Berkeley Journal of African-American Law & Policy
Volume 10 | Issue 2
Article 6
June 2008
Unlocking the Truth: Evaluating 2008 Election
Issues for Elderly Minorities as a Key to
Understanding Medicare Reform
Susan E. Cancelosi
Follow this and additional works at: http://scholarship.law.berkeley.edu/bjalp
Recommended Citation
Susan E. Cancelosi, Unlocking the Truth: Evaluating 2008 Election Issues for Elderly Minorities as a Key to Understanding Medicare Reform,
10 Berkeley J. Afr.-Am. L. & Pol'y 226 (2008).
Available at: http://scholarship.law.berkeley.edu/bjalp/vol10/iss2/6
Link to publisher version (DOI)
http://dx.doi.org/doi:10.15779/Z38RS5D
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Unlocking The Truth: Evaluating 2008
Election Issues For Elderly Minorities As A
Key To Understanding Medicare Reform
Susan E. Cancelosi*
INTRODUCTION
In a child's game of pick-up sticks, success depends on identifying and
extracting individual sticks without disturbing the remainder of the pile.1 In the
early 2008 United States presidential campaign, the candidates 2 approached
Medicare reform similarly, treating the nation's health care system for the
elderly like a pile of unrelated problems to resolve piecemeal.
This strategy
may skirt a political minefield in an election year, 4 but just as moving one stick
in the child's game often results in an unanticipated and unwanted shift
elsewhere, so too it is with Medicare's tangled web of interrelated issues. As
5
illustrated by the potential impact of certain proposals on elderly minorities,
. Assistant Professor of Law, Wayne State University Law School; B.A./B.B.A.,
Southern
Methodist University; J.D., Cornell Law School; LL.M., Health Law, University of Houston Law
Center. The author would like to thank Peter Hammer, Linda M. Beale, Derek E. Bambauer and
Lance Gable for their insightful comments on various drafts of this Article.
1. See Pick-up Sticks, http://en.wikipedia.org/wiki/Pick-upsticks (last visited Apr. 27,
2008).
2. As of December 14, 2007, before the primary season began, most media organizations
were tracking 16 potential candidates for the U.S. presidency. This Article focuses on those
candidates as a historical snapshot that reflects an underlying problem in how the country
approaches Medicare reform. On the Democratic side, there were Joe Biden, Hillary Clinton,
Chris Dodd, John Edwards, Mike Gravel, Dennis Kucinich, Barack Obama, and Bill Richardson.
On the Republican side, there were Rudy Giuliani, Mike Huckabee, Duncan Hunter, John
McCain, Ron Paul, Mitt Romney, Tom Tancredo, and Fred Thompson. See, e.g., Election Center
2008: Meet the Candidates, CNN, http://www.cnn.com/ELECTION/2008/ (last visited Dec. 14,
2007). Joe Biden and Chris Dodd both withdrew from the Democratic race on January 3, 2008;
John Edwards withdrew on January 30, 2008; Dennis Kucinich withdrew on January 25, 2008;
and Bill Richardson withdrew on January 10, 2008. Rudy Giuliani withdrew on January 30, 2008;
Mike Huckabee withdrew on March 4, 2008; Duncan Hunter withdrew on January 19, 2008; Mitt
Romney withdrew on February 7, 2008; Tom Tancredo withdrew on December 20, 2007; and
Fred Thompson withdrew on January 22, 2008. See, e.g., PresidentialCandidates Who Have
DroppedOut, BOSTON GLOBE, http:llwww.boston.com/news/politicsl2008lcandidatesl
Droppedout candidates/ (last visited Apr. 27, 2008).
3. See discussion infra Section II.
4. See, e.g., infra notes 165-167 and accompanying text.
5. See discussion infra Section III.
2008]
UNLOCKING THE TRUTH
Medicare reform that achieves its goals without unwanted side effects requires
systemic analysis of issues, with recognition and careful balance of the
competing tensions often entangled in a single proposed change.
The original Medicare program - today often referred to as "traditional
Medicare" - exemplifies one version of public health insurance. 6 Under
traditional Medicare, everyone - no matter how sick or how healthy, no matter
how poor or how wealthy - pays for and receives the same insurance coverage
through the federal government. The federal government establishes what
traditional Medicare will cover and reimburses private health care providers for
providing needed care. On one hand, the basic benefit package in traditional
Medicare falls short of comprehensive coverage. 7 As a result, various reforms
over the decades have targeted expansion of Medicare's benefits, particularly in
2003 with the introduction of an outpatient prescription drug benefit as part of
the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(the "MMA"). 8 On the other hand, traditional Medicare's expenses have
troubled many onlookers since the program's introduction, prompting frequent
cost-control proposals. 9 Private market advocates have consistently argued for
private insurance alternatives to traditional Medicare as a way to drive down
costs through competition, and their efforts have resulted in significant changes
to Medicare. 0 Today, private insurers under a program called "Medicare
Advantage" compete to offer a range of benefit packages to induce Medicare
beneficiaries to join particular private plans instead of traditional Medicare.II
The federal government subsidizes the private insurers' costs through
2
complicated reimbursement schemes.'
In late 2007, despite a full slate of potential candidates in both major
3
political parties, Medicare reform proposals were few and finite in scope.'
Almost all candidates who addressed Medicare steered away from system-wide
considerations and confined their suggestions to either limited improvements in
the existing structure 14 or narrow cost-reduction strategies.15 They sidestepped
inherent conflicts between improving benefits and cutting expenses as well as
6. Because Medicare provides its services through private entities (physicians, hospitals,
etc.), it is not a completely public system like, for example, the Department of Veteran's Affairs
(VA). See infra note 158. For overviews of the Medicare system, see MARILYN MOON,
MEDICARE: A POLICY PRIMER (2006), and CCH, MEDICARE EXPLAINED (2007).
7. See discussion infra Section I.A.
8. Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No.
108-173, 117 Stat. 2066 (2003) (hereinafter MMA).
9. See discussion infra Section I.F.
10. Id.
11. See discussion infra Section I.B.
12. Id.
13. See discussion infra Section II.
14. See discussion infra Section II.A.
15. See discussion infra Section ll.B.
228 BERKELEY JOURNAL OFAFRICAN-AMERICAN LAW & POLICY
[VOL. X:2
underlying tensions between public and private insurance solutions.' 6 With an
eye to the 2008 presidential election and its impact on the future direction of
Medicare, this Article provides a brief overview of the current Medicare
system, explaining the traditional government-run public pieces of the system
and the private insurance components that have been implemented in recent
years. Against this background, the Article surveys the early 2008 presidential
candidates' Medicare reform proposals and discusses how their piecemeal
approach missed relevant systemic considerations and ignored important
underlying policy tensions. The Article then considers the ramifications for
elderly minorities of certain key proposals - particularly involving Medicare
Advantage. plans - when viewed against the backdrop of the overall Medicare
system and in the context of competing considerations of benefit expansion,
cost reduction, and public-private balance. The Article concludes that narrowly
focused reforms put the entire system at risk because of the ramifications such
proposals tend to miss.
I.
MEDICARE BASICS
Enacted in 1965 as part of President Lyndon B. Johnson's Great Society
18
reforms, 17 the Medicare system forms Title XVIII of the Social Security Act.
Medicare in 2006 provided broad health insurance coverage to approximately
43 million individuals, including 36 million people age 65 or older.' 9 Of the 43
million, more than 20 percent belonged to racial or ethnic minority groups.20
That percentage is expected to increase. Projections indicate that by 2030 more
than one in four older Medicare beneficiaries will belong to a racial or ethnic
minority group and that1 by 2050 minorities will comprise almost 40 percent of
2
the elderly population.
16. See discussion infra Section II.C.iii.
17. THE WHITE HOUSE, BIOGRAPHY OF LYNDON B. JOHNSON, http://www.whitehouse.gov
/history/presidents/lj36.html.
18. Social Security Amendments of 1965, Pub. Law No. 89-97, 79 Stat. 286 (1965).
19. BDS. OF TRUSTEES OF THE FED. HOSP. INS. & FED. SUPPLEMENTARY MED. INS.
TRUST FUNDS, 2007 ANN. REP. OF THE BDS. OF TRUSTEES. OF THE FED. HoSP. INS. & FED.
SUPPLEMENTARY MED. INS. TRUST FUNDS 2 (Apr. 23, 2007) (hereinafter 2007 ANN. TRS. REP.),
availableat http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2007.pdf.
20.
HENRY J. KAISER FAM. FOUND., DISTRIBUTION OF MEDICARE ENROLLEES
BY RACEiETHNiCITY, STATES (2005-2006), U.S. (2006), http://www.statehealthfacts.org/
comparebar.jsp?ind=297&cat=-6 (last visited Dec. 13, 2007). Nationally, in 2006, ten percent of
all Medicare beneficiaries were black, seven percent were Hispanic, and four percent belonged to
other non-white racial or ethnic minority groups. Id.
21.
FAMILIES
POPULATION 1
kit/Medicare.pdf
USA,
(Mar.
MEDICARE:
2006),
IMPROVING
HEALTH
FOR
A GROWING
MINORITY
http://www.familiesusa.org/assets/pdfs/minority-health-tool-
2008]
UNLOCKING THE TRUTH
A. TraditionalMedicare (MedicarePartsA and B)
From the beginning, Medicare coverage has been available through what
are called Medicare Parts A and B - sometimes collectively known as
"traditional" Medicare. 24 Medicare Part A provides coverage for a range of
institutional services, such as inpatient hospital expenses, some skilled nursing
facility care and home health care, and hospice care. 25 Part B covers the cost of
services from physicians and other health care providers, as well as various
other medical expenses, including outpatient services and durable medical
equipment. 26 The Social Security Act specifies the broad scope of benefits
27
covered by traditional Medicare, with administration through the Centers for
Medicare & Medicaid Services ("CMS"). 28
The federal government
reimburses Part A providers generally under an "inpatient prospective payment
system," with a set payment amount assigned to the treatment of a particular
29
type of illness or injury (known as a "diagnosis-related group" or "DRG").
Part B providers receive payment from the government in most cases based on
fee schedules established by CMS. 30 In early 2007, an estimated 81 percent
of
3
all Medicare enrollees received coverage through traditional Medicare. '
All beneficiaries enrolled in traditional Medicare are entitled to the same
22. 42 U.S.C. §§ 1395c-1395i-5 (2000). Part A is titled "Hospital Insurance Benefits for
the Aged and Disabled" in the Social Security Act. Id.
23. 42 U.S.C. §§ 1395j-1395w-4 (2000).
Part B is titled "Supplementary Medical
Insurance Benefits for the Aged and Disabled" in the Social Security Act. Id
24. See, e.g., AARP, MEDICARE PLAN CHOICES, http://www.aarp.org/health/medicare/
traditional/a2003-04-25-hc-medicarechoices.html (last visited Apr. 28, 2008), and Press Release,
The White House, Fact Sheet: Framework to Modernize and Improve Medicare (Mar. 4, 2003),
http://www.whitehouse.gov/news/releases/2003/03/20030304- I.html.
25. 42 U.S.C. § 1395d (2000 & Supp. 5 2006).
26. 42 U.S.C. § 1395k (2000).
27. See, e.g., 42 U.S.C. §§ 1395d (2000 & Supp. 5 2006), 1395k (2000).
28. See, e.g., CTRS. FOR MEDICARE & MEDICAID SERVS. (CMS), INTERNET-ONLY
MANUALS, http://www.cms.hhs.gov/Manuals/IOM/list.asp#TopOfPage
(last visited Apr. 28,
2008).
29. 42 U.S.C. § 1395ww(a) (2000 & Supp. 5 2006). See also CMS, ACUTE INPATIENT PPS
OVERVIEW http://www.cms.hhs.gov/AcutelnpatientPPS/01_overview.asp (last visited Apr. 28,
2008). Under certain circumstances, additional amounts can be paid to Part A providers to reflect
unusually high costs of particular cases. Id.
30. 42 U.S.C. § 1395u(b)(3) (2000 & Supp. 5 2006). See also CMS, FEE SCHEDULEGENERAL INFORMATION OVERVIEW, http://www.cms.hhs.gov/FeeScheduleGenlnfo/ (last visited
Apr. 28, 2008).
31. HENRY J. KAISER FAM. FOUND., MEDICARE FACT SHEET (Mar. 2007),
http://www.kff.org/medicare/upload/2052-09.pdf. In 2005, an analysis of comparative enrollment
rates by Medicare-eligible beneficiaries found that 85 percent of African Americans, 75 percent of
Hispanics, and 87 percent of other non-white minority populations were enrolled in traditional
Medicare as compared to 87 percent of whites. MedicareAdvantage: Key Issues and Implications
for Beneficiaries: Hearing of H. Comm. on the Budget, 110 h Cong. exh. 7 (June 28, 2007)
(testimony of Patricia Neuman, Henry J. Kaiser Fam. Found.), available at
http://www.kff.org/medicare/upload/7664.pdf(hereinafter Neuman Testimony).
230 BERKELEY JOURNAL OFAFRICAN-AMERICAN LAW & POLICY
[VOL. X:2
coverage package without regard to their health or wealth.32 The coverage
under Parts A and B is generous but not comprehensive. For example, the
majority of Medicare Part A beneficiaries do not pay a monthly premium,3 3 but
are subject to deductibles, cost-sharing payments, and benefit caps 34 that are
geared toward coverage of short-term, acute illnesses rather than chronic
conditions. 35 Medicare Part B enrollees pay a monthly premium, a yearly
36
deductible, and 20 percent co-insurance for most services and equipment.
Beyond these expenses, some health care costs fall outside traditional
Medicare's coverage altogether. 37 These coverage "gaps" - whether due to an
individual's exceeding coverage limits or due to a policy choice that Medicare
excludes a particular expense - mean that individuals with traditional Medicare
32. Medicare is available to all "individuals who are age 65 or over and are eligible for
retirement benefits under title II of this Act...." 42 U.S.C. § 1395c (2000). No income test
applies. The requirement of eligibility "for retirement benefits under title II of this Act" means
eligibility for Social Security retirement benefits. At the end of 2006, more than 90 percent of
those aged 65 or older received Social Security retirement benefits. ALISON SHELTON, AARP
PUB. POL'Y INST., SOCIAL SECURITY: BASIC DATA
1 & n.1 (June 2007),
http://assets.aarp.org/rgcenter/econ/ddl59_ss.pdf The benefits available under Medicare Parts A
and B are specified in the Social Security Act. See supra note 27 and accompanying text.
33. 2007 ANN. TRS. REP., supra note 19, at 168. The Social Security Act permits voluntary
enrollment, for a premium, in Part A by some individuals who otherwise do not qualify for Part A
benefits. 42 U.S.C. § 1395i-2 (2000 & Supp. 5 2006). See also CMS, MEDICARE PART A FOR
AGED UNINSURED INDIVIDUALS, http://www.cms.hhs.gov/OrigMedicarePartABEligEnrol/
04_Part%20A%20for/2OAged%20Uninsured%20lndividuals.asp (last visited Apr. 28, 2008).
34. 42 U.S.C. § 1395e (2000).
35. Beneficiary cost-sharing in Part A depends on a "spell of illness," defined generally as a
period of inpatient care that ends only when an individual has not been an inpatient of a hospital,
skilled nursing facility or other similar institution for a period of at least 60 consecutive days. 42
U.S.C. § 1395x(a) (2000 & Supp. 5 2006). For each spell of illness, a beneficiary in 2008 will pay
a $1,024 deductible for the first 60 days of inpatient hospital care, plus a $256 per day co-payment
for each of the next 30 days (days 61-90). After 90 days of inpatient hospital care in a spell of
illness, the beneficiary begins to dip into what are called "lifetime reserve days" for which a
beneficiary must pay a $512 per day co-payment in 2008. Medicare limits each beneficiary to a
maximum of only 60 lifetime reserve days, no matter how many spells of illness. Other Part A
benefits - such as home health services, skilled nursing facility care, and hospice care - are
subject to different cost-sharing requirements and caps on benefits. For example, skilled nursing
facility care is covered for a maximum of 100 days in any spell of illness. Long-term or custodial
care is completely excluded. CMS, MEDICARE AND You 2008, at 11I (Jan. 2008), available at
http://www.medicare.gov/Publications/Pubs/pdf/10050.pdf (hereinafter MEDICARE AND YOU
2008).
