Medicare: How Well Is It Actually Working? | New Hampshire Public Radio

Medicare: How Well Is It Actually Working?

Jan 22, 2020

"Medicare-for-all" is a phrase we hear a lot lately on the presidential trail, but we're taking a step back to talk about how Medicare, which was designed to provide health insurance for older Americans and those with disabilities, has evolved since its creation. We look at how Medicare is working now. 

Original air date: Wednesday, January 22, 2020.

GUESTS:

  • Tricia Neuman - Senior Vice President and Director of the Program on Medicare Health Policy for the Henry J. Kaiser Family Foundation. She oversees the Foundation's policy analysis and research pertaining to Medicare. Check out her discussion on how Medicare works for the "What The Health" podcast from Kaiser Health News. 
  • Stephen Zuckerman - Senior Fellow and Vice President for Health Policy at the Urban Institute. He studies health economics and health policy. 

Check out the podcast Tradeoffs, made by a team including former NHPR reporter Dan Gorenstein and producer Andrew Parella, about healthcare policy in the United States. 

Transcript

  This is a machine-generated transcript and will contain errors.

 

Laura Knoy:
I'm Laura Knoy and this is The Exchange. Medicare-for-all is a phrase we hear a lot on the presidential campaign trail, but not much about Medicare itself. And that's unusual in past elections. Medicare has been a major topic because the program is huge, partially funded by payroll taxes and providing health coverage for 44 million older Americans and those with disabilities. But while Medicare does insure these populations have access to health insurance, there are longstanding complaints about coverage gaps and concerns about rising costs. So today, on The Exchange, we look at Medicare as it exists right now. What it is, how it works and how it could work better.

Laura Knoy:
We have two guests both joining us from D.C. Tricia Neuman is senior vice president of the Kaiser Family Foundation and director of the foundation's program on Medicare policy. And Tricia. Great to have you. Thanks for your time. Thank you for having me. And also with us, Stephen Zuckerman, senior fellow and vice president of health policy at the Urban Institute. And Stephen, a big welcome. Thank you also for being with us today. Thank you very much. Well, both of you, I'll start with you first, Tricia. Give us your best one or two sentence description of what Medicare is. Obviously, it's huge. Obviously, it's complicated. But if you could just give us a brief summary of what this program is.

Tricia Neuman:
Ok, how about Medicare is a very popular national health insurance program that was established in 1965 that is administered by the federal government available for people 65 and older and others with permanent disabilities without regard to their income or medical history. And it now covers more than 60 million Americans.

Laura Knoy:
Good job. One sentence. How about you, Stephen?

Stephen Zuckerman:
Well, I think it's important to recognize that the program covers hospitals, physician services, other institutional care. But there's. It doesn't cover some services like dental care, vision services. And what surprises a lot of people. It doesn't cover long term care. And and that can that can be something that people need as they get older.

Laura Knoy:
Well, and we'll definitely talk about what Medicare covers and what it doesn't, because you're right, Stephen, there's often some surprises when people find out that it doesn't cover things like dental or, you know, hearing aids and so forth. But couple of things that you said, Tricia. Medicare is often called an entitlement program. So what does that mean exactly?

Tricia Neuman:
People become eligible for Medicare, but they have paid into the system throughout their working lives. So those of your listeners who who know that they look at their paycheck, they know that one point four or five percent of their salary goes right into Medicare. And so because people have paid in to the system, they are entitled to benefits when they become eligible for the program. And the program then is obligated to make payments. It's not a block grant program. It's not subject to annual appropriations. The money automatically flows because the government's obligated to cover benefits and people are entitled to benefits.

Laura Knoy:
So once you start working, Tricia, you are kicking in a little bit, you know, all the way down the road.Exactly. And Stephen, something you said, Medicare is covering Americans over age 65, but who else does it cover? You mentioned people with disabilities. How is that sort of established?

Stephen Zuckerman:
Well, people who end up having disabilities that allow them to receive Social Security benefits as part of that disability are also eligible for Medicare after a short waiting period. And also, people, you know, as the program evolved over time, people with end stage renal disease who are on dialysis may be waiting for a transplant are also covered by the program.

Laura Knoy:
And Stephen, Medicare is often confused with Medicaid. So just clear that up for us, please.

Stephen Zuckerman:
Well, Medicare is a is a federal program that's available in every state and eligibility for Medicare is uniform across the country. Medicaid is a program that states administer with federal financial support and the rules for eligibility for the Medicaid program can actually vary quite a bit across the states. So Medicaid, sorry, Medicaid is focused much more on low income population.

Laura Knoy:
Right. So it's a state and federal partnership. The states have a lot of say over who gets covered, who doesn't. It's mainly for low income people. Medicare then as you guys both explained and Stephen, correct me if I'm wrong, is basically everybody is supposed to pay in and everybody is supposed to benefit.

Stephen Zuckerman:
Exactly. And that's, you know, Medicare gets a little bit complicated because people do have some choices, especially if they're working after age 65. But but basically it's it's available to everyone who pays into the program and is and enrolls in the program.

Laura Knoy:
And Tricia, you said Medicare was created in 1965. So what was the what was going on at that time? What was the problem that Medicare was aiming to solve?

