pubpol 2350 prelim 2

ACA exchange gov't subsidy generally _____ with a person's or family's annual income

ACA exchange gov't subsidy generally decreases with a person's or family's annual income

As income increases relative to the poverty level, people are expected to contribute a _____ percentage of their income toward insurance premiums

As income increases relative to the poverty level, people are expected to contribute a larger percentage of their income toward insurance premiums

Why are so many Americans uninsured?

1. Health insurance is ____

1. Health insurance is voluntary: the gov't does not provide us with tax-funded insurance or require us to buy it.

Why are so many Americans uninsured?

2. Some people don't...

2. some people don't earn enough to afford health insurance, or they choose to spend their limited income on other essentials

Why are so many Americans uninsured?

3. Medicaid

3. Medicaid, a gov't-run health insurance program for low-income people, doesn't cover all low-income individuals

Why are so many Americans uninsured?

4. Many small employers do not...

4. Many small employers do not offer health insurance

Why are so many Americans uninsured?

5. People who don't have access to employer-sponsored health insurance...

5. People who don't have access to employer-sponsored health insurance face higher premiums in the individual market.

Why are so many Americans uninsured?

6. Some people who are offered health insurance by their employer...

6. Some people who are offered health insurance by their employer DO NOT purchase it. With community-rated premiums, insurance may not be a good bargain for healthy people.

Why are so many Americans uninsured?

7. Not everybody eligible for a subsidized premium on the ACA...

7. Not everybody eligible for a subsidized premium on the ACA chooses to buy a health plan

When and who signed Medicare Bill?

1965

effective: 1966

President Johnson

When and who signed the Medicare Modernization Act?

2003

effective: 2006

Bush

Who is covered by Medicare?

1. Elderly: 65+: paid payroll taxes for 10+ years

2. Disability: under 65 (after 2 year waiting period)

3. ESRD Patients: End stage renal disease (ESRD)

How many people were covered by Medicare in 2025?

69.0 million

___% of the elderly were uninsured in 1962

48% of the elderly were uninsured in 1962

Lowered uninsured rate reduced...

reduced OOP medical spending and the poverty rate among the elderly

increased male life expectancy by 1 year

Medicare comes in ___ parts

4 parts

Medicare Part A covers:

what it covers: Hospital inpatient, SNF, home care

pt costs: deductibles and coinsurance

Medicare Part B covers:

what it covers: Physician, outpatient facility, infused drugs

premium: $203/month

pt costs: premiums, deductibles, and coinsurance

Medicare Part C covers:

What it is: Medicare Advantage; an alternative way to receive Medicare benefits through a private health insurane plan

Medicare benefits +

Dentures and Dental Care, Eyeglasses, Hearing aids included

trade-off: lower out-of-pocket costs and extra benefits, but usually a NARROWER provider network and more utilization management

Medicare Part D covers:

What it covers: Prescription medication through drug coverage plans

Premium: $35/month

Patient Costs: Premiums, deductibles, and coinsurance

D = DRUGS

What's NOT covered by traditional Medicare

1. Long-lasting care/ nursing home

2. Dentures and dental care

3. Eyeglasses

4. Hearing Aids

2-4 covered by PRIVATE medicare ADVANTAGE plans

Why do medicare leave coverage gaps?

still face significant cost-sharing requirements

(w/ deductibles and copay)

- financial burden: avg. $6,150 (2024) --> 26% of their social security income

What is Supplemental insurance ?

helps fill the gaps in traditional medicare by paying some costs that beneficiaries would otherwise owe.

Type of Supplemental insurance

Medigap

Medicaid

Medicare Advantage

___% of Medicare beneficiaries had some form of supplemental coverage in 2021

94% of Medicare beneficiaries had some form of supplemental coverage in 2021

A simple example

Imagine a patient receives a $1,000 outpatient medical bill under traditional Medicare.

Medicare pays its covered share.