36. Under Part B, a beneficiary is subject to an annual $135 (in 2008) deductible, then - for
most services and equipment - to a 20 percent co-insurance amount based on the applicable fee
schedule for the approved services or equipment. MEDICARE AND YOU 2008, supra note 35, at
112. Beneficiaries must also pay a premium for Part B ranging in 2008 from $96.40 to $238.40
per month, depending on income levels. Id. at 110. The income-based premium level became
effective in 2007, a change implemented by the MMA. 42 U.S.C. § 1395r(i) (2000 & Supp. 5
2006); MMA, supra note 8, § 811 (a).
37. For a summary of the key gaps in coverage, see CTR. FOR MEDICARE ADVOCACY, INC.,
MEDICARE SUPP. INS. "MEDIGAP", http://www.medicareadvocacy.org/FAQMedigap.htm#Gaps
(last visited Apr. 29, 2008).
2008]
UNLOCKING THE TRUTH
can still incur significant out-of-pocket expenses. 38
B. MedicarePrivateInsurance (MedicarePart C)
Medicare today offers an alternative to Parts A and B through Part C,39
originally known also as "Medicare+Choice" but renamed at the end of 2003 as
"Medicare Advantage.""O Medicare Part C offers health insurance coverage
through private insurers who contract with CMS 4 1 to provide at least the same
benefits as are available under traditional Medicare Parts A and B. 42 Most
Medicare Advantage plans also offer supplemental benefits not available under
the traditional system, often including coverage for preventive dental care,
vision care, and prescription drugs.43 A Medicare beneficiary may elect to
receive Medicare coverage either through traditional Medicare or through a
Part C Medicare Advantage plan. 4
With some variation depending on the type of plan,45 the federal
government pays Medicare Advantage plans a monthly amount per enrolled
beneficiary. The monthly payment rate is calculated under a complex formula
that takes into account the difference between a bid amount submitted by the
plans to the government and a Medicare-determined administrative "benchmark.' ' 6 Private plans receive a partial "rebate" of the difference between the
38. See, e.g., DAVID GROSS & NORMANDY BRANGAN, AARP PUB. POL'Y INST., OUT-OFPOCKET SPENDING ON HEALTH CARE BY MEDICARE BENEFICIARIES AGE 65 AND OLDER: 1999
PROJECTIONS (Dec. 1999), http://assets.aarp.org/rgcenter/health/ib4 Ihspend.pdf, and STEPHANIE
MAXWELL ET AL.,URBAN
INST., GROWTH IN MEDICARE AND OUT-OF-POCKET SPENDING:
IMPACT ON VULNERABLE BENEFICIARIES (2000), http://www.urban.orgiUploadedPDF/growth-inmedicare.pdf. One study found that a couple retiring in 2008 would need about $225,000 to cover
out-of-pocket medical expenses even with Medicare. News Release, Fidelity Investments,
Fidelity Investments Estimates $225,000 Needed To Cover Retiree Health Care Costs (Mar. 5,
2008), http://personal.fidelity.com/myfidelity/InsideFidelity/index -NewsCenter.shtml?refhp=pr.
39. 42 U.S.C. §§ 1395w-21-1395w-28 (2000 & Supp. 5 2006).
40. MMA, supra note 8, § 201(b).
41. 42 U.S.C. § 1395w-27 (2000 & Supp. 5 2006).
42. 42 U.S.C. § 1395w-22(a)(1) (2000 & Supp. 5 2006).
43. 42 U.S.C. § 1395w-22(a)(3) (2000 & Supp. 5 2006). Typical supplemental benefits
include vision care, preventive dental care, hearing care, basic physical exams, and prescription
drug coverage. MEDICARE AND You 2008, supra note 35, at 38. See MARSHA GOLD ET AL.,
AARP PUB. POL'Y INST., 2006 MEDICARE ADVANTAGE BENEFITS AND PREMIUMS (Nov. 2006),
http://assets.aarp.org/rgcenter/health/200623 medicare.pdf, for a detailed analysis of Medicare
Advantage plans' coverage and costs.
44. 42 U.S.C. § 1395w-21(a) (2000 & Supp. 5 2006).
45. Common types of Medicare Advantage plans include health maintenance organizations
(HMOs), preferred provider organizations (PPOs), private fee-for-service (PFFS) plans, medical
savings account (MSA) plans and special needs plans (SNPs). MEDICARE AND YOU 2008, supra
note 35, at 38-39.
46. 42 U.S.C. § 1395w-23 (2000 & Supp. 5 2006). See also GEO. WASH. UNIV., NAT'L
HLTH POL'Y FORUM, THE BASICS: MEDICARE ADVANTAGE 1-2 (Nov. 29, 2005),
http://www.nhpf.org/pdfs basics/Basics MA_ 11-29-05.pdf. Special computations apply to socalled regional Medicare Advantage plans, which cover large geographic areas in an effort to
make Medicare Advantage available to rural beneficiaries. Id. See also MEDICARE PAYMENT
232 BERKELEY JOURNAL OF AFRICAN-AMERICAN LAW& POLICY
[VOL. X:2
bid and benchmark amounts if their bids come in lower than the benchmark.47
Plans must use the rebate to provide additional benefits beyond the traditional
Medicare benefits or to reduce beneficiary cost-sharing, including premium
48
By mid-2007, slightly more than 8.3 million - approximately 19
costs.
percent of Medicare's 43 million total - beneficiaries were enrolled in some
type of Medicare Advantage plan.49
As long as a Medicare Advantage plan covers at least the same expenses
as traditional Medicare, the private insurer offering the plan may design the
coverage almost any way it wishes. 50 As a result, unlike traditional Medicare,
Medicare Advantage plans vary in what they cover and what costs they shift to
beneficiaries. 51 Most beneficiaries in Medicare Advantage pay the basic Part B
premium, plus an additional premium for any supplemental benefits they
5
52
receive as well as various co-payments.53
C. MedicarePrescriptionDrug Coverage (MedicarePartD)
Beginning in 2006, the MMA added a new Part D to Medicare through
54
which Medicare beneficiaries can receive prescription drug coverage.
ADVISORY COMMISSION
(hereinafter
MedPAC),
REP. TO THE CONGRESS:
ISSUES
IN A
MODERNIZED
MEDICARE
PROGRAM
74
(June
2005),
available
at
http://www.medpac.gov/publications/congressional-reports/June05_Entire report.pdf.
47. Id.
48. 42 U.S.C. § 1395w-24(b)(1)(C) (2000 & Supp. 5 2006). See also HINDA RIPPS
CHAIKIND & PAULETTE C. MORGAN, CONG. RES. SERV. REP. FOR CONGRESS: MEDICARE
ADVANTAGE PAYMENTS 2 (Sept. 29, 2004), available at http://www.law.umaryland.edu/
marshall/crsreports/crsdocuments/RL32618.pdf. There has been some concern that Medicare
Advantage plans are not necessarily using the rebate as prescribed. See, e.g., Robert Pear,
Medicare Audits Show Problems in Private Plans, N.Y. TIMES, Oct. 7, 2007, at Al, and U.S.
GOVT. ACCT. OFFICE, REP. NO.
GAO-08-359: MEDICARE ADVANTAGE: INCREASED SPENDING RELATIVE TO MEDICARE FEEFOR-SERVICE MAY NOT ALWAYS REDUCE BENEFICIARY OUT-OF-POCKET COSTS (Feb. 2008),
availableat http://www.gao.gov/new.items/d08359.pdf.
49.
HENRY J. KAISER FAM. FOUND., TOTAL MEDICARE ADVANTAGE (MA) ENROLLMENT,
2007, http://www.statehealthfacts.org/comparetable.jsp?ind=327&cat-6 (last visited May 17,
2008),
and
FACT
SHEET:
MEDICARE
ADVANTAGE
(Mar.
2007),
http://www.kff.org/medicare/upload/2052-09.pdf. A study of 2005 enrollments found that 15
percent of African Americans, 25 percent of Hispanics, and 13 percent of other non-white
minorities were enrolled in Medicare Advantage, as compared to 13 percent of whites. Neuman
Testimony, supra note 31, at exh. 7.
50. The Social Security Act permits Medicare Advantage plans to "provide to individuals
enrolled under this part [Part C] ... supplemental health care benefits that the Secretary may
approve. The Secretary shall approve any such supplemental benefits unless the Secretary
determines that including such supplemental benefits would substantially discourage enrollment
by [Medicare Advantage] eligible individuals with the organization." 42 U.S.C. § 1395w22(a)(3)(A) (2000 & Supp. 5 2006).
51. See GOLD, supra note 43.
52. FACT SHEET: MEDICARE ADVANTAGE, supra note 49. See also MEDICARE AND YOU
2008, supra note 35, at 41.
53. GOLD, supra note 43, at tbl. B-5.
54. 42 U.S.C. §§ 1395w-101-1395w-152 (Supp. 5 2006).
2008]
UNLOCKING THE TRUTH
Medicare prescription drug coverage is available through private insurers, not
through traditional Medicare Parts A and B.55 Beneficiaries electing general
health insurance coverage under traditional Medicare must enroll separately in
a free-standing Part D prescription drug plan through a private insurer to obtain
the coverage; beneficiaries electing a Medicare Advantage plan either obtain
drug coverage through that plan, if available, or also elect a stand-alone Part D
plan. 56 The federal government pays Part D insurers a monthly amount per
beneficiary that takes into account a bid amount from the insurer, with a variety
of technical adjustments intended to limit the insurer's risk, minus beneficiary
premium payments.57 By January 2007, approximately 54 percent of all
Medicare-eligible beneficiaries had enrolled in Medicare prescription drug
58
coverage through Medicare Advantage plans or stand-alone Part D plans.
Private insurers offering either stand-alone Part D plans or prescription
drug coverage through Medicare Advantage must provide coverage that is at
least "actuarially equivalent" 59 to the standard Medicare Part D benefit
prescribed by the MMA, but have considerable freedom as to the details as long
as the overall package meets the equivalence requirement and is approved by
CMS. 60 As a result, like Medicare Advantage plans, the details of Medicare
prescription drug coverage vary from plan to plan. 61 The standard prescription
55. 42 U.S.C. § 1395w-151 (Supp. 5 2006).
56. 42 U.S.C. § 1395w-101(a) (Supp. 5 2006). See also HENRY J. KAISER FAM. FOUND.,
FACT
SHEET:
THE
MEDICARE
PRESCRIPTION
DRUG
BENEFIT
(Oct.
2007),
http://www.kff.org/medicare/upload/7044_07.pdf.
Beneficiaries covered by a supplemental
private employment-based retiree health plan may also obtain prescription drug coverage through
that plan in lieu of enrolling in either a stand-alone Part D prescription drug plan or a Medicare
Advantage plan. HENRY J. KAISER FAM. FOUND. & HEWITT ASSOC., RETIREE HEALTH BENEFITS
EXAMINED: FINDINGS FROM THE KAISER/HEWiTT 2006 SURVEY ON RETIREE HEALTH BENEFITS
24 (Dec.
2006), http://www.kff.org/medicare/upload/7587.pdf
(hereinafter
KAISER/HEWITT
SURVEY) ; CMS, MEDICARE PRESCRIPTION DRUG COVERAGE: AN INTRODUCTION FOR
EMPLOYERS AND UNIONS, http://www.cms.hhs.gov/EmplUnionPlanSponsorlnfo/Downloads/
9100505EmployerBROOnline.pdf (last visited Dec. 13, 2007).
57. 42 C.F.R. § 423.315 (2005). See MARY ELLEN STAHLMAN, GEO. WASH. UNIV., NAT'L
HLTH
POL'Y
FORUM,
THE
NUTS
AND
BOLTS
OF
PDPS
(Nov.
8,
2006),
http://www.nhpf.org/pdfsib/fB817PDPlI 1-08-06.pdf, for a more detailed explanation of how
prescription drug plan payments are determined. See also MARK MERLIS, HENRY J. KAISER FAM.
FOUND., MEDICARE PAYMENTS AND BENEFICIARY COSTS FOR PRESCRIPTION DRUG COVERAGE
(Mar. 2007), http://www.kff.org/medicare/upload/7620.pdf.
58. FACT
SHEET: THE
MEDICARE
PRESCRIPTION
DRUG
BENEFIT, supra note
56.
Approximately 6.7 million (16 percent of all Medicare-eligible beneficiaries) obtained
prescription drug coverage through their Medicare Advantage plans in 2007; the remainder were
covered by stand-alone Part D prescription drug plans. Another 10.3 million beneficiaries
obtained coverage through employer retiree health plans (including the federal employees
retirement plan and TRICARE for military retirees), about 4.9 million were believed to have
coverage from other sources (particularly the VA), and about four million were believed not to
have prescription drug coverage at all in 2007. Id.
59. The term "actuarially equivalent" is defined for purposes of Medicare prescription drug
coverage in 42 C.F.R. § 423.100 (2005).
60. 42 U.S.C. § 1395w-102(c) (Supp. 5 2006).
61. It has been said that "if you've seen one PDP, you've seen one PDP." STAHLMAN,
234 BERKELEY JOURNAL OF AFRICAN-AMERICAN LAW& POLICY
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drug benefit for 2007 included a $265 deductible, covered 75 percent of all
approved drug costs from $265 up to an initial coverage limit of $2,400, and
then covered nothing until a beneficiary incurred $3,850 in out-of-pocket
costs. 62 After the out-of-pocket threshold is reached, Medicare coverage
provides what might be considered catastrophic coverage, covering
approximately 95 percent of all costs after the threshold.63 The period during
which a beneficiary is responsible for 100 percent of all drug costs after
exceeding the initial coverage limit and before reaching the catastrophic
coverage threshold is often called the "donut hole." 64 Beneficiaries are also
responsible
for premiums established by the plans in accordance with CMS
65
guidance.
D. Medicare Supplemental Insurance
Because of the gaps in Medicare coverage, 66 Medicare beneficiaries have
long sought supplemental coverage to offset their out-of-pocket costs.
Supplemental coverage most often comes from employer-sponsored retiree
health plans that wrap around Medicare and cover - up to the private plan
limits - whatever Medicare does not.6 7 Almost as popular are private
supplemental Medicare insurance plans, known as "Medigap" plans,68 that
offer gap coverage under one of a fixed number of options specified and
regulated by the federal government. 69 Medicare beneficiaries may also
supra note 57, at 6. In fact, relatively few Medicare prescription drug plans - only about 12
percent for 2008 - actually offer the standard benefit package. Deductibles vary considerably,
with an estimated 59 percent of all Medicare prescription drug plans in 2008 requiring no
deductible. Most insurers also require tiered co-payments in lieu of the standard benefit's fixed 25
percent coinsurance up to the donut hole. FACT SHEET: THE MEDICARE PRESCRIPTION DRUG
BENEFIT, supra note 56.
62. 42 U.S.C. § 1395w-102(b) (Supp. 5 2006). The numbers are updated each year.
63. Id.
64. About a third of plans offer some coverage in the standard benefit's donut hole, but
generally limit that coverage to generic drugs only. FACT SHEET: THE MEDICARE PRESCRIPTION
DRUG BENEFIT, supra note 56.
65. 42 C.F.R. § 423.286 (2005).
66. Medicare generally is estimated to cover only about 45 percent of a beneficiary's health
care costs. HENRY J. KAISER FAM. FOUND., FACT SHEET: MEDICARE AT A GLANCE (Feb. 2007),
http://www.kff.org/medicare/upload/1066-10.pdf. See also Patricia Neuman et al., How Much
'Skin In The Game' Do Medicare Beneficiaries Have? The Increasing Financial Burden Of
Health Care Spending, 1997-2003, 26 HEALTH AFF. 1692, exh. 1 (Nov./Dec. 2007), available at
http://content.healthaffairs.org/cgi/content/full/26/6/1692/TI.
