The Health Show Show 1292, 2013 January 2

This is the Health Show, a presentation of national productions.
Not many people have ever won an election by saying that Medicare is bad.
In fact, people who say that tend to lose elections by large numbers, so it's no surprise
that in a recent survey, 98% of adults, 18-year-olders said that Medicare is important to Americans
health and retirement.
But what about the health of Medicare itself?
What people pay 25% as taxpayers, the rest of us paid the other 75%.
On today's Health Show, we're going to be joined by two representatives of the American
Association of Retired People, AARP, and we'll talk about the future of Medicare and
Social Security and what AARP is doing to support their members.
Dr. Nina Sachs is away this week on Bob Barrett, and this is the Health Show.
Just about everybody has heard of AARP.
Some of us have reached the age where they're sending us mailers every month or so asking
us to join.
Those mailers must work.
AARP has over 37 million members aged 50 and older.
Whether you agree or disagree with their positions, they are recognized as a powerful lobbying
force working for older Americans.
And one of the biggest concerns of older Americans these days is the future of Medicare
and Social Security.
We've invited a couple of representatives from AARP to the program today to talk about
that future.
Cheryl Matthias is a senior vice president for policy who has been with AARP for over 25
years.
And Neil Lane is the former director of the New York State Office for the Aging and is
now a volunteer member of the AARP National Policy Council.
He's also a member of the Executive Council of AARP New York.
Cheryl, let's talk about Medicare and Social Security.
They're almost always mentioned together like they're joined at the hip, but they're
really two different programs funded in two different ways, right?
Okay, well, Social Security was started in 1935 and it is funded by payroll taxes.
You know, everybody who gets it from the time they get their first paycheck, they see
that 6.2% that's taken out of it.
And what they don't know maybe is that their employer is paying another 6.2%.
And that goes into the Social Security Trust Fund, which is the money that is,
is used to pay current Social Security beneficiaries.
So Social Security, that is the only way it's funded up till now and actually until 2033,
there is enough money to pay full Social Security benefits.
Now, that program is not really in trouble.
I mean, maybe down the road, but right now it's not in trouble.
It has a financial challenge for the future generations, but it is fine for the immediate
term.
Then there's Medicare.
Medicare.
Medicare has a bigger challenge, but Medicare is funded differently.
Remember, Medicare started in 1965, not in 1935.
And Medicare, which is the health insurance program for people who are generally 65 and
older, is funded in two different ways.
One way is that there is another amount taken out of your paycheck.
It's 1.45% of your pay and matching for the employer.
And that goes into what's known as the Part A, which is Hospital Trust Fund.
And so everybody who works pays into the Hospital Trust Fund.
Everybody who turns 65 is automatically eligible for Part A.
Part B, which is doctor's services, is paid differently.
And you actually have to sign up for Part B.
Part B you pay a premium for, just like you would for any insurance policy.
And when they sign up for it, they pay a monthly premium generally because people are
retired and are getting Social Security at that point.
The premium is a deduction from their Social Security check each month, so they don't
really write a check out.
But that premium pays for the doctor's services.
And then, to make it more complicated, we have a Part D, which is the prescription drug
benefit that was enacted in 2003.
The prescription drug benefit you have to choose to get, and you have to pay a premium for
that too.
And that's a premium that you actually write a check for to a private insurance company
that you choose to give you that benefit.
Medicare, when it was enacted in 1965, prescription drugs were not a big part of medicine at the
time.
And since then, the developments in medications have exploded to the point where now an average
50-year-old takes four prescriptions a day.
So people rely on these to keep themselves healthy.
And so everybody needs these medications.
So we've, you know, discussed it for years and years.
ARP's members told us they wanted us to get a prescription drug benefit at Medicare.
And finally, in 2003, Congress agreed to put it in.
But part of the deal, the sausage making that is legislation, is that in order to get
it in and to get everybody to vote for it, it was under President George W. Bush.
It had to be offered by a private insurance company.
The desire was, we'll let you do it if you let private insurance companies compete
for the business.
And so that's why it's administered by the government.
But private insurance companies are the ones you buy the program from.
The rules are government rules.
Everybody has to play by the same rules.
But the private insurance companies decide on what they call the formulary, because sometimes
there's different drugs for the same condition.
So they decide which drugs are covered, as long as the full range of conditions are covered.
And they decide the premium.
