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Is Medicare really healthier?

By Jennie L. Phipps · Bankrate.com
Thursday, July 31, 2014
Posted: 10 am ET

Medicare's Trustees released their annual report this week and the news seemed good. The Affordable Care Act in particular is expected to hold down the growth in costs enough to extend the solvency of the trust fund for Medicare Part A to 2030 -- four years longer than what was predicted in 2013. And Medicare Parts B and D have adequate funding for at least 10 years.

© Monkey Business Images/Shutterstock.com

These relatively optimistic projections came despite the trustees' decision to ignore current law that requires Medicare to reduce payments to physicians by almost 21 percent beginning in April 2015. Every year since 2003, Congress has voted to ignore this directive, and the trustees presented their cost predictions assuming this will happen again.

"Refreshing note of reality"

Devon Herrick, senior fellow at the National Center for Policy Analysis and an expert on health care policy, says he thinks this recognition brings a refreshing note of reality to this year's Medicare Trustees' report. "This caveat appears on page 2 of the report. It seems like the trustees are increasingly tired of the rosy spin about how solvent things are," Herrick says.

The report also says quite clearly: "Projections of Medicare costs are highly uncertain, especially when looking out more than several decades. One reason for uncertainty is that scientific advances will make possible new interventions, procedures and therapies."

Herrick acknowledges that health care costs have held steady and even declined in the last few years, but he doesn't believe that's sustainable. Nor does he believe that the Medicare Trustees' cost projections will prove accurate.

"Paying for Medicare is going to be a problem," Herrick predicts flatly. "People my late father’s age -- they paid in very little and they are getting modern medicine. Seniors born after World War II paid in more, but the cost of health care in general is rising at three times the rate of inflation. We paid for 1980s medicine and we're getting 2014 medicine. It's almost impossible to make that work out in the long run."

Currently, we contribute 1.45 percent of our wages to Medicare, an amount that our employers match for a total of 2.9 percent.

In the meantime, enjoy the fact that Part B costs are likely to remain flat in 2015 at $104.90 per month for the third year in a row for most enrollees.

Herrick thinks holding costs down is a two-edge sword. The less doctors earn on Medicare patients, the fewer Medicare patients they will treat, he says.

"A lot of research suggests that Medicare enrollees are having a hard time finding primary care physicians who will accept them as patients," he says. "I've heard that someone should start looking for a primary care physician at least a year before they become eligible for Medicare, so that they have a doctor who will be willing to continue to treat them once they become a Medicare patient."

That's a disturbing insight for those of us who don't have much choice about using the Medicare system.

Read about how the Affordable Care Act will affect Medicare.

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