67. In 2006, an estimated 12 million Medicare beneficiaries had employer-based
supplemental coverage. KAISER/HEwIrr SURVEY, supra note 56, at 1.
68. In 2003, an estimated 27 percent of Medicare beneficiaries obtained supplemental
coverage through Medigap policies. CRAIG CAPLAN & NORMANDY BRANGAN, AARP PUB.
POL'Y INST., OUT-OF-POCKET SPENDING ON HEALTH CARE BY MEDICARE BENEFICIARIES AGE
65 AND OLDER IN 2003, fig. 5 (Sept. 2004), http://assets.aarp.org/rgcenter/health/ddl01 _spending.
pdf.
69. 42 U.S.C. § 13 95ss (2000 & Supp. 5 2006).
2008]
UNLOCKING THE TRUTH
attempt to fill in Medicare's coverage holes by electing a Medicare Advantage
plan with supplemental benefits, and very low-income individuals can obtain
supplemental coverage - other than prescription drug assistance - through state
Medicaid programs. 70 The Medicare program itself provides prescription drug
assistance to low-income individuals. 71 Relatively few Medicare beneficiaries
face Medicare's coverage gaps without any kind of supplemental insurance
72
but those who do often belong to racial or ethnic minority
protection,
73
groups.
The most popular existing supplemental coverage options have their own
limitations. Employer plans often impose their own premiums, deductibles,
and cost-sharing requirements. 74 In 2006, for example, the average large
employer retiree health plan premium for new retirees age 65 or older totaled
$3,240 per year.75 Federal law limits Medigap plans to one of twelve fixed
benefit packages (denominated by the letters "A" through "L"), each with
limited coverage. 76 Medigap premiums also can be expensive. For example, in
2006, the national average Medigap Plan C annual premium was $1,766. 77 In
that same year, in households with the head of household age 65 or older, the
Some individuals thus may find
median annual income was only $27,798.
70. In 2003, 13 percent of all non-institutionalized, elderly Medicare beneficiaries
participated in a Medicare+Choice plan, and another 13 percent had supplemental coverage
through Medicaid. CRAIG CAPLAN & NORMANDY BRANGAN, supra note, 68. Only very lowincome individuals qualify for coverage through Medicaid. See, e.g., CMS, MEDICAID-AT-AGLANCE 2005 (2005), http://www.cms.hhs.gov/MedicaidEligibility/Downloads/Medicaidata
Glance05.pdf.
71. 42 U.S.C. § 1395w-l14(a) (Supp. 5 2006). The MMA shifted responsibility for
prescription drug assistance from Medicaid to Medicare, creating significant subsidies within
Medicare to assist impoverished beneficiaries - generally those with incomes below 150 percent
of the federal poverty level and with limited assets - with Part D premiums, annual deductibles,
and cost-sharing payments. See HENRY J. KAISER FAM. FOUND., Low-INCOME ASSISTANCE
UNDER THE MEDICARE DRUG BENEFIT (July 2007), http://www.kff.org/medicare/upload/
7327 03.pdf. As of January 2007, about 13.2 million Medicare beneficiaries were eligible for
some type of low-income subsidy under Part D. Id at 2.
72. In 2003, only seven percent of non-institutionalized, elderly Medicare beneficiaries had
no supplemental coverage at all. CRAIG CAPLAN & NORMANDY BRANGAN, supra note 68.
73. See infra notes 138-142 and accompanying text.
74. KAiSER/HEWITT SURVEY, supra note 56, at 15.
75. Id.
76. 42 U.S.C. § 1395ss (2000 & Supp. 5 2006). Plans F and J also are available in highdeductible options. As an example of Medigap's limitations, one of the most popular options Plan C - covers the Part A coinsurance required after the first 60 days of inpatient hospital care
and provides 100 percent payment for an additional 365 lifetime reserve days, but does not cover
custodial care even during an at-home recovery period following illness, injury, or surgery and
does not impose a cap on beneficiary's total out-of-pocket costs. See CMS, 2008 CHOOSING A
MEDIGAP POLICY: A GUIDE TO HEALTH INSURANCE FOR PEOPLE WITH MEDICARE (Sept. 2007),
available at http://www.medicare.gov/publications/pubs/pdf/02110.pdf.
77. Blue Cross Blue Shield of Michigan, Statement of Blue Cross Blue Shield of Michigan
on Attorney General Mike Cox Hearing Request on Medigap Rates (June 25, 2007),
http://www.bcbsm.com/pr/pr_06-25-2007 16780.shtml.
78. U.S. CENSUS BUREAU, INCOME, POVERTY, AND HEALTH INSURANCE COVERAGE IN
236 BERKELEY JOURNAL OFAFRICAN-AMERICAN LAW& POLICY
[VOL. X:2
that Medicare Advantage plans provide a preferable path to supplemental
insurance.79 The average annual Medicare Advantage premium in 2006, for a
plan including prescription drug coverage, was only $573.24, less than the
average employer or Medigap plan premium. 80 This potential for additional
benefits at lower cost has fueled claims that Medicare Advantage
plans
8
'
population.
Medicare
the
of
members
minority
particularly benefit
E. Medicare'sFinancialFuture
Despite the gaps in coverage and the need for supplemental insurance for
beneficiaries, many perceive Medicare as an expensive program. 82 In 2006
alone, the Medicare program spent $408 billion, an amount equal to
approximately 3.1 percent of the nation's gross domestic product.8 3 Medicare
is funded by a combination of payroll taxes, beneficiary premiums, and general
government revenue. 8 4 Payroll taxes are dedicated to a trust fund that supports
traditional Medicare Part A. Beginning in 2007, Part A expenditures each year
are expected to exceed the payroll taxes collected in that year, forcing the
program to dip into the trust fund to meet expenses.8 5 By 2019, according to
the 2007 Medicare Trustees' Report, that trust fund is expected to run out of
86
previously accumulated assets based on current spending and income levels.
THE UNITED STATES: 2006, at 5 (Aug. 2007), available at http://www.census.gov/prod/2007pubs/
p60-233.pdf.
79. This is debatable. For example, the initial premium cost savings may fade depending on
the quantity of health care services a beneficiary uses and the cost-sharing features of the
particular Medicare Advantage plan selected. See, e.g., BRIAN BILES ET AL., COMMONWEALTH
FUND, MEDICARE BENEFICIARY OUT-OF-POCKET COSTS: ARE MEDICARE ADVANTAGE PLANS A
BETTER DEAL? (May 2006), http://www.commonwealthfund.org/usr-doc/927_BilesMedicare
beneOOPcosts MA ib.pdfsection=4039.
80. GOLD, supra note 43, at tbl. B-3.
81. See AMERICA'S HEALTH INSURANCE PLANS, CTR. FOR POL'Y & RESEARCH, LOWINCOME
&
RURAL
BENEFICIARIES
WITH
MEDIGAP
COVERAGE
(Feb.
2007),
http://www.ahipresearch.com/PDFs/FullReportLowlncomeRuraReportFeb2007.pdf;
ADAM ATHERLY & KENNETH E. THORPE, VALUE OF MEDICARE ADVANTAGE TO
LOW-INCOME
AND
MINORITY
MEDICARE
BENEFICIARIES
(Sept.
20,
2005),
http://www.bcbs.com/issues/medicaid/research/Value-of-Medicare-Advantage-to-Low-Incomeand-Minority-Medicare-Beneficiaries.pdf; and infra notes 204-205 and accompanying text. See
also Timothy Stoltzfus Jost, Racial and Ethnic Disparities in Medicare: What the Department of
Health and Human Services and the Centers for Medicare and Medicaid Services Can, And
Should, Do, 9 DEPAUL J. HEALTH CARE L. 667, 691-700 (2005), for an argument that Medicare
Advantage plans could provide a key tool in reducing racial and ethnic disparities in healthcare for
Medicare beneficiaries.
82. See, e.g., William M. Welch, Medicare: The next riddlefor the ages, USA TODAY, Mar.
16, 2005, at 10A, and Robert Pear, About Those Health Care Plans by the Democrats..., N.Y.
TIMES, Mar. 3, 2008, at A16.
83. 2007 ANN. TRS. REP., supra note 19, at 4.
84. Id. at 185.
85. Id. at 100.
86. Id. at 15. Projections of exhaustion of the Part A trust fund change from year to year
and are dependent upon the particular assumptions employed. In 2002, for example, the Medicare
2008]
UNLOCKING THE TRUTH
A combination of beneficiary premiums and general government revenue
finances the remaining parts of Medicare. Because Part B premiums continue
to increase and contributions from general revenues can be adjusted upward as
87
needed, Part B income is structured to balance expenditures each year.
However, Part B costs have increased by an average of almost 11 percent per
year over the past five years, and the Medicare Trustees' Report projects future
growth of at least six to nine percent annually, requiring ever-higher premiums
88
and government revenue contributions to ensure Part B solvency.
Meanwhile, Part D expenses are projected to grow at 12.6 percent per year over
the next decade. 89 Taken together, Medicare expenses are expected to consume
11.3 percent of the nation's90 gross domestic product in 75 years, a matter of
concern to many onlookers.
Trustees' Report projected exhaustion of the Part A trust fund in 2030. BDS. OF TRUSTEES OF THE
FED. HosP. INS. & FED. SUPPLEMENTARY MED. INS. TRUST FUNDS, 2002 ANN. REP. OF THE BDS.
OF TRUSTEES OF THE FED. HOSP. INS. & FED. SUPPLEMENTARY MED. INS. TRUST FUNDS 3 (Mar.
26, 2002), available at http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2002.pdf.
2004, exhaustion was projected by 2019.
In
BDS. OF TRUSTEES OF THE FED. HOSP. INS. & FED.
SUPPLEMENTARY MED. INS. TRUST FUNDS, 2004 ANN. REP. OF THE BDS. OF TRUSTEES OF THE
FED. HoSP. INS. & FED. SUPPLEMENTARY MED. INS. TRUST FUNDS 2 (Mar. 23, 2004), available
at http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2004.pdf. In 2005, the projected date
of exhaustion changed upward to 2020. BDS. OF TRUSTEES OF THE FED. HOSP. INS. & FED.
SUPPLEMENTARY MED. INS. TRUST FUNDS, 2005 ANN. REP. OF THE BDS. OF TRUSTEES OF THE
FED. HosP. INS. & FED. SUPPLEMENTARY MED. INS. TRUST FUNDS 2 (Mar. 23, 2005), available
at http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2005.pdf.
87. 2007 ANN. TRS. REP., supra note 19, at 28.
88. Id. at 20.
89. Id. at 23.
90. Id. at 10. See also, e.g., TRACY L. FOERTSCH & JOSEPH R. ANTOS, HERITAGE FOUND.,
PAYING FOR MEDICARE: AN ECONOMIC LOOK AT THE PROGRAM'S UNFUNDED LIABILITIES (Oct.
11, 2005), http://www.heritage.org/Research/HealthCare/wm880.cfin; Geoff Colvin, The $34
trillion problem, FORTUNE, Mar. 17, 2008, at 30; and CONG. BUDGET OFFICE, THE LONG-TERM
OUTLOOK
FOR
HEALTH
CARE
SPENDING
(Nov.
2007),
http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf. The U.S. Comptroller General
in 2007 said: "Our longer-range federal fiscal outlook, owing significantly to federal health care
entitlement spending, remains grim; Medicare and Medicaid spending threaten to consume an
untenable share of the national economy in the coming decades." U.S. GOVT. ACCT. OFFICE, REP.
NO. GAO-07-1155SP: HEALTH CARE 20 YEARS FROM Now: TAKING STEPS TODAY TO MEET
TOMORRow'S CHALLENGES (Sept. 2007), available at http://www.gao.gov/new.items/
d071155sp.pdf. Some of the presidential candidates also voiced concern over Medicare's finances
in 2007. For example, John McCain stated that "[t]he growth of spending on Medicare threatens
our fiscal future." John McCain, McCain Tax Cut Plan, http://www.johnmccain.com/
Informing/Issues/0B8E4DB8-5BOC-459F-97EA-D7B542A78235.htm (last visited May 15, 2008).
Hillary Clinton acknowledged that "Medicare ... faces significant financial challenges." Hillary
Clinton, Health Care: Long-term care insurance (Aug. 15, 2007), available at
http://www.hillaryclinton.com/news/speech/view/?id=3890. Some caution is advised when
evaluating these statements, however. See Theodore Marmor et al., Medicare and Political
Analysis: Omissions, Understandings,and Misunderstandings,60 WASH. & LEE L. REv. 1127,
1158-1160 (2003), for a discussion of the risk of exaggerated political rhetoric when applied to the
Medicare program's finances.
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[VOL. X:2
F. Recent Medicare Reform
Medicare's financial forecast makes reform a perennial issue.
In
traditional Medicare, reform efforts tend to focus on the provider side, striving
to encourage cost-efficient care and limiting reimbursement rates.
For
91
example, after escalating costs raised concern in the program's early years,
Medicare in the 1980s adopted the prospective payment system and DRGs to
rein in reimbursement rates for certain institutional providers under Part A and
then established fee schedules in the early 1990s to control other provider costs
under Part B. 92 Since then, Congress has continued to tinker with how
providers in traditional Medicare are paid. For example, the Balanced Budget
Act of 1997 (the "BBA") imposed a number of additional limits on payments to
hospitals, all intended to reduce traditional Medicare's costs in that area, and
93
expanded the prospective payment system method to home health agencies.
The BBA also revised how fee schedules for Part B payments for physicians
are updated from year to year. 94 The MMA in 2003 also included numerous
provisions changing how certain types of providers are paid under either Part A
or B; 95 and most recently President George W. Bush's Fiscal Year 2009 budget
91. The original Medicare program reimbursed hospitals on the basis of their reported costs,
after the costs had already been incurred. Physicians were reimbursed on the basis of their
"reasonable charge." THEODORE R. MARMOR, THE POLITICS OF MEDICARE 85 (1973). This
approach led to tremendous annual increases in overall Medicare expenses - an average of 40.2
percent in 1968 and 1969. JONATHAN OBERLANDER, THE POLITICAL LIFE OF MEDICARE 47
(2003).
92. The prospective payment system was introduced by the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. No. 97-248, 96 Stat. 324 (1982). The use of fee schedules for
Part B expenses began with the Omnibus Budget Reconciliation Act of 1989, Pub. L. No. 101239, 103 Stat. 2106 (1989). See JONATHAN OBERLANDER, supra note 91, for an overview of the
first four decades of the program and various reform efforts. See also M. Kenneth Bowler,
ChangingPolitics ofFederalHealth InsurancePrograms, PS 202 (Spr. 1987), for a discussion of
the first two decades of Medicare reform efforts.
93. The Balanced Budget Act of 1997: A current look at its impact on patients and
providers: Statement before the Subcomm. on Health & Environment of the H. Comm. on
Commerce, 106 th Cong. 1-2 (July 19, 2000) (statement of Gail R. Wilensky, Medicare Payment
Advisory Commission), available at http://pages.stem.nyu.edu/-jasker/BBAl.pdf (hereinafter
Wilensky Statement). Before the BBA, home health agencies were reimbursed on the basis of
their costs, similar to the way hospitals and other institutional providers had been paid in the first
two decades of Medicare. Id. at 8.
94. The BBA introduced a formula that takes into account changes in inflation and a factor
(called the "Sustainable Growth Rate" or "SGR") based on the nation's Gross Domestic Product
to determine the appropriate update amount. 42 U.S.C. § 1395w-4(b), (d) (2000 & Supp. 5 2006).
See also CMS, ESTIMATED SUSTAINABLE GROWTH RATE AND CONVERSION FACTOR, FOR
MEDICARE
PAYMENTS
TO
PHYSICIANS
IN
2007
(Nov.