And if the government was not involved with the premium be higher?
That's a matter of opinion.
Okay.
And then there's, I would say that where you would really expect a great difference if
the government was not involved would be in what drugs were offered at what amounts.
And this is not a mandatory thing.
How about comes up to your door and says why haven't you signed up?
That's correct.
It's not mandatory, but there is.
But as with part B, part B and D are voluntary, but people need to understand that if they
do not sign up when they are first eligible, while they can sign up later, it will cost them
more.
Right.
Just on the side, what happened to part C?
Part C still exists.
Part C is what we call the Medicare Advantage program.
And that is a program which combines everything into one fell swoop.
It combines it into what some people call a managed care or a health maintenance organization.
And those are private organizations that contract with the government to offer both hospital,
physician, prescription drug, the whole Shabang.
And if you sign up for part C for Medicare Advantage, you pay your Medicare Advantage premium,
which takes the place of your part B.
You still have to pay your part B premium, but you don't pay your part D premium separately.
You pay a Medicare Advantage premium, but you also then don't buy a supplemental policy.
A lot of people who have Medicare buy another private insurance policy because even though
I like to say, even though people love Medicare and they think it's wonderful, which it is,
it is not nearly as comprehensive as your average employer provided health insurance.
And a lot of people I know who when they turn 65 and they get into Medicare, they say,
oh, wow, I didn't know this.
But the fact is that most people decide that they need to buy supplemental coverage to cover
their medical expenses once they're on Medicare.
But if you go with the part C, you don't buy the supplemental coverage.
Okay.
We're hearing about the financial problems with the system.
What is in 25 words or less, which is impossible?
What are the financial problems going in?
The biggest problem that we have, they're really two.
The biggest one of the two is the ever increasing cost to the general health care system.
We spend an enormous amount of money for a health care in this country, twice what most
other countries do and don't get the outcomes that many of those other countries do.
So the cost is big.
We also have the phenomenon of the baby boomers now aging into the Medicare system and that
is a big number.
And as a result of their aging, the low birth rates after their boom, we will have fewer
workers.
So we have fewer people paying into the system while they're working and greater numbers
drawing on the system after they retire.
Are the premiums enough to fund the parts B and D?
No, they are not.
They were designed to cover part of the cost.
For part B, the doctor services, most people pay 25 percent and actually as taxpayers,
they and the rest of us pay the rest the other 75 percent.
Although people of higher incomes as of several years ago are now paying more and people
of the highest income are actually paying up to 85 percent of the cost of the insurance.
And therein lies the problem though, is that the, if it's just a fraction, then everybody
else has to make up and the pots just getting smaller.
It's yes.
And as Neil said, you know, one of the things we have to do is bring down the overall
cost of health care.
And another thing we need to do in Medicare is do some sort of financial changes to make
it sustainable because of the baby boom.
But that's a separate issue.
We talk about the American health care system a lot as if it was just this one big system
that all operated under one set of rules, but it's really, I mean, it's private enterprise.
First off, ARP to some concern from a portion of some membership was a strong supporter
of the Affordable Care Act.
And the Affordable Care Act does do a number of things to try to squeeze down the increasing
costs and improve care at the same time.
A good example of that is what's called ACOs or accountable care organizations.
And though that's a new concept in the ACA that brings together multiple providers,
hospitals, physicians, home care into one organization that integrates the care for
the individual.
Now, that's very different than it is today because today you would go to the hospital that
isn't affiliated with anybody but the hospital.
You'd go to a physician who may or may not be affiliated with the hospital.
And you'd get your home care and therapies from some other organization.
And none of that is integrated.
Now the concept here is that ACOs, the Affordable Care organizations, will be accountable for
the outcomes so that they will make their money based on the outcomes.
Good outcomes will result in greater funding for the organization.
Poor outcomes, they'll be penalized.
And the other thing about that is that, you know, if you think about it and probably
most of your listeners will have this experience.
I know I certainly have.
You know, if you get sick and you go to the doctor and the doctor says, you know, I have
to do a CAT scan.
And you get the CAT scan from the place downstairs from the doctor's office and they say, oh, you
better go to the hospital.
Then you go to the hospital and the hospital says, oh no, we have to do our own CAT scan.
So you have a lot of duplication of services which just runs up costs.
So things like things that will help our electronic medical record systems, where the systems
will talk to each other.
