By AARP CEO William D. Novelli and AMA Board Chairman Edward Langston, M.D. - 10/25/07 07:00 PM EDT
Unfortunately, the COLA is also falling behind skyrocketing healthcare costs, particularly Medicare premiums that most people in Social Security pay. While Social Security checks have increased about 3 percent each year, Medicare Part B premiums (Part B helps pay for physician, outpatient, home health, and preventive services) have jumped an average of nearly 10 percent annually. In fact, premiums have doubled since 2000. For the majority of Americans 65-plus relying on Social Security for more than half of their income, the COLA is an important hedge against inflation. But its value is being gnawed away by rising healthcare costs.
Today, Medicare’s costs for doctors and prescription drugs consume nearly a third of the average Social Security check, according to a report by the Center for Retirement Research at Boston College. The Centers for Medicare and Medicaid Services estimate those same healthcare bills will eat up 53 percent of the average Social Security check by 2040. With so many Americans relying on Social Security, spending half of each check on health care is simply unsustainable, especially for those with limited incomes.
Why should this concern older Americans today? In January, doctors could be forced to cut back the number of new Medicare patients they accept because of a drastic payment cut that will reduce payments well below practice costs. That will make it harder for Medicare patients to find a doctor, unless Congress steps in. But preventing the cut and keeping access to doctors will cost money. That price could be placed on the backs of everybody in Medicare, driving their premiums and coinsurance even higher, and cutting deeper into the COLA.
Congress has another option: cutting excess government subsidies to private insurance plans, called Medicare Advantage. When the government opened Medicare to private plans, the insurance companies promised greater efficiency that would yield more benefits for less than the cost of traditional Medicare. They were wrong.
The independent Medicare Payment Advisory Commission estimates that the government will hand private insurance companies in Medicare $54 billion in excess payments over the next five years. Paying for this windfall adds to already sky-high Medicare premium increases. Instead, we could use those payments to preserve access to doctors in Medicare.
Congress can continue to subsidize private insurance companies with billions in excess payments, or it can use that money to keep Medicare strong, keep premiums down and help lower-income people. The House has already acted and now the Senate needs to follow suit.
Reid out of touch
From Ron Sargent
(Regarding article, “Wildfires get personal for lawmakers,” Oct. 24.) A passage of the article reads: “‘One reason why we have the fires in California is global warming,’ Senate Majority Leader Harry Reid (D-Nev.) told reporters Tuesday, stressing the need to pass the Democrats’ comprehensive energy package.”
This fellow is out of touch with the situation. The reason for most of the fire damage is vegetation control. Tree huggers in the area have stopped any reasonable controls for years and this is the result.
Red Bluff, Calif.