2006),
http://www.cms.hhs.gov/SustainableGRatesConFact/Downloads/sgr2007f.pdf. The SGR formula
has proved problematic in recent years as health care spending has outpaced the nation's
economic growth, and Congress has intervened to stabilize provider payments from year to year.
See, e.g., MMA, supra note 8, § 601, and Tax Relief and Health Care Act of 2006, Pub. L. No.
109-432, 120 Stat. 2922 (2006).
95. See, e.g., MMA, supranote 8, §§401,404,411.
2008]
UNLOCKING THE TRUTH
96
included yet more adjustments in Medicare provider payments.
Alongside reform efforts directed at cost control in traditional Medicare,
private insurance advocates have argued for introducing competition and
private insurers into the system. 97 In the mid-1990s, those advocates scored a
degree of success with the passage of the BBA and its creation of Medicare
Part C with Medicare+Choice. 98 Proponents of Medicare+Choice saw it both
"as a vehicle to provide Medicare beneficiaries with richer benefits" - at lower
costs - than in traditional Medicare and as a way "to help set the stage for
future changes in the structure of Medicare." 99 Private insurance supporters
hoped Medicare+Choice would expand the availability and attractiveness of
private plan options in Medicare, 00 but Medicare+Choice did not fare well.10
Not only did many beneficiaries outside urban areas fail to obtain access to a
Medicare+Choice plan, 10 2 but large numbers of existing plans withdrew or
increased premiums within a few years of the program's enactment, often
leaving beneficiaries with little if any choice other than to return to traditional
Medicare. 1° 3 Medicare+Choice's failures were largely blamed on expense:
Many private insurers claimed that they could not sustain the plans under the
04
prevailing reimbursement systems.'
The most significant reform effort in recent years came in 2003 with
passage of the MMA. In addition to the introduction of Part D prescription
drug coverage, the MMA created structural and financial incentives for
beneficiaries to choose private plans. 10 5 Perhaps most significant among the
structural incentives was the MMA's effective limitation of Part D prescription
drug coverage to private insurers, not traditional Medicare.' 0 6 This structure
96. WHITE HOUSE, MAJOR SAVINGS AND REFORMS IN THE PRESIDENT'S 2009 BUDGET
153-156 (Feb. 2008), http://www.whitehouse.gov/omb/budget/fy2009/pdfsavings.pdf.
97. See JONATHAN OBERLANDER, supra note 91. As an example of mid-1980s interest in
private market solutions, see Frank W. Porell & Stanley S.Wallack, Medicare risk contracting:
determinantsof market entry, 12 HEALTH CARE FIN. REV. 75 (Wint. 1990).
98. Balanced Budget Act of 1997, Pub. L. No. 105-33, 111 Stat. 251 (1997).
99. Wilensky Statement, supra note 93, at 12.
100. See, e.g., Lynn Etheredge, The Medicare Reforms of 1997: Headlines You Didn't
Read, 23 J. HEALTH POL. POL'Y & L. 573 (June 1998), and Nancy-Ann DeParle, As Good As It
Gets? The Future ofMedicare+Choice,27 J. HEALTH POL. POL'Y & L. 495 (June 2002).
101. Wilensky Statement, supra note 93, at 12-14. See also U.S. GOV'T ACCT. OFF., REP.
No. GAO/HEHS-00-183: MEDICARE+CHOICE: PLAN WITHDRAWALS INDICATE DIFFICULTY
OF PROVIDING CHOICE
WHILE ACHIEVING
SAVINGS
(Sept.
2000),
available at
http://www.gao.gov/archive/2000/heOO183.pdf, and U.S. GOV'T ACCT. OFF., REP. No. GAO-02202: MEDICARE+CHOICE: RECENT PAYMENT INCREASES HAD LITTLE EFFECT ON BENEFITS
OR PLAN AVAILABILITY IN 2001 (Nov. 2001), availableat http://www.gao.gov/new.items/
d02202.pdf.
102. See, e.g., Michelle Casey et al., Medicare Minus Choice: The Impact of HMO
Withdrawals on Rural MedicareBeneficiaries, 21 HEALTH AFF. 192 (May/June 2002).
103. See Wilensky Statement, supranote 93, at 12-14.
104. See supra note 101.
105. See infra notes 106-110 and accompanying text.
106. 42 U.S.C. §§ 1395w-101, 1395w-151(a)(13-14) (Supp. 5 2006).
240 BERKELEY JOURNAL OF AFRICAN-AMERICAN LAW& POLICY
[VOL. X:2
means that beneficiaries who wish to remain in traditional Medicare for their
general health insurance must navigate a wide range of private insurance
options' ° 7 to select a stand-alone Part D prescription drug plan and must then
deal with two different sources of coverage for health care expenses traditional Medicare for everything other than outpatient drugs, and a private
insurer for drug benefits. Given the coverage gaps in traditional Medicare,
most beneficiaries enrolled in Parts A and B will also pursue some form of
supplemental coverage if they can afford it, 10 8 bringing a third source of
insurance into the mix. In contrast to this complexity, beneficiaries who elect a
Medicare Advantage plan that includes prescription drug coverage can enjoy
"one-stop shopping" for all their health insurance needs, especially if the plan
they choose also provides needed supplemental benefits.
To counteract many of the perceived causes of the Medicare+Choice
failures, the MMA also increased reimbursement rates for Medicare Advantage
plans and authorized regional plans to ensure coverage for Medicare
beneficiaries outside urban areas. 10 9 The effect of the bid/benchmark and
rebate payment system has resulted in payments to Medicare Advantage plans
that are estimated at approximately 112 percent of the average cost of covering
beneficiaries under traditional Medicare." 0 By 2007, seemingly attractive
Medicare Advantage plan options proliferated, with at least one private plan
available to almost all beneficiaries."'
The MMA also made other changes intended to improve Medicare. For
example, the legislation introduced demonstration projects - Medicare's way of
testing new ideas - in chronic disease management' 2 and coordination of
107. The difficulties for Medicare beneficiaries in choosing among the stand-alone Part D
plan options has been widely reported. See, e.g., Tom Baxter & Bob Kemper, Medicare drugplan
draws yelps, ATLANTA JOURNAL-CONSTITUTION, Jan. 30, 2006, at IA; and Robert Pear, Rolls
Growing For Drug Plan As Problems Continue, N.Y. TIMES, Jan. 18, 2006, at A 17.
108. See discussion supra Section I.D.
109. See supra note 46 and accompanying text.
110. The Medicare Advantage Programand MedPAC Recommendations: Statement before
the H. Comm. on the Budget, 110' Cong. 5 (June 28, 2007) (testimony of Mark E. Miller,
MedPAC), available at http://www.medpac.gov/documents/062807_Housebudget Med
PAC testimonyMA.pdf. Payments in 2006 to Medicare Advantage plans were calculated by
MedPAC to range "from 110 percent of FFS for HMOs to 119 percent of FFS for private fee-forservice (PFFS) plans," where "FFS" means the average cost for beneficiaries in traditional
Medicare. Id. at 6. See also The Medicare Advantage Program: Enrollment Trends and
Budgetary Effects: Statement before the S. Comm. on Finance, 11 0 th Cong. (Apr. 11, 2007)
(testimony
of
Peter
R.
Orszag,
Cong.
Budget
Off.),
available
at
http://www.cbo.gov/ftpdocs/79xx/doc7994/04-11-MedicareAdvantage.pdf.
See discussion supra
Section I.B. for an explanation of the bidibenchmark payment system.
11. See Marsha Gold, Medicare Advantage in 2006-2007: What Congress Intended?, 26
HEALTH AFF. (May 15, 2007), http://content.healthaffairs.org/cgi/content/abstract/hlthaff.
26.4.w445, for a discussion of the pros and cons of Medicare Advantage plans, including both
benefits and drawbacks for beneficiaries.
112. MMA, supra note 8, §§ 648, 721, 723.
2008]
UNLOCKING THE TRUTH
care. 113 Specifically, the MMA required the Secretary of Health and Human
Services ("HHS") to "phase in chronic care improvement programs in
traditional fee-for service," specifying a focus on "clinical quality and
beneficiary satisfaction" (as well as cost management) for individuals with
conditions such as congestive heart failure and diabetes.' 14 Coverage for a
range of additional preventive screenings - including an initial physical
exam
5
and diabetes screenings - was also added to traditional Medicare."
II. MEDICARE AND THE
PRESIDENTIAL CAMPAIGNS
Many of the presidential candidates in 2007 did not directly address
Medicare even when they focused on health care issues.1 6 When they looked
113. MMA, supra note 8, § 646.
114. MMA, supra note 8, § 721. See also CMS, CMS LEGISLATIVE SUMMARY: SUMMARY
OF H.R. 1, MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003
(Apr.
2004),
available
at
http://www.cms.hhs.gov/MMAUpdate/downloads/PL108173summary.pdf.
115. MMA, supra note 8, §§ 611-613, providing coverage of an initial preventive physical
exam, cardiovascular screening blood tests, and diabetes screening tests.
116. This Article looks at candidates' platforms primarily as published on their official
websites in October and November 2007. Mike Gravel, a former Senator from Alaska, advocated
universal health care through vouchers that would allow all citizens to purchase health coverage.
His official website list of issues did not reference the Medicare system. Mike Gravel, How Mike
Stands on the Issues, http://www.gravel2008.us/issues (last visited May 18, 2008). In another
forum, Mr. Gravel stated that his plan "would be to keep in place Medicare and Medicaid and
phase them out over time."
On the Issues: Mike Gravel on Health Care,
http://www.ontheissues.org/2008/Mike GravelHealthCare.htm (last visited May 18, 2008).
Dennis Kucinich called for "Medicare for all" (characterized as a "Universal, Single-Payer, Notfor-Profit health care system") to solve the problems of the uninsured younger than 65. His
website's issue list did not offer specific reform provisions for the existing Medicare system.
Dennis Kucinich, A Healthy Nation, http://www.dennis4president.com/go/issues/a-healthy-nation/
(last visited Oct. 2, 2007). Rudy Giuliani's "12 Commitments" platform did not reference
Medicare directly although he included a pledge to "give Americans more control over and access
to health care with affordable and portable free-market solutions."
Rudy Giuliani, 12
Commitments, http://www.joinrudy2008.com/commitment (last visited Nov. 22, 2007). During a
Republican candidate debate, Mr. Giuliani did call for a "private solution" to both Medicare and
Medicaid. On the Issues: Rudy Giuliani in 2007 GOP primary debate in Orlando, Florida, Oct.
21, http://www.ontheissues.org/Archieve/2007 GOPFloridaRudy_Giuliani.htm (last visited
Apr. 30, 2008). Mike Huckabee opposed "universal health care mandated by federal edict," but
avoided mentioning Medicare in his list of health care issues. Mike Huckabee, Issues: Health
Care,
http://www.mikehuckabee.com/index.cnfm?FuseAction=Issues.View&Issueid=8
(last
visited Nov. 22, 2007). Ron Paul also did not mention Medicare directly, but his website included
the following statements: "The federal government decided long ago that it knew how to manage
your health care better than you and replaced personal responsibility and accountability with a
system that puts corporate interests first. Our free market health care system that was once the
envy of the world became a federally-managed disaster."
Ron Paul, Health Care,
http://www.ronpaul2008.com/issues/health-care/ (last visited Nov. 22, 2007). In other settings he
indicated he would abolish the "federal entitlement to Medicare." On the Issues: Ron Paul on
Health Care, http://www.ontheissues.org/2008/Ron Paul HealthCare.htm (last visited Nov. 22,
2007). Mitt Romney called generally for "extending health insurance to all Americans, not
through a government program or new taxes, but through market reforms." He, too, did not
directly address Medicare reform in his discussion of health care issues. Mitt Romney, Issue
242 BERKELEY JOURNAL OFAFRICAN-AMERICAN LAW& POLICY
at Medicare,
they
typically suggested
either targeted
[VOL. X:2
corrections
(or
expansions) in the existing benefit structure or cost reduction measures. None
of the candidates directly addressed how Medicare reform might affect elderly
minorities.' 17 Even when their health care proposals for the younger uninsured
involved broad policy discussions, the candidates steered clear of comparable
debate in Medicare."
As a result, their Medicare proposals seemed myopic
and disjointed, with no apparent effort to place a particular suggested change in
the context of the overall system or to evaluate how that change might alter the
balance between competing policy concerns.
Watch: Extending Health Care to All Americans, http://www.mittromney.com/IssueWatch/HealthCare (last visited Nov. 22, 2007). Tom Tancredo similarly avoided mentioning
Medicare, but said on his website that the "way to address America's health care problems is not
through bigger government programs, litigation, regulation, or additional government spending."
Tom Tancredo, Health Care, http://teamtancredo.org/pdfs/healthcare.pdf (last visited Apr. 30,
2008). Fred Thompson did not explicitly reference Medicare, but said that "[c]urrent government
programs must ...be streamlined and improved so that those who truly need help can get the
health care they need" and also noted that "[t]hose who propose a one-size-fits-all Washingtoncontrolled program ignore the cost, inefficiency, and inadequate care that such a system offers."
Fred Thompson, On the Issues: Health Care, http://www.fred08.com/Principles/Principles
Summary.aspx?View=OnThelssues (last visited Nov. 22, 2007).
117. Although not addressing the issues of older minorities, several of the candidates at
least acknowledged the serious health disparities that exist between members of racial and ethnic
minority groups and other individuals in American society. John Edwards, for example, stated
that "[p]eople of color are more likely to be diagnosed with cancer and less likely to receive
timely and effective treatment."
John Edwards, Universal Health Care Through Shared
Responsibility, http://johnedwards.com/issues/health-care/health-care-fact-sheet (last visited Apr.
30, 2008) (hereinafter John Edwards, Universal Health Care). To address those concerns, Mr.
Edwards called for "medical research into disparities, reduc[ing] the pollutions and toxins that
disproportionately harm communities of colors, and support[ing] translation services to address
language barriers." Id. Mr. Edwards also linked universal health insurance efforts to disparities:
"By helping all Americans get insurance, I will also address disparities in health caused by
disparities in insurance." Id. Bill Richardson echoed those statements: "All too often in the
United States, health outcomes differ based on race and ethnicity. For example, minorities suffer
disproportionately from diabetes, heart disease, and H1V/AIDS, are more likely to be uninsured,
and are less likely to have a regular doctor than white Americans." Bill Richardson, Issues:
Health Care: American Choices: Bill Richardson's Plan for Affordable Health Coverage for All
Americans, http://www.richardsonforpresident.com/issues/healthcare?id=0002 (last visited Nov.
25, 2007) (hereinafter Bill Richardson, Plan for Affordable Health Coverage). Bill Richardson
also said he would "work to reduce health disparities by ensuring access to affordable health care
coverage for every American, supporting increased training for minority health professionals, and
supporting efforts to increase the number of minorities who have medical homes, which will help
to reduce health disparities by ensuring they receive timely medical care and appropriate
preventive services." Id. Hillary Clinton noted that "[tlhe problem of affordability of insurance
also contributes to racial disparities in health outcomes. ... Lack of access to health care due to
lack of coverage, even for a short period of time, can lead to worse health outcomes and financial
insecurity." Hillary Clinton, American Health Choices Plan: Quality, Affordable Health Care for
Every American, http://www.hillaryclinton.com/feature/healthcareplan/AmericanHealth
choicesplan.pdf (last visited May 14, 2008) (hereinafter Hillary Clinton, Health Choices Plan).
