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Medicare offers universal health insurance to seniors. Why would Manchin change that?

Medicare offers universal health insurance to seniors. Why would Manchin change that?

Picture of Trudy  Lieberman
(Photo by Anna Moneymaker/Getty Images)
(Photo by Anna Moneymaker/Getty Images)

So much help for seniors hangs in the balance as Democrats whittle away at the massive legislative package in Congress. If by some chance Medicare recipients get new benefits to help pay for dental, vision and hearing services and lower prices for their costliest prescription drugs, there’s a high probability that those new benefits will go only to some of them, prompting a foundational change in the program. Recall that the 56-year-old Medicare program is universally available to everyone 65 and older and some younger people who qualify for Social Security Disability Insurance (SSDI). 

If those new benefits are “means tested,” that is available only for the neediest beneficiaries, it would fundamentally transform the program into something far different than it is today. Under a social insurance model, which Medicare is built on, everyone paying into the system is entitled to a benefit, a point often lost in the talk about means testing. With means testing, beneficiaries would qualify only if their income and perhaps assets were low enough to require government help. 

“Advocates of means testing are appealing to an old idea of social policy,” said Yale professor emeritus Theodore Marmor, who helped draft the original Medicare bill in the 1960s. Who do you give help to: everyone or the poorest among them? “Giving aid to people who really need it is a tired old argument that comes out in slightly different flavors.”

This year proponents of means testing have found a powerful ally: West Virginia Sen. Joe Manchin, who is key to any part of the legislative package that will make it through the Senate, from climate to Medicare. Manchin offered insight into where his thinking is in a recent conversation with CNN’s chief congressional correspondent, Manu Raju. “I’m more concerned about our nation and our country turning into more of an entitlement society versus a rewarding society,” he said. It wasn’t hard to grasp the meaning of Manchin’s words. He would not endorse another Medicare entitlement in the form of drug, vision, and hearing benefits. But if Democrats bow to Manchin and limit these benefits to lower-income Americans, it would fundamentally change the program.

A separate bill introduced in the House in September by none other than Rep. Scott Peters of California and Rep. Kurt Schrader of Oregon, who have received large donations from the drug industry, would fundamentally change the program. Peters has received nearly $1 million from the drug industry during his nine years in Congress. One of the bill’s co-sponsors is Rep. Kathleen Rice from New York, who has also received contributions from pharma.

Their bill would authorize a yearly cap on out-of-pocket pharmaceutical spending “for those who need assistance most,” according to their press release. Those with incomes of 300% of poverty ($38,640) or less have their expenses capped at $1,200. Those with incomes between $38,640 and $51,520 would see a cap of $1,800 and those with incomes above $51,520 would have a cap of $3,100.  Presumably, Medicare would pick up any drug expenses over those numbers. The bill would also cap out-of-pocket expenses for insulin and allow beneficiaries with fixed incomes to pay their out-of-pocket expenses on the installment plan, a provision that’s arguably more suited for one-time consumer purchases than monthly recurring drug expenses that could add up quickly.

“Advocates of means testing are appealing to an old idea of social policy,” said Yale professor emeritus Theodore Marmor, who helped draft the original Medicare bill in the 1960s. Who do you give help to: everyone or the poorest among them? “Giving aid to people who really need it is a tired old argument that comes out in slightly different flavors.”

The American Dental Association strongly supports means testing for the proposed Medicare dental benefit. “Dentists are worried about Medicare setting fees for their services, as it now does with doctors,” AP’s Ricardo Alonso-Zaldivar reported.  

The group has proposed a plan that would cover only people with incomes below 300% of the poverty line. Furthermore, the dentists say any benefit must be “adequately funded” to support a reimbursement rate that enables at least 50% of dentists in a geographic area to receive their full fees “to support access to care.”

But Medicare advocates worry deeply about any moves that erode the program’s universality. “Proposals that would add income-related benefits in Medicare by limiting coverage only to people below certain income limits are more insidious than existing income-related premiums that charge higher–income beneficiaries more for their Part B coverage for doctor services and outpatient care and Part D, coverage for drugs,” said David Lipschutz, associate director of the Center for Medicare Advocacy. “We are not generally supportive of charging higher-income people higher premiums because it undermines the universality of the Medicare program.” 

Lipschutz explained that in a social insurance program like Medicare, everyone should have access to the same benefit. If means testing is authorized in the legislation now on the table, beneficiaries with incomes above the thresholds would get no benefit at all under the policy contemplated by the American Dental Association, Lipschutz said. “That would exclude half of all the Medicare beneficiaries and would offer a terrible precedent.”

There are a lot of  misperceptions about how wealthy older adults are. A few years ago the Kaiser Family Foundation revealed how well-off the elderly really are. Researchers found that half of all beneficiaries had incomes below $26,200 per person in 2016. Only 5% had incomes over $103,450. Kaiser researchers concluded that “most are of modest means,” which “raises questions about the extent to which the next generation of Medicare beneficiaries will be able to bear a larger share of the cost.”

“We’re trying to sound the alarm that this could be a fatal mistake if you try to make social insurance more like social assistance.” — William Arnone, CEO, National Academy of Social Insurance

That explains the immense popularity of government drug price negotiations under Medicare. The latest Kaiser survey found a whopping 83% of Americans support price negotiations even after hearing arguments against it. “We didn’t poll on baseball, motherhood, and apple pie, but I’m not sure they would score much higher,” Kaiser executive vice president Larry Levitt said in a tweet

The New York Times reported that Manchin in a private memo has called for any new spending for families and health to be “needs based with means-testing guardrails.” William Arnone, chief executive of the National Academy of Social Insurance, told me in an interview, “We’re trying to sound the alarm that this could be a fatal mistake if you try to make social insurance more like social assistance.” Both Social Security and Medicare could radically change. Eventually only those with the lowest incomes would receive benefits, leaving those over the line to fend for themselves.

So far, the media have done little to illuminate what’s at stake. “The press is all about the top line number, about the Democrats in disarray, and they don’t make clear the large numbers about costs are 10-year projections,” says Nancy Altman who heads the advocacy group Social Security Works. “We have real hunger games going on here. Do we go for paid medical leave for workers or vision, dental, and hearing benefits for seniors?” 

We’ll be watching those brutal decisions play out in real time over the coming days and weeks.

Veteran health care journalist Trudy Lieberman is a contributing editor at the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care column.

Comments

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Means testing would eliminate dental coverage that is already available in Medicare Advantage regardless of income. In the AARP United Health Care Medicare Advantage PPO plan in 2021, subscribers receive a $500 benefit for basic dental care, such as exams and fillings. In addition, subscribers can pay $38 per month for an additional $1500 of dental benefits, including 50% coverage for a root canal or crown. None of this is means tested.

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Great by all means, much helping and useful write up. The whole blog is too informative and impressive, I would love to be back here to gain some more knowledge.

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Thank you, Ms. Lieberman for raising the issue of means testing snd the proposed changes to Medicare…both Original Medicare and Medicare Advantage plans.
As a SHIP counselor, I have had the experience of working with both ‘poor’ and ‘wealthy’. Every year I help people with ‘proving’ they are still poor and I also have to inform ‘wealthy’ beneficiaries about their higher Part B and D premiums. Both should be abolished and both peoples should have the same access to healthcare, period!
I am also a HC activist and want you to know we are taking action against the Direct Contracting Entities. There will be an action in Washington, DC on November 30, sponsored by PNHP and NIMA, delivering 4500 petitions to Secy Alex Becerra’s office.
I can send you more info.

Thank you so much for all your journalistic support!!

Barbara Commins RN

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