The patient is responsible for the remaining 20% coinsurance, or $200, assuming the deductible has already been met.

If the patient has a Medigap policy that covers this coinsurance, the policy may pay some or all of that $200, depending on its terms.

The purpose is to...

The purpose is to reduce the financial uncertainty of getting sick.

Joining a ____ ____ ______ Health Plan is a common way to (reduce/increase) patient cost sharing and receive additional health benefits

Joining a Private Medicare advantage Health plan is a common way to reduce patient cost sharing and receive additional health benefits

How does Medicare Advantage work?

Federal Gov't (CMS): pays the private insurer for each enrolled beneficiary

>>>

Private medicare advantage insurer: organizes covered healthcare and pays providers under its plan's rules

>>>>

Medicare Beneficiary:

uses the plan's network ad pays applicable premiums and out-of-pocket costs

a. Traditional Medicare v. b. Medicare advantage:

Who administers coverage?

Prover choice?

Extra benefits?

Cost structure?

Prior Authorization barrier?

Who administers coverage:

a: federal gov't

b: private insurance

Prover choice?

a: generally broad

b: narrow network

Extra benefits?

a: requires separate coverage or services (dental and vision)

b: includes the additional benefits

Cost structure?

a: part B, possibly part D, and medigap premiums, cost sharing

b: part B, possibly part C, and medigap premiums, cost sharing

a. Less restrictive

b. uses MORE utilizes management

__ % of Medicare Beneficiaries Choose to Be in a Private Medicare Advantage (Part C) plan

55% of medicare beneficiaries choose to be in a private medicare advantage plan

Why doesn't everyone choose a madicare advantage plan?

Benefits:

1. offered prescription drug coverage, dental care, and vision care

2. only 24% of plans charge a part C premium

3. OOP max is present v. no MAX in traditional

4. Lower patient cost sharing than in traditional Medicare

HOWEVER

1. have a smaller network of providers (i.e. less choice)

2. Implement utilization management more aggressively (e.g. prior-auth)

How is Medicare financed?

(hospital care)

- "Pay-as-you-go" system:

current workers pay for current 65+ year olds

future workers pay for current workers when they are 65+

- Employees and their employers SPLIT a 2.90% medicare payroll tax on wages (+0.90% for HIGH INCOME WORKERS)

- Part A trust fund is expected to RUN OUT in 2033

How is Medicare financed?

(Physician and drugs)

- fed tax revenues cover 76% of part b and part d costs

- elderly pay premiums for the remaining portion of parts B and D

(slightly higher for HIGH INCOME)

PART B and D are SUBSIDIzED

--> PAY AS YOU GO SYS

Medicare spending is steadily increasing or decreasing?

Share % of medical spending in US (1980 v. 2024)

INCREASING

1980: 15% ($37)

2024: 22% ($1,118)

As Baby Boomers Retire, _____ Workers Will be Paying taxes Per Each Medicare Beneficiary, Which ____ theTaxes Required Per Worker

#of workers per medicare beneficiary:

1970:

2029:

As Baby Boomers Retire, Fewer Workers Will be PayingTaxes Per Each Medicare Beneficiary, Which Raises theTaxes Required Per Worker

#of workers per medicare beneficiary:

1970:3.7

2029: 2.5

Older adults receive substantial benefits from Medicare, while much of the program's funding comes from taxes paid by the ____ ______, including _____ workers.

Older adults receive substantial benefits from Medicare, while much of the program's funding comes from taxes paid by the broader population, including current workers.

Older voters turn out at ______ rates than younger ones.

Older voters turn out at higher rates than younger ones.

What will happen if medicare costs continue to grow at historic rates?