118. See, e.g., infra notes 168-171 and accompanying text.
2008]
UNLOCKING THE TRUTH
A. Proposalsto Improve Existing Structure
A number of proposals focused on correcting perceived failures in
Medicare's existing benefit structure have been offered. 119
For example,
several candidates in mid-2007 called for eliminating the Part D prescription
drug coverage "donut hole,"' 120 a source of confusion and concern since the
MMA's enactment. 121 Slightly more than 30 percent of Part D eligible
beneficiaries in 2007 were expected to have drug expenses that exceeded the
initial coverage limit and reached into the donut hole.' 22 Individuals with
chronic conditions requiring expensive maintenance medications are
particularly at risk. 123 Some beneficiaries may obtain coverage by electing a
Medicare Advantage or stand-alone Part D plan that offers some level of
coverage in the donut hole, 124 and very low-income individuals qualify for
subsidies that cover the gap.' 25 History, however, suggests that some number
of remaining beneficiaries - those who do not qualify for government lowincome assistance, yet do not have the resources to cover drug costs out of
119. Joe Biden, for example, called for "treating mental health services the same as other
health services," including an increase in the government's share of outpatient psychiatric service
costs. Joe Biden, Issues: Health Care, http://www.joebiden.com/issues?id=0020 (last visited Nov.
22, 2007) (hereinafter Joe Biden, Issues: Health Care). Traditional Medicare imposes separate
limits on certain mental health services. See CHRISTOPHER LOFTIS, GEO. WASH. UNIV., NAT'L
HLTH POL'Y FORUM, THE BASICS: MEDICARE'S MENTAL HEALTH BENEFITS (Feb. 14, 2007),
http://www.nhpf.org/pdfsbasics/BasicsMedicareMentalHealth.pdf,
for an overview of
Medicare's treatment of mental health services.
120. Joe Biden, Issues: Health Care, supra note 119. Chris Dodd also included eliminating
the donut hole in his health care issue list. Chris Dodd, The Dodd Plan to Strengthen Retirement
Security, http://chrisdodd.com/issues/seniors (last visited Nov. 22, 2007) (hereinafter Chris Dodd,
Retirement Security).
121. See, e.g., Jim Spencer, New Medicare 'doughnut hole' hard to swallow, DENVER
POST, Dec. 28, 2003, at BI; Marvin Adelman, Medicare Drug Bill Hurts Middle Class, SOUTH
FLORIDA SUN-SENTINEL, Dec. 29, 2003, at 18A; Davis Bushnell, More Questions than Answers
on Changes to Medicare, BOSTON GLOBE, Dec. 11, 2003, at 3; Editorial, Seniors Weigh In on
Medicare Change - and Not Kindly, AKRON BEACON J., Dec. 10, 2003, at B3; and William
Neikirk, Bush Signs Bill on Medicare, but Doesn't End Flap, ALBANY TIMES UNION, Dec. 9,
2003, at A3. The donut hole's inclusion in the Part D standard benefit package reflected an effort
to control costs. See, e.g., Robert Pear, Deal 'in Principle' For Medicare Plan To Cover Drug
Costs, N.Y. TIMES, Nov. 16, 2003, at Al. Shortly after passage of the MMA, the Congressional
Budget Office estimated that closing the donut hole would increase the then-estimated cost of the
Part D prescription drug benefit to at least $320 billion by 2023.
122. FACT SHEET: THE MEDICARE PRESCRIPTION DRUG BENEFIT, supra note 56. See also
JENNY MINOTT, CHANGES IN HEALTH CARE FINANCING & ORGANIZATION, ROBERT WOOD
JOHNSON FOUND., FINDINGS BRIEF: MEDICARE ADVANTAGE AND THE IMPACT OF MEDICARE
HMOS ON INPATIENT UTILIZATION (Oct. 2007), http://www.hcfo.net/pdf/findings 1007.pdf.
123. See, e.g., Bob Rosenblatt, ChronicAilments Increase the Challenge of Picking a Part
D Plan, CALIF. HEALTHLINE (Dec. 19, 2005), http://www.califomiahealthline.org/articles/
2005/12/19/Chronic-Ailments-Increase-the-Challenge-of-Picking-a-Part-D-Plan.aspx?a = 1#.
124. About 29 percent of all Part D plans provide some coverage in the donut hole although
that coverage is typically limited to generic drugs. FACT SHEET: THE MEDICARE PRESCRIPTION
DRUG BENEFIT, supranote 56.
125. 42 U.S.C. § 1395w-1 14(a)(1)(C) (Supp. 5 2006). See also supra note 71.
244 BERKELEY JOURNAL OF AFRICAN-AMERICAN LAW& POLICY
[VOL. X:2
they are faced with costs they cannot
pocket - may stop taking drugs when
27
afford,126 with adverse health effects. 1
Some candidates suggested adding prescription drug coverage to
traditional Medicare as a way to resolve Part D issues, a proposal that could
undo one of the main privatization incentives of the MMA. l12 Two candidates
called in their campaign materials for traditional Medicare to establish a direct
prescription drug benefit. 129 Another candidate did not focus on the public plan
option on the campaign trail, but co-sponsored a bill in October 2007 to create
a new prescription drug benefit in traditional Medicare to compete with the
private plans. 130 That bill would not necessarily have closed the donut hole.
Instead, it proposed allowing traditional Medicare to "offer supplemental
prescription drug coverage in the same manner as other31qualified prescription
drug coverage offered by other prescription drug plans."']
126. For example, pre-MMA studies of Medicare-eligible adults found that significant
percentages failed to take their prescription drugs as prescribed when faced with drug costs
without insurance coverage. HENRY J. KAISER FAM. FOUND., PRESCRIPTION DRUG TRENDS (Oct.
2004), http://www.kff.org/rxdrugs/upload/Prescription-Drug-Trends-October-2004-UPDATE.pdf.
127. See 70 Fed. Reg. 4194, 4474 (Jan. 28, 2005) (to be codified at 42 C.F.R. pts. 400, 403,
411, 417, and 423).
128. See discussion supra Section I.F. Because the vast majority of Medicare beneficiaries
remain in traditional Medicare for their general health insurance, allowing traditional Medicare to
offer a drug benefit might easily take significant numbers of beneficiaries away from the standalone Part D plans in which they are currently enrolled. This could prove particularly true if
Medicare's bargaining power proved sufficient to drive down prescription drug costs in the
traditional plan below what private insurers could achieve. See MEDICARE RIGHTS CTR., THE
BEST MEDICINE: A DRUG COVERAGE OPTION UNDER ORIGINAL MEDICARE (Oct. 2007),
http://www.medicarerights.org/TheBestMedicine.pdf, and Ruth Lopert & Marilyn Moon, Toward
A Rational, Value-Based Drug Benefit For Medicare, 26 HEALTH AFF. 1666 (Nov./Dec. 2007),
for additional discussions of the issues surrounding addition of a prescription drug option in
traditional Medicare.
129. Bill Richardson called for "allow[ing] the Medicare program to provide a direct
prescription drug benefit, and ... allow[ing] the program to negotiate for lower prices with drug
companies." Bill Richardson, Plan for Affordable Health Coverage, supra note 117. John
Edwards also wanted to "give Medicare beneficiaries the choice of a public plan for their
prescription drugs." John Edwards, Security, Dignity and Choice: A Declaration Of Independence
For Older Americans, http://www.johnedwards.com/issues/seniors/ (last visited May 14, 2008)
(hereinafter John Edwards, Older Americans).
130. Barack Obama was a co-sponsor of the Medicare Prescription Drug Savings and
Choice Act of 2007, S. 2219, 110 th Cong. (1 Sess. 2007). On the campaign trail Mr. Obama
focused on a different solution to Part D problems: more information to allow participants to
compare drug plans effectively.
Barack Obama, Fulfilling our Covenant with Seniors,
http://www.barackobama.com/issues/seniors/ (last visited Nov. 23, 2007) (hereinafter Barack
Obama, Seniors).
131. Medicare Prescription Drug Savings and Choice Act of 2007, S. 2219 and H.R. 3932,
110 th Cong. (1" Sess. 2007). Because other Part D prescription drug plans can design coverage to
at least partially cover the donut hole, presumably so, too, could traditional Medicare's
prescription drug coverage. The October 2007 legislative proposals specifically authorized CMS
to "implement strategies similar to those used by other Federal purchasers of prescription drugs,
and other strategies, including the use of a formulary and formulary incentives ....
to reduce the
purchase cost of covered part D drugs." Id.
2008]
UNLOCKING THE TRUTH
Several proposals included expanding Medicare coverage for low-income
beneficiaries.
Such expansion could come from relaxing eligibility
requirements to bring more low-income individuals within the scope of
Medicare's existing low-income assistance,' 32 or it could involve direct
enhancement of Medicare's coverage for those low-income individuals
currently eligible for assistance.1 33 Significant percentages of Medicare
beneficiaries could be considered low-income.1 34 For example, in 2005, 33
percent of Medicare beneficiaries age 65 or older lived at or below 150 percent
of the federal poverty level for individuals that year ($13,590). 135 In 2006, 16
percent of all Medicare beneficiaries lived in households below 100 percent of
the federal poverty level ($20,614 for a family of four in 2006), and another 30
136
percent lived in households below 200 percent of the federal poverty level.
Members of racial and ethnic minority groups disproportionately fall into these
low-income cohorts, with almost 70 percent of all Hispanic and African
American/non-Hispanic Medicare beneficiaries in 2005 living below 200
percent of the federal poverty level.1 37 Many of these individuals are so poor
132. Hillary Clinton said she would loosen "overly restrictive asset-test rules" to expand
eligibility for low-income assistance. Hillary Clinton, Health Choices Plan, supra note 117. Ms.
Clinton specifically recommended implementing Medicare "policies to improve access to
programs that provide cost-sharing protections to low-income beneficiaries." Id. Similarly, John
Edwards said he would use savings from other reforms "to ensure that low-income Medicare
beneficiaries have access to the care they need." John Edwards, Older Americans, supra note 129.
Currently, the primary low-income subsidies in Medicare exist in Part D. See supra note 71.
Most other assistance for low-income beneficiaries comes from state Medicaid programs that
cover a range of health expenses not met by Medicare. See CMS, DUAL ELIGIBILITY: OVERVIEW,
http://www.cms.hhs.gov/DualEligible/01_Overview.asp#TopOfPage (last visited May 18, 2008).
See also LAURA SUMMER & LEE THOMPSON, COMMONWEALTH FUND, How ASSET TESTS
BLOCK Low-INCOME MEDICARE BENEFICIARIES FROM NEEDED BENEFITS (May 2004),
http://www.commonwealthfund.org/usrdoc/summer-assettestsib_727.pd.section=4039.
133. Bill Richardson proposed directly expanding Medicare's coverage to "fill in gaps in
care currently being funded by the states" for the so-called "dual eligibles" (those individuals who
are eligible for full benefits under both Medicare and Medicaid). Bill Richardson, Plan for
Affordable Health Coverage, supra note 117. Bill Richardson also said he would focus
specifically on coordination of care for dual eligibles, claiming that the current system - where
Medicare and Medicaid are responsible for different costs for the dual eligibles - results in "more
fragmented care, extra hassles and double the bureaucratic paperwork for patients, providers and
states." Id.
134. CMS, MEDICARE: A PROFILE: MEDICARE 2000: 35 YEARS OF IMPROVING
AMERICANS'
HEALTH
AND
SECURITY
12-13
(July
2000),
http://www.cms.hhs.gov/TheChartSeries/Downloads/35chartbk.pdf.
135. HENRY J. KAISER FAM. FOUND., MEDICARE BENEFICIARIES AGE 65 AND OVER
LIVING BELOW 150% OF THE FEDERAL POVERTY LEVEL, STATES (2004-2005), U.S. (2005), 20042005, http://www.statehealthfacts.org/comparetable.jsp?ind=313&cat=6 (last visited May 17,
2008).
136. HENRY J. KAISER FAM. FOUND., DISTRIBUTION OF MEDICARE ENROLLEES BY
FEDERAL POVERTY LEVEL, STATES (2005-2006), U.S. (2006), http://www.statehealthfacts.org/
comparetable.jsp?ind=295&cat-6&yr=l&typ=2 (last visited May 17, 2008).
137. In 2005, 34 percent of Hispanic Medicare beneficiaries age 65 or older had family
incomes below 100 percent of the federal poverty level for a family of four that year ($19,971),
and 35 percent had family incomes between 100 and 199 percent of the federal poverty level.
246 BERKELEY JOURNAL OF AFRICAN-AMERICAN LAW& POLICY
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that they qualify for supplemental health coverage through state-run Medicaid
programs, and in fact the ranks of the "dual eligibles" - people eligible for full
benefits under both Medicare and Medicaid - are filled disproportionately with
minority members.1 38 Many other low-income minorities, however, may have
income or assets just high enough to keep them from qualifying for either state
Medicaid coverage or Medicare's current low-income assistance.' 39 Such
4
individuals may have limited alternatives for supplemental health coverage: 0
Medigap premiums are often expensive,'14 and minorities are less likely to have
employment-based health insurance while working, 142 dooming their chances
Similarly, 30 percent of African-American/non-Hispanic elderly Medicare beneficiaries had
family incomes below 100 percent of the federal poverty level for a family of four that year, and
another 37 percent had family incomes between 100 and 199 percent. The numbers were
somewhat better for Asian and Pacific Islander elderly Medicare beneficiaries (28 percent were
below 100 percent of the federal poverty level, and 23 percent were between 100 and 199 percent)
and for American Indian/Alaska Native elderly Medicare beneficiaries (26 percent were below
100 percent of the federal poverty level, and 33 percent were between 100 and 199 percent). By
contrast, only 10 percent of white/non-Hispanic elderly Medicare beneficiaries had family
incomes below 100 percent of the federal poverty level, and 28 percent were between 100 and 199
percent. HENRY J. KAISER FAM. FOUND., KEY FACTS: RACE, ETHNICITY & MEDICAL CARE fig. 5
(Jan. 2007), http://www.kff.org/minorityhealth/upload/6069-02.pdf (hereinafter KAISER KEY
FACTS). The numbers have not been improved over time. In 2002, more than 60 percent of all
African-American and Latino Medicare beneficiaries fell below 150 percent of the federal poverty
level. HENRY J. KAISER FAM. FOUND., A PROFILE OF AFRICAN AMERICANS, LATINOS, AND
WHITES WITH MEDICARE: IMPLICATIONS FOR OUTREACH EFFORTS FOR THE NEW DRUG BENEFIT
2 (Nov. 2005),
http://www.kff.org/minorityhealth/upload/A-Profile-of-African-AmericansLatinos-and-Whites-with-Medicare-Implications-for-OUtreach-Efforts-for-the-New-DrugBenefit-Chartpack.pdf (hereinafter KAISER PROFILE). In 2002, the federal poverty level for an
individual was $8,860. Id.
138. In 2000, of Medicare dual eligibles age 65 or older, 19 percent were African
American, 17 percent were Hispanic, and another eight percent belonged to other racial or ethnic
minority groups. HENRY J. KAISER FAM. FOUND., DUAL ELIGIBLES: MEDICAID'S ROLE IN
FILLING MEDICARE'S GAPS tbl. 1 (Mar. 2004), http://www.kff.org/medicaid/upload/DualEligibles-Medicaid-s-Role-in-Filling-Medicare-s-Gaps.pdf. In 2002, 30 percent or more of both
African-American and Latino Medicare beneficiaries age 65 or older received Medicaid coverage.
KAISER PROFILE, supra note 137, at fig. 5.
139. Although significant percentages of elderly minority group members have low-income
levels, Medicaid income qualification levels are often even lower. See supra note 137 for 2005
statistics on income levels for elderly Medicare beneficiaries who are also members of racial or
ethnic minority groups. See CMS, DUAL ELIGIBLE CATEGORIES, http://www.cms.hhs.gov/
DualEligible/02_DualEligibleCategories.asp (last visited May 17, 2008), for a summary of
Medicaid eligibility rules.
140. See discussion supra Section I.D. Historically, as compared to whites, individuals
belonging to racial or ethnic minority groups have been more likely to go without any form of
supplemental Medicare coverage, less likely to have employment-based retiree health coverage,
and far less likely to have Medigap coverage. See Nadereh Pourat et al., Socioeconomic
Differences In MedicareSupplemental Coverage, 19 HEALTH AFF. 186 (Sept./Oct. 2000).
