We may soon see a new estimate from the Medicare Office of the Actuary -- based on a new way of analyzing Medicare spending first released as part of a special deal it did for the Associated Press (AP) on July 24 relative to Part D Medicare spending. If it is consistent with the special deal it did with the AP, the Office of the Actuary will be saying that the United States Medicare program has become a way for hospitals, skilled nursing facilities, home health care agencies like the visiting nurse program, durable medical equipment and self-administered-drug distributors, and particularly doctors and like medical professionals to theoretically get over two trillion dollars a year for pricey health care at taxpayer expense. That's what it said that its made up Part D spending meant.
The new theoretical actuarial view is interesting because it would be as if academics analyzed the automobile market based on the stickers on the side windows of new cars or sized the real estate market based on realtor postings of asking prices in newspapers and on web sites. This new numbers approach from the actuaries would show that the total cost of Medicare's coverage exceeded $2 trillion in 2015 for the first time. It would involve adding up the charges hospitals, doctors and other Medicare providers claim as their "charge" on the monthly or quarterly Medicare Summary Notice that everyone on Medicare receives (see Note) and reporting the difference between that number and what Medicare "approved" (see red oval) as if it were real Medicare spending. This is apparently the approach the Office of the Actuary took as part of its collusion with the AP concerning Part D Medicare spending.
Apparently, if using the analytical approach used by the Office of the Actuary in some kind of special deal for the AP (although data requests from the public are typically not something the Office of the Actuary does), the ‘retail price’ of all the services provided in the United States Medicare Parts A, B, C and D programs -- used by 55,000,000 Medicare beneficiaries -- was $2.1 trillion. However it is important to note (the AP did not note this in its article about Part D Medicare spending) that of that $2.1 trillion total,
- Only about 30% -- around $600 billion -- was paid for by the Medicare trust fund. This is the number you would find in reading the Annual Report of the Medicare Trustees
- About $150 billion was paid for by beneficiaries out of pocket or by Medicaid or by Social Security Extra Help or private Medicare supplemental insurance or other third parties.
- The other $1.4 trillion in such an Office of the Actuary Medicare spending estimate was not spent at all… by anyone... (depending on who you talk to but that is what most people think). It's fiction just like the information in the special deal between the Office of the Actuary and the AP concerning Part D
There are some academics who think the $1.4 trillion is passed on to people not on Medicare and there are other studies that indicate the $1.4 trillion is totally fictitious, like the difference between the price on the sticker on new car windows and what people actually pay for new cars.
The Office of the Actuary admits that it really does not know how much was not paid in the case of the Part D spending information it gave to the AP because it does not track that number. But the actuaries must feel that creating that new category of “we don’t know” will make its reports sound more impressive than the usual boring set of numbers that simply account for the measly $600 billion that the CMS trust funds actually did pay for health care services in 2015. You know... the sort of thing the Office of the Actuary is supposed to do.
NOTE: Medicare Summary Notices layout varies for Parts A, C, and D. A Part B Medicare Summary Notice is shown in illustration.
