United States Seniors: The Houston Chronicle Is Lying to Seniors about Medicare

The wording of this recent Houston Chronicle article or the model that it is describing or both is highly misleading.

1. The article says that lifetime Medicare Part B, supplemental premiums and self-administered-drug OOP costs for a male “retiree turning 65 years old^1" in 2011 will be $20,000 more than a male both turning 65 this year and going on Medicare this year. For that statement to be true everyone born in 1946 on Medicare since 2011 would have had to have spent $20,000 in the last three-four years on the items being measured on average and the person born in 1949 (turning 65 this year) will have to spend nothing on these items on average during the last four years of his life. In between, both – today’s 65 year old on Medicare and today’s 69 year old on Medicare -- are both going to basically spend the same on average. Specifically, the average person who both turned 65 in 2011 and joined Medicare that year has since spent less than $10,000 on those items. And of course it is highly unlikely that on average people both turning 65 and joining Medicare this year will be able to spend nothing on these items in the last four years of their lives (if anything, they will spend much more at end of life). I think the article is just poorly worded on this point but possibly the model on which it is based is more seriously flawed than is otherwise obvious as noted in points 2 and 3 below.
2. There is no link provided to the group that built the model but it would appear that the major thing that lower national healthcare-spending growth rates – should they actually materialize over the next 25 years -- could affect are Part B premiums (and supplemental premiums to a lesser extent). It would be interesting to see how plugging in the NHE growth rates from the 2008-2012 time frame² are translated into this model’s projections. It is fairly well known that the relative stability of the Part B premium itself for the last few years is purely demographic (that is, more relatively healthy and therefore less costly 60 somethings joining Medicare while relatively costly 80 somethings – sadly – leave the system). It is also fairly certain that that demographic advantage is short lived because, in general, 60 somethings are not healthier than their parents on average and there are many more of them than there were of the older generation. If this model has figured out how to accurately model for this major demographic bubble known as the baby boom, it deserves a lot of publicity.
3. Based on the numbers quoted in the Houston Chronical article, it is hard to figure how the model handles donut-hole calculations².

• Only about 1% of the people on Medicare³ are fully affected by the donut hole and less than 10% are at all affected. Since they are not mentioned, it is unclear if the model calculates the effects of state pharmaceutical assistance programs (not available in all states), secondary self-administered-drug insurance from former employers, and donut-hole insurance. The model potentially does not even factor in Social Security Extra Help/LIS.
• The most money that the donut hole rule changes in the Patient Protection and Affordable Care Act (PPACA) “save” the 1% of the people who are fully affected by it⁴  – not accounting for inflation – is about $3000 a year so the model – by claiming a $45,000 cost reduction because of the 2010 PPACA donut hole law changes – is apparently assuming that the very small group of people so chronically ill that they are fully affected by the donut hole will all live beyond 80

¹You do not have to a retiree to join Medicare. In fact, because the so-called United States full retirement age has been raised to 66 and is still going up, an increasing number of people joining Medicare at 65 are not retirees

²The “new” PPACA donut-hole rules and current NHE health spending trends were known in 2010 so why didn’t a model generated in 2011 reflect those new rules/trends already?

³These are the percentages for everyone on Medicare, which is what the model is supposedly measuring, not just for the people on Part D, the only people potentially affected by the donut hole

⁴Presumably the woman mentioned in the article

http://www.chron.com/news/health/article/Good-news-on-health-care-costs-for-retirees-5901790.php