141. See supra note 77 and accompanying text.
142. See KAISER KEY FACTS, supra note 137, at fig. 16. In 2005, for example, 69 percent
of white, non-Hispanic individuals under age 65 had some form of employment-based health
insurance as compared to 40 percent of Hispanics and 48 percent of African American/nonHispanic individuals. Id Among low-income (defined as individuals with family income less
than 200 percent of the federal poverty level) individuals in 2005, the statistics are worse: Only
2008]
UNLOCKING THE TRUTH
of access to such coverage in retirement.
Other proposals clustered around encouraging preventive care, 143 chronic
disease management, 144 and coordination of care. 145 For example, one
20 percent of low-income Hispanic individuals under age 65 and 23 percent of low-income
African American/non-Hispanics under age 65 had employment-based health insurance. Id. at fig.
17.
143. Hillary Clinton did not expressly call for expanding Medicare coverage of preventive
services, but in a document describing the impact of her proposed "American Health Choices
Plan" on seniors, she stated that the "American Health Choices Plan will require coverage of
preventive services that experts deem proven and effective, such [as] blood pressure, blood
glucose, cholesterol, vision and hearing screenings and more.... Preventive efforts are useful to
Americans of any age but are especially important to seniors, as many people tend to develop
illnesses as they age." Hillary Clinton, The American Health Choices Plan: Hillary Clinton's Plan
to Ensure Affordable, Quality Health Care for Seniors, http://www.hillaryclinton.com/files/pdf/
senior impactreport.pdf (last visited May 14, 2008) (hereinafter Hillary Clinton, Health Care for
Seniors). Bill Richardson said he would require that "evidence-based preventive services [such as
cancer screenings, tobacco cessation counseling, and immunizations] are covered in all public ...
health plans." Bill Richardson, Plan for Affordable Health Coverage, supra note 117. Although
not in connection with Medicare, Mike Huckabee called for the country to "get serious about
preventive health care." Mike Huckabee, Issues: Health Care, supra note 116. John McCain also
indirectly called for more preventive care: "Doctors must do a better job of managing our care
and keeping us healthy and out of hospitals and nursing homes." John McCain, John McCain on
Health Care (Oct. 11, 2007), http://www.johnmccain.com/Informing/News/Speeches/8f5febd6cdca-4136-b0d8-a97f5287235d.htm. Fred Thompson, while steering clear of Medicare, still
called for a "healthcare system that: ... [i]mproves the individual health of all Americans by
shifting to a system that promotes cost-effective prevention, chronic-care management, and
personal responsibility." Fred Thompson, On the Issues: Health Care, supra note 116. Although
Joe Biden did not call directly for more preventive care in his specific Medicare reform proposals,
he highlighted his previous efforts in "protection and prevention," noting that he "helped lead the
effort to require Medicare to cover annual mammograms for women over the age of 65 and to
exempt these procedures from the annual Medicare Part B deductible." Joe Biden, Issues: Health
Care, supra note 119. Chris Dodd also did not directly call for expanding preventive care and
chronic disease management in Medicare, but generally advocated a national health care plan that
"will focus on chronic disease management and preventive measures." Chris Dodd, Health Care
for All: The Dodd Plan, http://chrisdodd.com/node/1924 (last visited Nov. 22, 2007) (hereinafter
Chris Dodd, The Dodd Plan). Barack Obama wanted to put a greater emphasis on prevention to
strengthen Medicare. See Barack Obama, Seniors, supra note 130.
144. Citing statistics that "84 percent of Medicare patients with common chronic diseases
see at least six doctors, putting them at risk for medication errors, emergency room visits, and
preventable hospitalizations," Bill Richardson called for the expansion of "state-of-the-art chronic
disease management programs already being provided to Veterans' Administration and Medicare
patients with severe chronic diseases" to all chronically ill Medicare beneficiaries.
Bill
Richardson, Plan for Affordable Health Coverage, supra note 117. Hillary Clinton said her
American Health Choices Plan "will ensure higher quality and better coordination of care by using
state-of-the-art chronic care coordination models within federally-funded programs to provide
care for Americans afflicted with these costly, multi-faceted illnesses." Hillary Clinton, Health
Care for Seniors, supranote 143.
145. Hillary Clinton wanted to "align Medicare payments with performance to both
promote quality and reduce the geographic variation in care." She also wanted to "promote
chronic care management programs as well as innovative models such as 'medical homes'."
Hillary Clinton, Health Choices Plan, supra note 117. Closely related was Bill Richardson's
proposal to require CMS "to lead a public-private effort to streamline ... regulations [involving
reporting requirements for physicians and hospitals] to ensure patient safety and free health care
providers to spend more time on patient care." Bill Richardson, Plan for Affordable Health
248 BERKELEY JOURNAL OFAFRICAN-AMERICANLAW& POLICY
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candidate recommended changing Medicare payment systems "to compensate
providers for diagnosis, prevention, and care coordination." 146 The prevalence
of chronic conditions - many of them arguably preventable or at least mitigated
by preventive care - is a significant and growing problem among Medicare
beneficiaries. 47 A study reviewing the top 10 medical conditions among
Medicare beneficiaries over a 15-year period found that more than half of all
such individuals received medical treatment in 2002 for at least five different
chronic conditions.1 48 The more health care an individual needs, the greater the
chance that the individual will reach one of Medicare's gaps in coverage.
Unless that individual has supplemental coverage, he or she must pay out of
pocket for care or go without.1 49 Elderly minorities tend not only to be in
worse health overall than other Medicare beneficiaries,' 50 but also to suffer
Coverage, supra note 11 7. John Edwards wanted to "promot[e] proactive disease management,
ensuring that doctors regularly check up on their patients, encouraging doctors to communicate
with each other, and making sure that every American with chronic conditions has a patientcentered 'medical home' allowing a doctor to coordinate their care and promote life-improving
care as well as treat life-threatening emergencies." John Edwards, Older Americans, supra note
129.
146. John McCain, John McCain on Health Care, supra note 143. John McCain also said,
"We need to change the way providers are paid to focus their attention more on chronic disease
and managing their treatment. This is the most important care and expense for an aging
population." Id. Bill Richardson called for "[i]mproving coordination of care and reducing
bureaucracy for millions of seniors and persons with disabilities enrolled in both Medicare and
Medicaid." Bill Richardson, Plan for Affordable Health Coverage, supra note 117.
147. See COMMONWEALTH FUND, QUALITY MATTERS: JUNE UPDATE FROM THE
COMMONWEALTH FUND: ISSUE OF THE MONTH: CHRONIC DISEASE MANAGEMENT IN MEDICARE
(June 21, 2005), http://www.commonwealthfund.org/publications/publicationsshow.htm?
doc id=280563#issue.
148. Kenneth E. Thorpe & David H. Howard, The Rise in Spending among Medicare
Beneficiaries: The Role of Chronic Disease Prevalence and Changes in Treatment Intensity, 26
HEALTH AFF. w378, exh. 1 (Aug. 22, 2006), http://content.healthaffairs.org/cgi/content/fll/25/5/
w378?maxtoshow=&HITS= 0&hits=10&RESULTFORMAT=&authorl =thorpe&andorexactfullt
ext=and&searchid=l &FIRSTINDEX=0&resourcetype=HWCIT.
Common chronic conditions
included heart disease, mental disorders, trauma, arthritis, hypertension, cancer, diabetes,
pulmonary conditions, and cerebrovascular disease. The numbers were noticeably higher in 2002
than in 1987, attributed at least in part to "increases in obesity levels." Id at w38 1.
149. Studies consistently show that lack of health care insurance correlates to lower use of
health care services. See, e.g., Joseph S. Ross et al., Use of Health Care Services by LowerIncome andHigher-Income UninsuredAdults,295 J. AM. MED. ASSOC. 2027 (May 3, 2006).
150. For example, in 2002, 43 percent of African-American Medicare beneficiaries and 38
percent of Latino Medicare beneficiaries were reported to be in fair or poor health as compared to
30 percent of all Medicare beneficiaries similarly reported. KAISER PROFILE, supra note 137, at 2.
The disparities for Medicare beneficiaries are often attributed in part to the fact that many
minorities do not have access to health insurance before they reach age 65. Once members of
minority populations reach age 65 and become eligible for Medicare, there is some evidence that
Medicare eligibility begins to improve health disparities. For example, Medicare policies in the
late 1980s and 1990s are credited with some balancing of health care expenditures among all
groups of Medicare beneficiaries. See, e.g., Jose J. Escarce et al., Racial and Ethnic Differences
in Public and Private Medical Care Expenditures among Aged Medicare Beneficiaries, 81
MILBANK Q. 269 (2003). The Medicare system has made some effort to reduce racial and ethnic
health disparities. See, e.g., Kathryn M. Langwell, Strategiesfor Medicare health plans serving
2008]
UNLOCKING THE TRUTH
disproportionately from chronic disease. For example, in 2002, studies
indicated that approximately 30 percent of African-American and Latino
Medicare beneficiaries suffered from diabetes as compared to only 18 percent
of non-Latino whites. 51' Such statistics make treatment of chronic illnesses
critical for the minority population.
B. Proposalsto Reduce Costs
Most other candidate proposals in 2007 fell under a cost-reduction
umbrella. 152
For example, several candidates argued that the federal
I53
negotiate prescription drug prices for Medicare Part D.
should
government
racialand ethnic minorities, 23 HEALTH CARE FIN. REV. 131 (Summer 2002). See also Timothy
Stoltzfus Jost, supra note 81, for a careful analysis of the issue of racial and ethnic disparities in
Medicare and approaches that CMS could take to improve the situation.
151. KAISER PROFILE, supra note 137, at 2. The same study indicated that 71 percent of
African-American Medicare beneficiaries had hypertension as compared to 59 percent of nonLatino whites. Id. See INST. OF MED., UNEQUAL TREATMENT, CONFRONTING RACIAL AND
ETHNIC DISPARITIES IN HEALTH CARE (Brian D. Smedley et al. eds., 2003), for a comprehensive
discussion of racial disparities in health care.
152. Proposals that seemed to have quality of care as their primary motivation are grouped
under the previous Section, whereas proposals with cost as their main incentive are placed here.
An unusually technical cost-related reform proposal, and not one that clearly saves Medicare
money, came from Joe Biden who called for MedPAC "to study and report to Congress on
replacing the use of the sustainable growth rate as a factor in determining the update for such
payments with a factor that more fully accounts for changes in the unit costs of providing
physicians' services." Joe Biden, Issues: Health Care, supra note 119. See supra note 94 for a
discussion of the SGR rate.
153. "Medicare must have the authority to negotiate with pharmaceutical companies for
lower prescription drug prices," according to Bill Richardson. Bill Richardson, A Strong
Commitment to Our Nation's Seniors, http://billrichardson.cachefly.net/pdf/issueflyers/Seniors
Flyer.pdf (last visited May 14, 2008) (hereinafter Bill Richardson, Seniors). Mike Huckabee
initially appeared to endorse the idea of permitting government negotiation, but later withdrew
support and did not address the issue on his official website. Jeffrey Young, Candidates See Drug
Plan as a Double-Edged Sword, THE HILL, Sept. 5, 2007, http://thehill.com/leading-thenews/candidates-see-drug-plan-as-a-double-edged-sword-2007-09-05.html.
John McCain missed
the vote early in 2007 on proposed legislation that would have allowed the government to
negotiate prescription drugs, but later indicated he would have supported it. Id. See also Robert
Pear, Senate Bars Medicare Talks for Lower Drug Prices, N.Y. TIMES, Apr. 19, 2007, at A20.
Mr. McCain did not, however, address the issue on his official website. Although not specific to
seniors, Hillary Clinton's website claimed that her American Health Choices Plan would lower the
cost of prescription drugs not only by allowing Medicare to negotiate prescription drug prices, but
also by "creating a pathway for biogeneric drug competition; removing barriers to generic
competition; and providing more oversight over pharmaceutical companies' financial relationships
with providers." Hillary Clinton, Health Care for Seniors, supra note 143. Barack Obama said he
believes that the federal government should negotiate for lower drug prices for seniors in the
Medicare program. Barack Obama, Seniors, supra note 130. So, too, Chris Dodd claimed that he
would "ensure that Medicare harnesses the enormous purchasing power of the millions of seniors
enrolled in the Part D Prescription Drug Benefit to bargain for lower drug prices." Chris Dodd,
Retirement Security, supra note 120. Joe Biden also called for negotiation of prescription drug
prices by Medicare: "[T]he Medicare and Modernization Act of 2003 expressly forbids the
federal government from interfering in drug negotiations between pharmaceutical companies and
the numerous private insurers spread out across the country that offer Part D coverage. Simply
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"America's seniors must never be forced to choose between groceries and the
medication they need to stay healthy," said one candidate.' 54 Currently, each
private insurer providing a Part D prescription drug plan negotiates its own
prices with pharmaceutical manufacturers and develops its own formulary of
covered drugs. 155 The MMA expressly barred the Secretary of HHS from
"interfer[ing] with the negotiations between drug manufacturers and
pharmacies and [prescription drug plan] sponsors" and further prohibited the
government from "requir[ing] a particular formulary or institut[ing] a price
structure for the reimbursement of covered Part D drugs."' 56 Candidate
proposals to change this part of the MMA followed unsuccessful Congressional
that the federal
efforts to do the same. 157 Proponents of negotiation argue
58
government's bargaining power would drive down costs.'
put, this 'noninterference clause' dilutes Medicare's bargaining position." Joe Biden, Health
Care: Four Practical Steps Toward Health Care for All, http://www.joebiden.com/issues?id=0003
(last visited Oct. 26, 2007) (hereinafter Joe Biden, Health Care: Four Practical Steps).
154. Bill Richardson, Seniors, supra note 153.
155. See U.S. GOVT. ACCT. OFFICE, REP. NO. GAO-08-47: MEDICARE PART D: PLAN
SPONSORS' PROCESSING AND CMS MONITORING OF DRUG COVERAGE REQUESTS COULD BE
IMPROVED 1-5 (Jan. 2008), available at http://www.gao.gov/new.items/d0847.pdf, for a
description of how drug plan sponsors establish drug prices and make coverage decisions.
Medicare requires that certain classes of drugs be covered, but does not specify which drugs. 42
U.S.C. § 1395w-104(b)(3)(C) (Supp. 5 2006).
156. 42 U.S.C. § 1395w-1 11(i) (Supp. 5 2006).
157. The prohibition on the federal government's negotiating prescription drug prices has
been controversial since enactment. See, e.g., Bill Thomas & Edward Kennedy, Dramatic
Improvement or Death Spiral - Two members of Congress Assess the Medicare Bill, 350 N.E. J.
MED. 747 (Feb. 19, 2004). For detailed discussions of the politics of the MMA, see Jonathan
Oberlander, Through the Looking Glass: The Politics of the Medicare Prescription Drug,
Improvement and Modernization Act, 32 J. HEALTH POL. POL'Y & L. 187 (Apr. 2007) and
Thomas R. Oliver et al., A Political History of Medicare and Prescription Drug Coverage, 82
MILBANK Q. 283 (2004). In early 2007 a bill to require the Secretary of Health and Human
Services to "negotiate lower covered part D drug prices on behalf of Medicare beneficiaries"
passed the House. Medicare Prescription Drug Price Negotiation Act of 2007, H.R. 4, 110 th Cong.
(1st Sess. 2007). The related bill died in the Senate. Medicare Prescription Drug Price
Negotiation Act of 2007, S. 3, 110" Cong. (I" Sess. 2007). For more background, see Robert
Pear, Senate Bars Medicare Talks for Lower Drug Prices,N.Y. TIMES, Apr. 19, 2007, at A20, and
Robert Pear, House Democrats Pass Bill on MedicareDrug Prices,N.Y. TIMES, Jan. 13, 2007, at
A13.
