Seniors’ Access to Care

Medicare is the public insurance system providing health care for all Americans over age 65, and Americans with permanent disabilities. It is the only single-payer system in the United States today. Medicare meets an essential need for senior citizens and disabled individuals in the United States. At the time it was enacted in 1965, more than half of elderly Americans were without health insurance. Now Medicare covers nearly 43 million seniors. In addition, Medicare is the most cost-efficient health insurance system in the United States today: it is estimated that Medicare spends between 3 and 5 percent on administrative costs, while administrative costs for private insurance plans are about 2.5 times higher. Costs have grown more slowly for Medicare than private insurance plans: between 1970 and 2000, Medicare spending per enrollee grew at an average of 9.6%, compared to an average of 11% for private insurance companies.

Medicare is being chipped away by privatization efforts. These efforts are making Medicare more expensive for individuals and the government, with little to show for it. The recent passage of Medicare Part D added prescription drug coverage to the plan, but with a built-in “doughnut hole” that only pays for the first $2,510 in drug costs. The enrollee then must pay 100 percent of drug costs until a “catastrophic coverage” level is reached, after which prescription coverage kicks in again. The gap in coverage amounts to about $3,216 in out-of-pocket costs.

Medicare Advantage

In 2003, the Medicare Modernization Act was passed, creating a greater role for private insurance plans known as Medicare Advantage. The theory behind this was that private competition would drive down costs. However, the opposite has happened. The government reimburses Medicare Advantage plans at a higher rate than traditional fee-for-service Medicare. In 2005, Medicare spent an average of $922 more on Advantage enrollees than those in traditional Medicare. Medicare Advantage is also intended to save patients money, but it only does so for those that use few medical services. Sicker patients end up spending more out-of-pocket than they would for traditional Medicare. These patients are also more costly for the private insurance companies, who make an effort to enroll only beneficiaries in good health, leaving traditional Medicare to bear the burden of those enrollees with higher health costs.

Seniors have higher medical costs than the rest of the population, but their incomes are substantially lower. In 2003, people over 65 spent 14 percent of their income on out-of-pocket medical expenses, while those under 65 spent only 2.7 percent. Moreover, credit card debt for those 65 and older doubled between 1992 and 2004. Despite these problems, 73 percent of adults aged 50 to 64 are very or somewhat interested in early enrollment Medicare is the only U.S. model we have for single-payer health care but it is being gradually taken over by private interests. A national single-payer plan must strengthen Medicare, ensure that it is protected, and expand the right to health care to all age groups.

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