So the hospital will know and trust what the doctor's office has done and have a stake
in not just running up costs.
You know, if you have your bathroom floor tiled and the tile guy makes a mistake, you don't
pay him to do it over.
But if you go to the hospital and the hospital makes a mistake, oftentimes you pay him to
do it over.
Now, Medicare actually has recently instituted some rules where they said, under certain
circumstances, we're not paying for do-overs.
And that makes the hospital a lot more careful about whether they do it right and it does
cut down on cost for the system.
So there are ways in which we can work to produce a lower cost and actually a better quality
of care for the patients.
Still Decom will continue our conversation with representatives from AARP with a look
at how they reach out to their members.
That's next on the health show.
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Be sure to ask for health show number 1292.
This is the health show.
I'm Bob Barrett.
Our guest today are Cheryl Matthias, a senior vice president for policy who's been with
AARP for over 25 years.
And Neil Lane, former director of the New York State Office for the Aging, and now a volunteer
member of the AARP National Policy Council.
We mentioned that AARP is over 37 million members.
So let's talk about them.
What are the issues you hear about most often from your members?
Oh gosh.
You know, the main thing I would say that concerns are members.
I would put under the whole rubric of retirement security.
People are really afraid that their money is going to run out.
And that has to do with their health care as well as their pension or financial resources.
Financial people tell you, you know, when you retire, you need to have at least a quarter
of a million dollars put aside for your health care for the rest of your life.
Ask how many people, how much money they have put aside for their health care.
You know, I saw recently a number that said the average person who retires has like $50,000
is their total assets.
Well, that's one fifth of what they're supposed to put aside for their health care.
That doesn't include their living expenses.
How many people in New York State live only on social security?
I mean, somewhere around 25, 26%.
And we're a fairly affluent state.
So when we go down to some of the poorer states, that's...
Oh, it's got to be much higher.
And you have an average benefit.
14,000.
And that's the average.
Think about a lot of people who are actually pulling in less than that.
And we meet these people all the time.
And we go out and talk and somebody says, you know, I'll say 14,000 is the average.
And they say, oh, oh, my mom lived on a lot less than that.
And going back to Medicare, now we're seeing a lot of proposals, a lot of ideas, a lot
of talk about tinkering about...
We've heard during the election season that just passed that this many billion is being
cut and that many billion is being cut.
Is anything being cut?
Well, you know, I think everyone understands, you know, the numbers that we're thrown
out with $716 billion.
And frankly, they were supported by both parties until the ads for the election came out.
But the $716 billion that was included, these were considered to be provider cuts, which
means they were not beneficiary cuts.
They were included in the Affordable Care Act.
They were mostly reductions in future payments to hospitals, which hospitals agreed they
could absorb because they were going to get more business from more patients with insurance.
And reductions in future payments to those Medicare Advantage plans, who when they were
first brought into being, were actually paid more than Medicare fee for service was paid.
So that because of the formula and because there was a desire at the time to make them
very enticing for people to go into these private plans, they were given a higher rate
of reimbursement, even though initially as health maintenance organizations, they said,
hey, we can coordinate care and do it for less.
They were actually doing it for more.
And so the taxpayer was paying more money.
So what the law does is gradually phase that back down so that it's even with Medicare
fee for service.
And that's really where those savings or cuts are coming from.
So they are actually reductions in increases in future payment.
And there ones that everyone at the time agreed were reasonable reductions that would not
hurt beneficiaries and would not hurt quality of care.
We hear anecdotally though that some doctors say that well, they keep reducing how much
they pay me.
I'm just not going to take Medicare patients anymore.
Is that a fear?
Well, I think it is a fear.
Currently we're looking at a 30% reduction in what the federal government reimburses physicians
for office visits.
And that is a serious problem.
And it's we have to get passed.
It's known in Washington as the doc fix.
And we have to be realistic in terms of what we pay physicians.
Now, clearly the big problem is that we don't have enough primary care physicians.
And there's some suggestion that we overutilize and perhaps overpay for our specialty services.
So there has to be some realignment there so that we have sufficient primary care physicians
to coordinate our care.
And do have the specialist when we need them, but only when we need them.
It may seem odd that we're saying on the one hand we reduced, we did reductions in what
the hospitals and what the managed care organizations got.
And that was a good thing.
And we're worried about reductions in what the physicians were getting.
