the president signed a new health care reform law. And, today, he was out making the case for its merits.

"NewsHour" health correspondent Betty Ann Bowser has the story. The Health Unit is a partnership with the Robert Wood Johnson Foundation.

U.S. PRESIDENT BARACK OBAMA (from speech video): Just two generations ago...

BETTY ANN BOWSER: The president hosted a tele-town hall meeting in suburban Washington, where he addressed the concerns of seniors, one of those groups of voters most worried about how the health care overhaul will affect them.

BARACK OBAMA (from speech video): What you need to know is that the guaranteed Medicare benefits that you've earned will not change. This new law gives seniors and their families greater savings, better benefits, and higher-quality health care.

BETTY ANN BOWSER: The legislation which Mr. Obama signed into law in March extends health coverage to 32 million uninsured Americans by 2014, mandates most people buy insurance or pay a fine, sets new regulations on insurers, and provides subsidies and Medicaid expansion to millions of individuals. It will also cut some $500 billion in future Medicare spending, something that has seniors very concerned.

Today's town hall was the first of many events aimed at winning over a skeptical American public between now and midterm elections. Democrats and allies of the Obama administration are raising $25 million to set up a new tax-exempt group to head off criticism that might impact candidates in November.

A key part of the strategy is showing Americans how the law will benefit them. The president told seniors today the first batch of $250 rebate checks are being mailed to help millions of them when they fall into the coverage gap known as the doughnut hole.

BARACK OBAMA: It's being phased in, but, by 2020, this law will close the doughnut hole completely. The doughnut hole will be gone. It will be gone.

BETTY ANN BOWSER: Seniors aren't the only ones unsure about new law. Recent polls show more than 50 percent of Americans don't like it. However, most people don't want to repeal the legislation. That is something Republicans are trying to do in at least 30 states.

While much of the new law takes effect in 2014, the administration is already beginning to roll out some of its provisions, including a high-risk pool for those who are hard to insure. And most major insurance companies have agreed to allow parents to keep children on their insurance policies until they turn 26.

JUDY WOODRUFF: And more now about some of those changes that are already taking place or will be in the next several months.

Susan Dentzer is with us once again. She's the editor in chief of the journal "Health Affairs" and an occasional analyst for the "NewsHour."

It's good to have you back with us.

SUSAN DENTZER: Great to be back, Judy.

JUDY WOODRUFF: Before anything else, let me ask you about something the president said. He said to these seniors today, "I want to assure you that your Medicare benefits are not going to change."

At the same time, we are reporting there's going to be a $500 billion cut in Medicare benefits in the future. How do you reconcile that?

SUSAN DENTZER: Not a cut in benefits. The $500 billion, people should understand, is a $500 billion slowdown in the rate of growth. Medicare spending is still going to grow substantially.

For the last couple of decades, Medicare has grown 4 percent per year per beneficiary. In the future, it will grow 2 percent per year per beneficiary. So, spending is still going to go up, including for benefits. It's just that hospitals in particular aren't going to see their payments rise as quickly as they would have otherwise.

And there will be other entities that won't be paid quite as much as well, particularly entities that operate so-called Medicare Advantage plans. Their payment is going to change.

JUDY WOODRUFF: An important distinction here.

SUSAN DENTZER: An important distinction. And we don't know, frankly, what that means for benefits. But when the president said, your guaranteed benefits won't change, he's correct. It's some of the extras that some of these plans have provided that may or may not change. But, quite honestly, we won't know that for several years.

JUDY WOODRUFF: Now, today, the president talked about, Susan, those $250 rebate checks. Who is going to get them, and how significant is that?

SUSAN DENTZER: Everyone who has drug spending high enough to fall into the so-called doughnut hole will qualify -- will qualify for a check.

That means people who have total drug costs this year of $200 -- excuse me -- $2,830. So, what happens with this program is, first, you pay a $310 deductible. Then, from $310 up to $2830, the government pays three-quarters of your drug bills. You pay a quarter. Then it stops until you get total drug costs of $4,550.

This was not a huge innovation in benefit design. It was just a big hole to save a lot of money on the part of the government. So, what happens is, when you hit that $2,830 total drug spending now, you will get this $250 rebate check, which, of course, will just help a little bit, while you get through that doughnut hole. And then, when you get through the doughnut hole, you get broad coverage once again.

JUDY WOODRUFF: It's a little bit, but they're trying to get it out there quickly with these checks.

SUSAN DENTZER: That was the point. And, as was said, by 2020, the doughnut hole disappears altogether.

The key point on Medicare is (SUSAN DENTZER), "Not a cut in benefits. The $500 billion, people should understand, is a $500 billion slowdown in the rate of growth. Medicare spending is still going to grow substantially."

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