- medicare payroll taxes would have to INCREASE (2.9 to 3.4%)

- If we wait until 2030, taxes would have to increase to 11%

- If taxes are NOT raised, Part A spending would need to be cut by 11%

- other taxes (e.g. INCOME tax) will have to rise to cover part B and part D

- fed gov't can CUT other programs

- ged gov't can issue more DEBT

____% of Federal Budget Allocated to Health Care Programs in 2025; IfMedicare Taxes/Premiums Aren't Raised, Non-Health ExpendituresWill Have to be Cut

27% - Medicare and Medicaid

22% - Social Security

Beneficiaries can receive substantially ____ in Medicare _____ than they contributed in Medicare ____ over their lifetimes.

Beneficiaries can receive substantially more in Medicare benefits than they contributed in Medicare taxes over their lifetimes.

what are the 5 proposed policies

Proposed policy

What it means

Who would be affected?

10-year impact in lecture

1. Raise eligibility age from 65 to 67

- People would wait two additional years to qualify based on age.

- Adults approaching retirement who would otherwise qualify at 65.

- 10-yr impact: $100 billion

2. Increase Part B and D premiums

- Beneficiaries would pay premiums covering 35% of Parts B and D costs.

- Medicare beneficiaries, especially those who rely on these benefits.

- $418 billion

3. Raise payroll tax by 1 percentage point

- Increase the Medicare payroll tax rate to bring in more revenue.

- Workers and employers who pay the payroll tax.

- $651 billion

4. Switch to a premium support program

- Give beneficiaries a government contribution toward private coverage, with everyone required to shift into Part C under the proposal.

- Beneficiaries and private insurance plans; effects depend on how the contribution compares with plan costs.

- $275 billion

5. Change cost-sharing rules and restrict Medigap

- Change how much patients pay when they use care and limit supplemental coverage that pays those costs.

- Beneficiaries who use medical services and people with Medigap policies.

- $116 billion

How much of the federal budget is allocated to programs, such as medicaid and medicare?

27%

Restructuring Medicare will be easier if the Elderly acknowledge that Medicare is a _______ program

Restructuring Medicare will be easier if the Elderly acknowledge that Medicare is a transfer program.

What are the (5) possible medicare restructuring policies?

1. Increase eligibility from age from 65 to 67

2. Increase Part B and Part D premiums so they cover 35% of the costs

3. Raise payroll tax by 1% point

4. Turn Medicare into a premium support program; everybody must shift into Part C

5. Change cost sharing rules for Medicare and restrict Medigap

Medicaid, which is financed by state and federal gov't, is really ____ different programs

51 different programs

The federal gov't establishes _________ for the medicaid program (i.e., the "______" - the minimum)

The federal gov't establishes requirements for the medicaid program (i.e. the "floor" - the minimum)

- who must be covered

- what types of medical services must be offered

- very little cost sharing is allowed (e.g. deductibles, co-pays)

Each state decides whether to ______ the floor:

Each state decides whether to exceed the floor

- Decides whether to make certain types of people eligible beyond the minimum required by the federal government

• Determines how to raise its share of the program's cost

• Determines how much to pay physicians, hospitals, and other providers

• Administers its own program

"Legacy" (Before the 2010 Affordable Care Act, ACA) Medicaid Eligibility Rules/Federal Mandates Federally-Mandated Groups Who Must be Covered (all except #3)

1. Children in low-income households

2. Pregnant women

3. Low-income adults under 65 years of age

4. Blind or disabled persons who have little or no income

5. Low-income Medicare beneficiaries

Documented immigrants must wait ____ years after entering US to receive medicaid

5 years

Federal poverty level for a family of _____ is $31,000

Federal poverty level for a family of 4 is $31,000

Southern states have generally _____ to cover ____ pople

Southern states have generally chosen to cover fewer people

ACA _____ states to offer Medicaid to Low-Income people not already eligible, and ____ private health insurnace for middle-income people

ACA ENCOURAGES states to offer Medicaid to Low-Income people not already eligible, and SUBSIDIZES private health insurance for middle-income people

ACA is encouraging "Restrictive" states to become "expansive" states by picking up 90% of the costs for newly-eligible people