But the formula to reduce the physician pay, everyone agrees that it's not an accurate
formula.
And every year we have to do something to stop the reduction.
But that means that the next year the reduction gets higher.
So now it's almost 30%.
And it's a meat axe.
It's not a well designed realignment of what we're paying.
And so that we cannot allow to go forward because it really would interfere with people's
ability to get care from physicians.
And that is that something that just gets kicked down, the can gets kicked down the road
every few years.
Right.
And as Cheryl noted every year that it's kicked down the road, it gets more expensive
to fix.
We talked about how AARP has a lot of members.
How are you hearing their voices?
What type of a mechanism do you have that members can come up to you and say, you know, I have
this fear or I have this idea?
One of the things we actually decided this year that we wanted to use every channel AARP
head to listen to our members.
And that's why we started this initiative called You've Earned A Say.
The idea being that you pay into Medicare and Social Security and you have earned the
opportunity to have your say in how they're made strong for the long term.
So we set up a dedicated website called EarnedA say.org, put lots of really good information
on it, including information that was not AARP's viewpoint, but pros and cons of how we could
do things to make the program stronger from people who were known for either being a conservative
or a liberal.
So people could basically look at it, it respects the viewer and lets them make their
own decision as to what they want.
It also allows them to communicate directly with AARP and tell us what they think.
And the whole idea was that we wanted to make it easy for our members to have their voices
heard because we knew they were telling us that they didn't think anyone was listening.
Now in addition to this, that's a website and you know, I know some people do not use
the internet.
So we have other ways.
We have 800 numbers and people call us and we keep track of the calls that come in and
what they're about and we have trained operators who try to answer people's questions when
they're direct questions.
We have a whole communications department that keeps track of letters and emails in response
to all of them.
We do things called telatown halls, which is a way, you know, we have a lot of in-person
meetings.
I know folks out there who are our members probably maybe went to a community meeting
that AARP had.
And if you have a community meeting, you can get 60, 80, 100 people in a room and you can
talk.
And that's a great thing.
But when you have 37 million members, you need to do more than that.
So what we did is we came up with this idea of things called telephone town halls or
telatown halls.
And basically, within an area, like an area of a state, we call people whose numbers we
have and tell them that we're going to have a discussion about Medicare and Social Security
and if they want to participate, they stay on the line.
We get very high participation rates.
I mean, the companies that do this for us say, you know, nobody else gets as many people
staying on the line.
These are usually an hour long program and people who stay on the line for 10, 15, 20 minutes
or more of the hour, which is a really good chunk of time.
They get to put their questions in so their questions go in the queue.
We answer as many questions as we can.
The questions we can't answer, we try to find other ways to get back to them.
And you can actually participate with like five to 7,000 people at a time on that kind
of an event.
So we try to come up with every kind of event we can.
We have an office in every single state and we have over the past year engaged with five
and a half million people in this matter, which is a pretty, I mean, it's not 37 million,
but it's a pretty big number for an organization to be able to reach out to ask their opinion
and listen to them.
How pliable is the policy of ARP?
Can the management of ARP say, well, this is the way we want to go, but all our members
want that.
Do you say, well, we don't think it's right, but the members want it?
Well, the policy committee is, I'll use the analogy is put off in a clean room for
a lack of a better way to put it.
We are separated from any of the activities, other activities of ARP.
As Cheryl mentioned, we took the input from the five and a half million members and we,
as of 25 volunteers, set the policy for the organization.
Now that policy has to be approved by the board, but in fact, it always is because it's
been well-reasoned and reflects the desires of the membership and what's good for older
Americans and their families.
No one from the leadership of the organization comes in and delivers any message other
than we need you to come up with the best policies that represents the members and their
families.
And it's a very separate process from anything else.
And I attend, as many of my peers do, I try to attend the tele-town halls, I try to
attend the community forums, I try to be around the state to hear directly from our members
about what they feel and then take that to Washington.
That's all the time we have for this week's health show.
If you'd like to listen again, join us online at healthshow.org.
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Dr. Nina Sacks will be back with us next week.
I'm Bob Barrett.
Till then, stay healthy and be sure to join us next time for another edition of the health
show.
Dr. Nina Sacks is a practicing member of the American College of Gastroenterology.
Bob Barrett is producer of the health show.
Dr. Alan Shartock is executive producer.
The health show is a presentation of national productions, which is solely responsible for
its content.