158. Proponents of negotiation often point to the (VA), which does bargain for drugs, as a
model for how using the bargaining power of the federal government can drive down costs. See,
e.g., JIM HAHN, CONG. RES. SERV. REP. FOR CONG.: THE PROS AND CONS OF ALLOWING THE
FED. GOV'T TO NEGOTIATE PRESCRIPTION DRUG PRICES (Feb. 18, 2005), available at
http://www.law.umaryland.edu/marshall/crsreports/crsdocuments/RS2205902182005.pdf.
For
example, Joe Biden asked, "The federal government successfully uses its bulk purchasing power
to keep costs low in the Veterans Administration health system - why not allow it to do the same
for our nation's seniors who rely on Medicare?" Joe Biden, Health Care: Four Practical Steps,
supra note 153. Barack Obama said that, "[t]o help lower the cost of pharmaceuticals, ... the
federal government should negotiate for lower drug prices for seniors in the Medicare program,
just as it does to obtain lower prices for our veterans." Barack Obama, Seniors, supra note 130.
Despite its popularity, using the VA model as an example for Medicare is risky because the VA
model is not the same as even traditional Medicare, much less the private options available under
2008]
UNLOCKING THE TRUTH
Another popular candidate cost-reduction strategy targeted the MMA's
financial incentives for Medicare Advantage plans. 159 Several candidates
advocated lowering reimbursements to Medicare Advantage insurers to bring
the costs in line with those under traditional Medicare.1 60 For example,
charging that "excessive subsidies cost the government billions of dollars every
year and create an incentive structure that has led to fraudulent abuses of
seniors," one candidate argued for paying Medicare Advantage plans "the same
amount it would cost to treat the same patients under regular Medicare."'1 61 As
with proposals to allow government negotiation of prescription drug prices, all
of the calls from candidates to reduce Medicare
Advantage payments mirrored
62
failed Congressional proposals in this area.
C. Concerns Raisedby CurrentApproach
i. Understanding the Reasons
Taken as a group, the proposals presented a somewhat random collection
of reform ideas. Each proposal focused almost entirely on a single concern,
with broader systemic considerations left either unrecognized or
unacknowledged. Perhaps this reflects Medicare's history: Until the mid1990s, change in Medicare took place largely without fundamental policy
conflict due to what has been perceived as a general bipartisan acceptance of
Medicare Advantage and Part D. For example, although both traditional Medicare and the VA
offer a fixed benefit package, Medicare uses only private providers (hospitals and doctors) to
provide care whereas the VA uses its own doctors and medical facilities, exerting far more control
over providers than Medicare does.
See U.S. DEP'T OF VETERANS AFF., CURRENT BENEFITS,
http://wwwl.va.gov/opa/vadocs/current benefits.asp (last visited May 18, 2008), for a description
of VA system benefits.
159. See supra notes 109-111 and accompanying text. See also Staff, Clinton Details
Proposed Changes in Medicare Advantage; Obama and Edwards Are Less Specific, MEDICARE
ADVANTAGE NEWS (Sept. 17, 2007), http://www.aishealth.com/ManagedCare/Medicare/MAN_
clinton MAchanges.html.
160. Hillary Clinton called for eliminating "excessive Medicare overpayments to HMOs
and other managed care." Hillary Clinton, Health Choices Plan, supra note 117. John Edwards
also argued for reducing payments to Medicare Advantage plans. John Edwards, Edwards
Introduces Plans To Stand Up To Big Insurance Companies That Hurt Rural Seniors,
http://johnedwards.com/issues/health-care/20071025-insurance-companies/ (last visited May 14,
2008). Barack Obama made similar proposals. See infra note 161 and accompanying text. Bill
Richardson noted that "all Medicare beneficiaries are paying for this extra overhead [the extra
Medicare Advantage payments] even if they don't benefit from it." Bill Richardson, Plan for
Affordable Health Coverage, supra note 117.
161. Barack Obama, Barack Obama's Plan for a Healthy America: Lowering health care
costs and ensuring affordable, high-quality health care for all, http://www.barackobama.om/pdf/
HealthPlanFull.pdf (last visited May 14, 2008).
162. See, e.g., HENRY J. KAISER FAM. FOUND., Democrats Discuss Eliminating Medicare
Advantage Plan Overpayments To Fix Scheduled 10% Reduction in Medicare Physician Rates,
KAISER DAILY HEALTH POL'Y REP. (Mar. 7, 2007), http://www.kaisemetwork.org/daily_
reports/rep index.cfmhint=3&DR ID=43416.
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Medicare as a universal, government-run, public health insurance program.63
After the 1994 elections, however, that bipartisan agreement began to
disintegrate with the growing dominance of at least a rhetorical ideological
164
commitment to private market solutions, resulting eventually in the MMA.
The political landscape shifted again with the 2006 Congressional elections,
and the 2008 presidential candidates entered the campaign in an uncertain
world where it may have been difficult to ascertain which approach to
Medicare reform would play best to the electorate.'
Medicare often is called
the "third rail" in politics because of the perceived risk of reform proposals that
anger powerful senior voters. 166 In the 2008 presidential election, perhaps
the
167
more narrow the Medicare target, the more limited the perceived risk.
Myopia about Medicare may also reflect attention focused elsewhere.
Expanding health insurance for the younger uninsured catapulted high on the
issue list early in the campaign for the 2008 election.168 Many of the
candidates proposed detailed health care reform plans; others espoused general
commitments to either public or private solutions. 69 On either side, because no
163. JONATHAN OBERLANDER, supra note 91, at 156. See also Bruce C. Vladeck, The
Strugglefor the Soul of Medicare, 32 J. L. Med. & Ethics 410 (Fall 2004).
164. JONATHAN OBERLANDER, supra note 91, at Ch. 7. See Theodore R. Marmor & Gary
J. McKissick, Medicare'sFuture:Fact,Fiction andFolly, 26 AM. J. L. & MED. 225 (2000), for a
view from 2000 of the political conflicts over Medicare reform.
165. Public health care preferences in general may be difficult to ascertain. For example,
recent Gallup polls suggest that, while the vast majority of Americans want change in the health
care system on a theoretical level, they also don't want change if it will impact their pocketbooks
negatively. See, e.g., Kevin Freking, Health CareDilemma Close-Up, SEATTLE TIMES, Dec. 12,
2007, at A3.
166. See, e.g., Adam Clymer, Of Touching Third Rails and Tackling Medicare,N.Y. TIMES,
Oct. 27, 1995, at 21, andDick Thompson, The ThirdRail of U.S. Politics, TIME, Feb. 27, 1995, at
21.
For a definition of "third rail" in politics, see Wikipedia, Third rail (metaphor),
http://en.wikipedia.org/wiki/Third rail_(metaphor) (last visited May 15, 2008). For a brief
explanation of the term's origins, see William Safire, Third Rail, N.Y. TIMES, Feb. 18, 2007, §6,
at 20.
167. It is also possible that the more narrow the target, the easier it is to explain to
beneficiaries. Medicare reform is so complex that even experts in the area may have difficulty
addressing the subject adequately. See Theodore R. Marmor et al., supranote 90, for an overview
and critique of Medicare scholarly literature as of 2003.
168. See, e.g., Christopher Lee, Health Care Already a Key Issue in 2008 Race, WASH.
POST, Mar. 6, 2007, at A3; Jonathan Oberlander, Election 2008: PresidentialPolitics and the
Resurgence of Health Care Reform, 350 N.E. J. MED. 2101 (Nov. 22, 2007); Robin Toner,
Unveiling Health Care 2.0, Again, N.Y. TIMES, Sept. 16, 2007, §4, at 1; Susan Page & William
Risser, War not the only root of anxiety; economy, health care also top issues, pollfinds,
Domestic Concerns Rise in Poll,USA TODAY, Dec. 5, 2007, at IA.
169. See Joe Biden, Health Care: Four Practical Steps, supra note 153; Hillary Clinton,
Health Choices Plan, supra note 117: Chris Dodd, The Dodd Plan, supranote 143; John Edwards,
Universal Health Care, supra note 117; John McCain, Straight Talk on Health System Reform,
http://www.johnmccain.comVInforming/Issues/19ba2flc-cO3f-4ac2-8cd5-5cf2edb527cf.htm
(last
visited
Oct.
13,
2007);
Duncan
Hunter,
Core
Principles:
Values
Issues,
http://www.gohunter08.com/inner.asp?z=4 (last visited Nov. 23, 2007); Rudy Giuliani, Empower
Patients and Families, Not the Government, http://www.joinrudy2008.com/commitment/indepth/8
(last visited Oct. 2, 2007); Mike Huckabee, Issues: Health Care, supra note 116: Dennis Kucinich,
2008]
UNLOCKING THE TRUTH
national health program for those under 65 exists, candidates had no choice but
to focus broadly and address the underlying policy considerations. Any
national health insurance reform for those under 65 would likely influence
Medicare, but the candidates generally failed to mention that. 70 At best they
hinted at cost savings for Medicare through introducing preventive and chronic
disease care for younger individuals.171
ii. Raising Additional Questions
Approaching Medicare reform piecemeal tends to result in policy that
prompts additional questions. For example, proposals to close the prescription
drug donut hole, expand low-income assistance, or add preventive care and
chronic disease management are all efforts to plug holes in traditional
Medicare's existing benefit structure. For the individuals affected by the gaps,
coverage may be critical. But the gaps currently drawing attention represent
only a few of the holes in Medicare coverage,1 72 and no single gap affects a
significant majority of Medicare beneficiaries. 173 Why, then, these particular
gaps and not others?
Similarly, prescription drug costs and Medicare
Advantage plan reimbursements represent only two parts of a much larger
financial picture. Both involve costs the Medicare system incurred only after
passage of the MMA, yet Medicare's finances were raising concern long before
the MMA. 174 The candidates largely ignored problems with traditional
Medicare's payment structure. 175 But why address Part D and Medicare
A Healthy Nation, supra note 116; Barack Obama, Creating a Health Care System that Works,
http://www.barackobama.com/issues/healthcare/ (last visited May 14, 2008); Ron Paul, Health
Care, supra note 116; Bill Richardson, Plan for Affordable Health Coverage, supra note 117; Mitt
Romney, Issue Watch, supra note 116; Tom Tancredo, Health Care, supra note 116; Fred
Thompson, On the Issues: Health Care, supra note 116.
170. Barack Obama indirectly suggested the connection when, under the heading "Protect
and Strengthen Medicare," he said, "Ultimately we need to reduce waste in the Medicare system
and tackle fundamental health care reform across the economy." Barack Obama, Seniors, supra
note 130.
171. For example, Barack Obama also wanted to "put a greater emphasis on prevention" to
strengthen Medicare. Barack Obama, Seniors, supra note 130. Joe Biden argued for expanding
Medicare to the near elderly (age 55-64) as a way to reduce chronic care costs for the Medicare
program. "By the time people become eligible for Medicare at age 65, many are already dealing
with numerous chronic health conditions," according to Mr. Biden. "Providing an earlier window
to participate in Medicare can allow treatment of chronic diseases to start at an earlier age that can
save Medicare costs in the long run." Joe Biden, Health Care: Four Practical Steps, supra note
153. Bill Richardson made similar arguments. See Bill Richardson, Plan for Affordable Health
Coverage, supra note 117.
172. See discussion supra Section I.A.
173. See discussion supra Section II.A.
174. See discussion supra Section I.F.
175. One candidate did acknowledge issues in the existing system: "While it is tempting to
control Medicare costs by simply reducing payments to providers, that approach does not address
the issue of volume of services used - and also creates an access problem, as many providers drop
out of publicly-run programs when reimbursement drops too low. Our current system reimburses
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Advantage expenses and not those of the traditional system? And why
advocate bringing Medicare Advantage payments in line with costs under
traditional Medicare' 76 - without reference to whether or not those costs
separately require reform?
Even suggestions to have the federal government negotiate Medicare
prescription drug prices raise questions when evaluated in the context of the
overall system. For example, given that prescription drug coverage currently
exists in Medicare Part D only through private insurers who negotiate their own
separate arrangements with pharmaceutical manufacturers, what exactly would
the federal government negotiate? If the government negotiated system-wide
drug prices for all Medicare beneficiaries, private insurers would be left with
little basis on which to distinguish themselves from their competitors. Those
currently able to negotiate lower prices for certain drugs would lose a
competitive edge.
Would private insurers continue to offer different
formularies? There would be little value if the individual insurers no longer
controlled the price of covered drugs. In many respects, each private insurer
would become no more than an alternative plan administrator. What, then,
would be the reason to reserve Part D plans to private insurers instead of adding
a drug benefit to traditional Medicare? Day-to-day administration of traditional
Medicare already takes place through a number of private insurance companies
that contract with CMS. 77
iii. Ignoring Competing Tensions
Taking a piecemeal approach to Medicare reform also ignores the
relationship between issues. Competing tensions run throughout Medicare between desires for benefit enhancement and cost reduction as well as between
public and private insurance solutions. In the early 2008 campaign, candidates
touched on each of these tensions almost entirely without acknowledgement of
the counter positions. For example, despite general candidate consensus that
Medicare's finances pose a problem,' 78 their proposals appeared almost to
providers on the volume of services used, without truly examining what services work best." Joe
Biden, Health Care: Four Practical Steps, supra note 153. Mr. Biden was also the only candidate
with a specific proposal directed at provider reimbursement: having the MedPAC review use of
the SGR rate in updating payments. See supra note 152. Admittedly, the proposals to improve
preventive care, chronic disease management, and care coordination could be characterized as
cost-reduction strategies for traditional Medicare. If so, is it possible that these few provisions
alone are all that is needed to rectify traditional Medicare's payment structure?
176. See discussion supra Section lI.B.
177. CMS is authorized to enter into contracts for administration of Medicare under 42
U.S.C.
§
1395kk-1
(2000).
See CMS, INTERMEDIARY-CARRIER
DIRECTORY,
http://www.cms.hhs.gov/ContractingGenerallnformation/Downloads/02_ICdirectory.pdf
(last
visited May 18, 2008), for a listing of current entities providing administrative services for
Medicare.
178. John McCain, for example, said, "[B]y 2019, Medicare will be broke. We are
currently spending more on Medicare than we are collecting in payroll taxes and cashing in the
2008]
UNLOCKING THE TRUTH
ignore Medicare's overall financial state and the inherent conflict between
providing a better benefit package and reducing expenses, 179
They
recommended expansions in the existing benefit structure - for example,
through eliminating the donut hole or expanding coverage for low-income
180
beneficiaries - with at best limited consideration of the associated costs.
Concurrently, the candidates sidestepped the potential impact of their costreduction proposals on benefits. In some cases, the same candidate argued for
both lowering Medicare Advantage payments and expanding coverage,
apparently overlooking the fact that Medicare Advantage plans - thanks 1to
81
enhanced reimbursement rates - may provide needed supplemental coverage.
When the government reduced reimbursement rates to Medicare+Choice plans
in an earlier cost-savings reform, the additional benefits provided by
Medicare+Choice plans vanished.1 82 The same could happen with Medicare
Advantage plans.
The candidates also skirted the tension between private and public
insurance solutions for Medicare. 183 At most they indirectly referenced the
conflict.1 84 For example, allowing the federal government to negotiate
prescription drug prices would curtail the MMA's privatization shift by
eliminating the primary basis on which private insurers compete, converting
those insurers into little more than administrators for a government-run
benefit.18 5 This impact went unmentioned by the candidates. So, too, direct
few IOUs left in the trust fund. In the meantime, more and more of our retirees' social security
checks will also go to pay for Medicare leaving our seniors with less money for their everyday
expenses." John McCain, John McCain on Health Care, supra note 143. John Edwards made
similar statements: "Skyrocketing health care costs have put pressure on Medicare and threatened
its long-term solvency." John Edwards, Older Americans, supra note 129. Barack Obama said
that "[e]nsuring the long-term solvency of the Medicare trust fund may be our toughest fiscal
challenge." Barack Obama, Seniors, supra note 130. See also supra note 90.
