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Legislation & Politics | ||
AFSCME Statement on Medicare Portions of the FY 2009 BudgetStatement for the Record of the The American Federation of State, County and Municipal Employees (AFSCME) represents 1.4 million employees who work for federal, state, and local governments, health care institutions and non-profit agencies, and an additional 230,000 retiree members. AFSCME and its members are proud of labor's historic role in the creation of Medicare and we remain strong defenders of the Medicare program from those who would undermine its foundations. When President Johnson signed Medicare into law on July 30, 1965, he spoke of the profound promise of Medicare to our nation and its citizens: “No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, and to their uncles, and their aunts. And no longer will this Nation refuse the hand of justice to those who have given a lifetime of service and wisdom and labor to the progress of this progressive country.” For today's 44 million Medicare beneficiaries and our nation, the need for Medicare to remain a sanctuary against financial ruin caused by the vicissitudes of illness and disability rings as true in 2008 as it did more than four decades ago. President Bush’s fiscal year 2009 budget would undermine Medicare by making substantial program cuts while protecting insurance company profits at the expense of moderate-income beneficiaries, hospitals and other providers. Instead of improving the fiscal solvency of Medicare by reducing the extra subsidies provided to insurance companies for offering a private alternative to Medicare, the Administration’s budget shields these privatized Medicare Advantage plans from direct cuts. Damaging Cuts to Medicare The President’s budget chops Medicare by more than $178 billion over the next five years, $556 over ten years, and more than $10 trillion over the next 75 years. These extensive cuts are funded, in large part, by shifting roughly $6 billion of extra premium costs to moderate-income beneficiaries, nearly $21 billion in costs to hospitals that treat significant populations of indigent patients, and more than $117 billion in reduced payments to hospitals, nursing homes, home care agencies and other providers. Cuts at this level will have significant short-term and long-term negative impact on traditional Medicare which, for most AFSCME retirees, is the foundation of their health care benefits. These cuts will negatively impact retirees’ health outcomes and quality of life by limiting access to care and by undermining the strength of traditional Medicare.
Shifting Costs onto Beneficiaries and Cutting Payments to Health Care Providers AFSCME is concerned with the President’s renewed legislative proposals to shift added Medicare premium costs onto limited and moderate-income beneficiaries. All beneficiaries are already paying higher Part B premiums, in part to subsidize overpayments to insurance companies offering Medicare Advantage plans. In addition, those with incomes above certain levels pay a surcharge on their Part B premiums. The President’s budget would abolish indexing the income threshold for the additional Part B premiums to the Consumer Price Index. The President’s budget would also put an un-indexed surcharge on Part D prescription drug premiums as well. Without indexing the income threshold to inflation, over time more moderate- and even lower-income beneficiaries will be affected, in the same way that, without indexing, the Alternative Minimum Tax has expanded to include more moderate-income taxpayers. When President Bush proposed the same un-indexed premium surcharge in his FY 2007 budget it was reported that in a few years the Part B premium surcharge would cover nearly one in ten beneficiaries. While the Medicare Payment Advisory Commission (MedPAC), the independent nonpartisan group charged with making recommendations to Congress on the Medicare program, has recommended some ways to adjust payments to providers, the President’s budget ignores the magnitude and scope of these recommendations in an arbitrary and unbalanced manner. For example, contrary to MedPAC recommendations, the President would cut Medicare payments targeted to hospitals that serve large numbers of low-income individuals by 30 percent over two years, forcing many public and safety net hospitals to absorb $20.7 billion over five years. This cut, along with other proposed cuts to providers, will limit beneficiaries’ access to care and jeopardize the health of significant numbers of people who are elderly, and may be frail, or have serious disabilities. Subsidies to Inefficient Privatized Medicare Advantage Plans, Which Threaten Medicare’s Financial Solvency Remain Untouched While the President proposes cuts to providers who serve beneficiaries, his budget shields inefficient and costly Medicare Advantage plans from any direct cuts to their windfall subsidies. MedPAC has recommended that Congress curb the billions of dollars in excessive payments made to private insurance companies that offer a private alternative to supplant – not supplement – Medicare. When Congress opened up Medicare to private plans, it was based on the claim that the private health insurance industry would be more efficient, provide more coordinated care for seniors and the disabled, and do so with less cost to the taxpayers and beneficiaries than the traditional Medicare program. The promises of efficiencies and lower costs have been illusory; Medicare now pays private Medicare Advantage plans more than it would cost to cover the same beneficiaries through the traditional Medicare program. Current estimates are that for every dollar spent for benefits under traditional Medicare it costs $1.17 when a private fee-for-service plan provides the benefits. Not surprisingly, with that enhanced profit, incentives enrollment in Medicare Advantage private fee-for-service has grown at an alarmingly rapid rate over the past year. Growth in enrollment further exacerbates the strain on Medicare’s financial health by draining the Medicare Hospital Trust Fund and taxpayers’ resources. Over the next 10 years, these overpayments to insurance companies will cost an additional $150 billion. These overpayments shave two years off the financial solvency of the Hospital Trust Fund. The ballooning growth in overpayments to private plans will drive premiums even higher for beneficiaries, erode Medicare's financial solvency and ultimately force major changes in the Medicare program, including substantial cuts in benefits. If left unchecked, these overpayments will ultimately lead our nation backwards to a time when seniors were one illness away from poverty and were denied reasonable and necessary medical care because they could not afford to pay doctors or hospitals. AFSCME is concerned that these plans, as a substitute for traditional Medicare, also undermine the quality and integrity of the Medicare program. Medicare Advantage plans may offer additional benefits, such as gym memberships, or hearing aids and eyeglass coverage, but they modify their benefits to cut corners in more important areas, such as limiting hospital days or charging higher co-pays for rehabilitative care than Medicare. State officials who forced retirees into Medicare Advantage plans acknowledged that “we know that …retirees who use more medical care will be worse off under this plan.” We are concerned that Medicare Advantage plans deny claims more frequently to hold down costs and the appeals process is more difficult under these plans than under traditional Medicare. Retirees must go through the company rather than Medicare’s transparent appeals process and can be bounced between the federal agency that administers Medicare and the insurance company when they seek redress. Medicare Advantage plans, unlike traditional Medicare, are not stable. These plans can and do pull out of markets, disrupting health care services and causing much anxiety among beneficiaries. There is a lack of access, quality and accountability for many of these private replacements for Medicare. The private fee-for-service plans are exempt from basic quality reporting and they limit access to care and choice because significant numbers of doctors and hospitals have refused to accept beneficiaries from these plans. Given these problems, Congress must act to rein in the runaway overpayments to these private plans. Congress must reject the President’s budget which does nothing to curb the escalating growth of these privatized Medicare plans, reduce the excessive subsidies to these plans or improve Medicare benefits for current and future beneficiaries.
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