179. See, e.g., Heather Jerbi, Presidential Prescriptions 2008, CONTINGENCIES 20, 24
(Nov./Dec. 2007), available at http://www.contingencies.org/novdec07/presidential.pdf, and
Staff, Democraticcandidates duck tough 'boomsday 'choices, USA TODAY, Dec. 5, 2007,
at 12A.
180. When costs were mentioned in connection with proposals for preventive care, chronic
disease management and coordination of care, most candidates tended to frame the proposals in
terms of cost reduction. See discussion supra Section II.A. and supra note 171 and accompanying
text.
181. See discussion supra Section I.B.
182. See discussion supra Section I.F.
183. The significance of this conflict should not be underestimated. See supra note 157 and
Bruce C. Vladeck, supranote 163.
184. John Edwards, for example, charged that "[i]nstead of strengthening Medicare for our
seniors, George Bush has surrendered it to the drug companies and HMOs." John Edwards, Older
Americans, supra note 129. Talking generally about health care, but with Medicare clearly in
mind, Mike Huckabee said, "We don't need universal health care mandated by federal edict or
funded through ever-higher taxes." Mike Huckabee, Issues: Health Care, supra note 116. Dennis
Kucinich stood alone in calling for a "universal, single-payer, not-for-profit health care system,"
what he also calls "Medicare for All." Dennis Kucinich, A Healthy Nation, supra note 116.
185. See discussion supra Section ll.C.ii.
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proposals to add a prescription drug benefit to Medicare tended not to consider
the effect on the system's public-private balance. 18 6
In fact, adding a
prescription drug benefit to traditional Medicare would make the traditional
system a direct competitor of the private insurer Part D prescription drug plans.
A significant majority of beneficiaries choose traditional Medicare for
everything other than prescription drugs, 187 and many of those beneficiaries
might also elect traditional Medicare for prescription drugs if the option
existed. Were they to do so, the traditional system would enjoy considerable
bargaining power in negotiating the price of prescription drugs with
pharmaceutical manufacturers. That bargaining power would likely exceed the
bargaining power of any single private insurance company and drive the cost of
drugs in traditional Medicare below what private insurers could offer. This
would give traditional Medicare a competitive advantage that could eventually
undercut private insurers, counteracting a key privatization effort of the MMA.
Similarly, reducing reimbursement rates for Medicare Advantage plans
would remove a key MMA incentive for those plans.' 88 The candidates treated
these proposals primarily as cost-savings measures, 189 focusing on the reports
that Medicare Advantage plans cost more to treat beneficiaries than traditional
Medicare. 90 Lowering the reimbursement rates to the private insurers would
save money if traditional Medicare provides the same care at less expense, but
that is not all. The MMA increased reimbursement rates for Medicare
Advantage plans in an effort to correct a perceived major cause of the failure of
the predecessor Medicare+Choice private plans - i.e., not enough funding to
convince private insurers to remain in the Medicare market.' 9'
Cost
considerations did not completely drive the analysis, however; proponents
hoped to push Medicare away from the government-run model of traditional
Parts A and B and toward private insurers. 92 To now remove the financial
incentives for Medicare Advantage insurers would thus represent a policy
reversal, possibly resulting in the withdrawal of many such plans from the
Medicare market.
186. See discussion supra Section II.A. For example, both John Edwards and Bill
Richardson included adding prescription drugs to traditional Medicare in the same sentence with
allowing the federal government to negotiate prescription drug prices to cut costs. See supra note
129.
187. See supra note 31 and accompanying text.
188. See discussion supra Section I.F.
189. See discussion supra Section II.B.
190. See supra notes 160-161 and accompanying text.
191. See discussion supra Section I.F. and supra notes 99-100 and accompanying text.
192. See supranotes 1 10- 111 and accompanying text.
UNLOCKING THE TRUTH
2008]
III.
ELDERLY MINORITIES AND MEDICARE REFORM ISSUES
Because of racial disparities in health and income status among the
elderly, 93 the potential impact of certain proposals on elderly minorities
illustrates the risks of a piecemeal approach to Medicare reform that neither
considers systemic ramifications nor attempts to balance competing tensions.
A. Systemic Analysis
Benefit expansion proposals may appeal to elderly minorities facing a
combination of poor health, low-income status, and absence of supplemental
coverage through traditional sources.' 94 Because of the high drug costs
associated with chronic diseases,' 95 and the prevalence of chronic conditions
among members of racial and ethnic minority groups, 19 6 closing the Part D
prescription drug donut hole or improving chronic disease management,
preventive care, and coordination of care' 97 would help many in the minority
population. Similarly, loosening the income and asset tests for Medicare's lowincome assistance would assist those elderly minorities currently without
supplemental insurance. But what makes these particular coverage gaps the
most crucial out of the wide array of traditional Medicare's coverage holes?
Other coverage limits might be equally relevant to these populations. For
example, changing the structure of traditional Medicare Part A's inpatient
hospital benefit - a benefit that works well for acute care, but not necessarily
for chronic illness' 98 - might prove a more valuable benefit improvement for
elderly minorities than closing the donut hole.' 9 9 So, also, might expanding
Medicare coverage for home health care help prevent certain medical
complications and related expenses that eventually drain individuals' resources
and drive them toward Medicaid. A gap like the prescription drug donut hole
may seem easier for a politician to explain than more complex parts of
traditional Medicare, but coverage changes should be made taking into account
the Medicare benefit structure in all its complexity. Expansions should target
areas that will best improve the overall health status of the greatest number of
beneficiaries, based on systemic analysis of the various populations' needs.
193.
194.
195.
196.
197.
198.
199.
rather that
See supranotes 137-142 and 150-151 and accompanying text.
See supra notes 137-142 and accompanying text.
See supra note 123 and accompanying text.
See supranote 151 and accompanying text.
See discussion supra Section II.A.
See supra note 35 and accompanying text.
The argument is not that one coverage gap deserves closure more than another, but
it is misleading to single out only one hole when there are so many that might be
equally deserving.
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B. Competing Tension: Benefit Expansion and Cost Reduction
Medicare reform that achieves its purpose without undesirable side effects
requires evaluating and balancing the competing tensions pulling the system in
various directions. For example, systemic analysis of Medicare's coverage
gaps as they affect elderly minorities might suggest that all of the 2008
candidate benefit expansion proposals should be adopted alongside a number of
other proposals to close holes in the benefit structure. A richer benefit structure
would assist all Medicare beneficiaries, but particularly those who are poorer
and sicker. Financial constraints place complete coverage beyond reach,
however, creating constant competition between benefit expansion and cost
reduction proposals.
The debate over Medicare Advantage plans reflects this tension between
benefit expansion and cost reduction. For the many elderly minorities without
access to either Medicaid or employment-based retiree health insurance, and
unable to afford Medigap premiums, 200 a Medicare Advantage plan with
comparatively low-cost supplemental benefits may offer a beneficiary a
financially viable alternative. 201 This possibility has attracted support for
Medicare Advantage plans from advocates within the minority community. In
the spring of 2007, the director of the Washington, D.C. bureau of the
NAACP 20 and the national president of LULAC 203 sent letters to members of
both the Senate and the House of Representatives in support of maintaining
government funding for Medicare Advantage plans. 20 4 The NAACP and
LULAC both relied on insurance industry claims that Medicare Advantage
plans "disproportionately provide coverage to low-income and racial and ethnic
minority beneficiaries." 20 5 Those claims have since been disputed, 2 6 but
200. See supra notes 139-142 and accompanying text.
201. Seesupranote 81.
202. "NAACP" is the commonly used acronym for the National Association for the
Advancement of Colored People.
203. "LULAC" is the commonly used acronym for the League of United Latin American
Citizens.
204. HENRY J. KAISER FAM. FOUND., Minority Groups Oppose Proposed Reduction in
Funds for Medicare Advantage Plans, KAISER DAILY HEALTH POL'Y REP. (Mar. 16, 2007),
http://www.kaisernetwork.org/daily reports/print report.cfm?DRID=43645&dr-cat=3;
Rosa
Rosales, LULAC National President, Letter to Member of Congress (Mar. 14, 2007), available at
http://www.lulac.org/advocacy/press/2007/medicareadvantageletter.pdf; and Hilary 0. Shelton,
Director, Washington Bureau, NAACP, Letter to Member of Congress (Mar. 14, 2007), available
at http://republicans.waysandmeans.house.gov/showarticle.asp?ID=32.
205. Id.
206. See, e.g., Paul Krugman, The Plot Against Medicare, N.Y. TIMES, Apr. 20, 2007, at
A23; Edwin Park & Robert Greenstein, CTR. ON BUDGET & POL'Y PRIORITIES, CURBING
MEDICARE OVERPAYMENTS TO PRIVATE INSURERS COULD BENEFIT MINORITIES AND HELP
EXPAND CHILDREN'S HEALTH COVERAGE (May 14, 2007), http://www.cbpp.org/5-1007health.htm; MEDICARE RIGHTS CTR., MEDICARE PRIVATE HEALTH PLANS VS. MEDICARE
SAVINGS PROGRAMS: WHICH IS THE BETrER WAY TO HELP PEOPLE WITH Low INCOMES
AFFORD HEALTH CARE? (Sept. 2007), http://www.medicarerights.org/MAvsMSP.pdf.; Neuman
2008]
UNLOCKING THE TRUTH
traditional Medicare remains riddled with coverage holes and Medicare
Advantage plans may provide needed assistance.
Candidate proposals in 2007 to cut Medicare Advantage payments did not
take into account the availability of supplemental benefits.2 °7 If Medicare
Advantage reimbursement rates drop, Medicare Advantage insurers could
choose either to withdraw from the market altogether, to eliminate
supplemental benefits, or to charge beneficiaries for more generous benefit
packages. Under any of those options, the value of the plans to many elderly
minorities would decline, if not vanish altogether. This concern is what
prompted the NAACP and LULAC to protest reductions in Medicare
Advantage reimbursement rates. 20 8 They focused on the benefits provided by
the plans; the 2008 presidential candidates focused on the cost of the plans.
But the two concerns are inextricably linked with Medicare Advantage. Rather
than focusing on one without considering the other, the goal of an expanded
Medicare benefit package should be balanced with its costs, evaluating
alternatives for providing enhanced benefits directly rather than proceeding as
though cost-reduction strategies can be disconnected from concern over gaps in
coverage.
C. Competing Tension: Public-PrivateBalance
Similar tension runs between maintaining traditional Medicare with its
government-managed structure and shifting to a system dominated by private
insurance alternatives. Questions have long been raised as to whether private
plans in Medicare offer the best solution for chronically ill and!or low-income
beneficiaries. 209 Despite the apparent attractiveness of Medicare Advantage
plans for many elderly minorities, embracing private insurance as the long-term
answer to Medicare could put low-income elderly minorities at long-term risk.
If Congress eventually reduces Medicare Advantage plan reimbursements,
plans that remain in the market and maintain enhanced benefit packages most
likely will increase their premiums to compensate. At some point, poorer
Testimony, supra note 31, at 2; and Mark Merlis, NAT'L HEALTH POL'Y FORUM, MEDICARE
ADVANTAGE PAYMENT POLICY (Sept. 24, 2007), http://www.mhpf.org/pdfsbp/BPMAPayment
Policy_09 24 07.pdf. The NAACP later tempered itssupport for Medicare Advantage plans.
See Jeffrey Young, NAACP may temper supportfor Medicare Advantage, THE HILL (May 15,
2007), http://thehill.com/business--lobby/naacp-may-temper-support-for-medicare-advantage2007-05-15.html, and Robert Laszewski, The Debate Over Medicare Advantage Funding - The
NAACP Goes "Whoops!" and Stark Tries to Start a "Food Fight" Over Who Has to Come Up
With
the
Money,
HEALTH
CARE
POL'Y
&
MARKETPLACE
REV.
(May
17,
2007),
http://healthpolicyandmarket.blogspot.com/2007/05/debate-over-medicare-advantagefunding.html.
207. See discussion supra Section lI.B.
208. See supra notes 202-205 and accompanying text.
209. See, e.g., Marilyn Moon, Will The Care Be There? Vulnerable Beneficiaries And
Medicare Reform, 18 HEALTH AFF. 107 (Jan./Feb. 1999), and Peter D. Fox et al., Addressing The
Needs Of ChronicallyIll Persons Under Medicare, 17 HEALTH AFF. 144 (Mar./Apr. 1998).
260 BERKELEY JOURNAL OF AFRICAN-A MERICAN LAW& POLICY
[VOL. X:2
beneficiaries may be priced out of the Medicare Advantage plans and forced to
return to traditional Medicare while wealthier beneficiaries gravitate toward the
more generous private plans. Traditional Medicare over time could devolve
into another Medicaid, viewed by many as a less desirable "welfare"
program 2 1 and vulnerable to cuts in benefits that today would be considered
untenable. 1'
The risk that traditional Medicare could eventually lose its broad-based
support underlies all Medicare reform proposals that push the system toward
private insurance alternatives and away from a uniform government-managed
program. Proposals such as allowing the federal government to negotiate
prescription drug prices or adding a prescription drug benefit to traditional
Medicare may reverse the risk. For elderly minorities who have much to lose if
the protections inherent in traditional Medicare fail over time, this shifting
balance between government-managed and private insurance alternatives adds
yet more complexity to the analysis of Medicare Advantage.
Medicare
Advantage plans in the short run may give lower-income minorities a muchneeded opportunity to fill in Medicare's coverage gaps, but supporting those
plans inherently favors private insurance over traditional government-run
Medicare. For elderly minorities in poor health and with limited financial
resources, that favoritism may cause concern because of the long-term risks.
CONCLUSION: TAKING A BROADER VIEW
Politicians shy away from tackling anything but limited issues in
Medicare for politically sensible reasons. The complexity of the Medicare
system - with its public-private hybrid approach and forty-year history of
conflicting reform approaches - makes it a difficult program to address.
Moreover, the United States is currently in the throes of conflict over the evenbigger health care dilemma of how to provide health insurance to the estimated
47 million currently uninsured individuals under age 65. 2 12 Medicare is also an
enormously popular entitlement program that is viewed as dangerous to touch.
It still demands attention, however, and the 2008 presidential candidates could
easily incorporate systemic Medicare reform into their broader health care
proposals.
210. See, e.g., JONATHAN OBERLANDER, supra note 91, at 104, and Timothy Stoltzfus Jost,
The Most Important Health Care Legislation of the Millenium (So Far): The Medicare
Modernization Act, 5 YALE J. HEALTH POL'Y & ETHICS 437, 446 (Wint. 2005). See also Dorothy
A. Brown, Race and Class Matters in Tax Policy, 107 COLUM. L. REv. 790 (Apr. 2007) for a
discussion of the risks of a program being viewed as "welfare."
211. See supra note 166 and accompanying text.
212. U.S. CENSUS BUREAU, supra note 78, at fig. 6. Uninsured rates are higher for members
of ethnic and racial minority groups. For example, in 2006, the Census Bureau estimated that 20.5
percent (or 7.6 million) of all African Americans, and 34.1 percent (or 15.3 million) of all
Hispanics, were uninsured. Id. at 19.
2008]
UNLOCKING THE TRUTH
261
To bring Medicare into the national debate and lead the program forward,
the candidates must look beyond isolated proposals and instead embrace
system-wide consideration of core issues and the complex tensions that tie
those issues together. To do otherwise will result at best in reform that falls
short of solving serious needs in the system - for example, by failing to identify
and close the most critical gaps in coverage. At worst, ignoring relationships
between Medicare issues could result in negative and unanticipated
consequences for what is already a vulnerable population. The quandary of
Medicare Advantage reform for elderly minorities spotlights this risk. Are the
programs a positive source of much-needed, affordable supplemental benefits?
Do they cost the system more than they should? Should they be supported by
minorities for the potential short-term value? Or should they be opposed
because of the long-term potential of shifting the Medicare program too much
toward private insurance? Balancing these and other questions is the challenge
of Medicare reform, a challenge that can be met only by looking at Medicare
with a wide and clear lens.