Tricia Neuman:
The main problem at the time as half of all older people in the country had no hospital insurance. And so the concern was that there are not a lot of people who couldn't afford health care if they got really sick. And that was exactly what motivated Medicare at the time.

Laura Knoy:
So Medicare started as hospital insurance, just hospital insurance Tricia?

Tricia Neuman:
No, but that was really the issue. That's the way people talked about it, framed the issue at the time, because the fact that was sort of the driver. You know, sometimes facts actually drive policy solutions. And the fact that the time was half of all seniors lacked hospital insurance. But when Medicare was established, it was established with both the inpatient hospital component, component physician services and all the other, most of the other benefits that it has today other than prescription drugs, which was not a part of the the benefits originally. I wanted to just add one thing, which is when we were talking about Medicaid a moment ago, the one thing that Medicaid does, it's so important for people on Medicare is it is the main public support source of funding for long term services and supports nursing home and home, home and community based care. So for people who are on Medicare, who have long term care needs, Medicaid is actually fairly important especially if they're Low-Income.

Laura Knoy:
I'd love to hear from both of you on this. But Tricia, you first. So what would you say the biggest difference between Medicare as it was created and Medicare now? What's the biggest difference between sort of Medicare in 1965 and Medicare 2020?

Tricia Neuman:
Other than the drug benefit, which is new, I think the biggest difference is that Medicare has gotten more complicated with an expanded role of private plans in the program. People used to say, I can't wait to go on Medicare because it's gonna be so easy. You just turned 65 and you went on Medicare and it was simple. We hear a lot about people being overwhelmed by the choices they have available today with Medicare Advantage plans and prescription drug plans. And that just has made the system a lot more complicated. it's in some ways more opportunity to choose better plans or different plans. But there are also risks associated with creating a complicated program for an older population.

Laura Knoy:
What do you think about that, Stephen? Medicare, 1965 versus 2020.

Stephen Zuckerman:
I mean, I think Tricia is absolutely right that the addition of private plans and the expanding role of private plans, some people are very surprised to realize that a third of all Medicare beneficiaries are not in the traditional Medicare program as it was designed in 1965, but have opted to be in these private plans - less so in New Hampshire. But definitely that's become part of the program. And I think the complexity of Medicare has probably driven a lot of people in that direction, because when you think about you have to sign up for part 80 and hospital services, part B to get physician services and part D to get drugs. And then many people also opt to have supplemental coverage because Medicare doesn't pay for everything. It can get very complicated. So I think a lot of people have decided that these Medicare Advantage plans, which is sort of one-stop shopping, ends up being a better option for them.

Laura Knoy:
Interesting. So, Stephen, how did that private element of Medicare get started? How and and why?

Stephen Zuckerman:
Well, Medicare has historically reflected what was going on in the rest of the health care system. And really going back, so when it started in 1965, the system was largely a fee for service system where people went to the doctor, got a bill and paid for each service separately. But by the 1970s, health maintenance organizations were growing. And I think, you know, Congress, the policymakers, decided that they wanted beneficiaries to have access to the same types of choices that you that you would have if you were, you know, not in the Medicare program. But and I think that part of the program, the private plans, has always been a bit of a sideshow. It hasn't been a main part of the program until recently. Probably in the last 10, 10 or 12 years. There's been a lot of growth in people choosing these private plans because I think it's become more attractive. Payments for these plans have been fairly generous relative to traditional Medicare. So the plans have been available in a lot more places and and people have opted for them. So it's been a little bit of a surprise I think.

Laura Knoy:
That's interesting. Tricia, I'd love your thoughts on that, too. The growth in private plan, participation in Medicare and whether that's been an overall benefit or not.

Tricia Neuman:
Well, I certainly agree with everything that Steve said, I think people Bolt may not appreciate when they talk about Medicare-for-all what Medicare looks like today, because in many parts of the country and again, it's not so much in New Hampshire, but, you know, in parts of Florida, more than half of all people in any given county are in a Medicare Advantage plan, which is, by the way, sort of a term used to describe HMO and PPO s that provide Medicare benefits -health maintenance organizations and preferred provider organizations.

Tricia Neuman:
Right. But these are operated by private insurers that receive payments from the federal government to provide Medicare benefits. I think in terms of what does it mean, is it a good thing? I think the jury is out on that. In some ways the attraction of Medicare Advantage plans like HMOs, is, it is simpler because you don't have to do all the, you don't have to get a separate supplemental policy or part D policy, and plans market extra benefits, which are which are very appealing to people like some dental benefits and vision, some exercise fitness programs which appeal to people. Those benefits may appeal more to you to healthier the younger part of the Medicare population. I think the issue, though, with that is important and still needs more discovery is how are these plans working for people when they get sick? Because there is some evidence that Medicare Advantage plans have somewhat higher, higher disenrollment rates among sicker people, low income people, people with disabilities. And that's really an important question to pursue.

Tricia Neuman:
There are quality measures that are out there, but they don't really dig in to how did these plans manage care well for people who have complex conditions. And this is this is a population that may start out healthy when they're 65, 66, 67, when they're really looking into what plan is best for them. But people, what we have learned is people tend to stay in whatever plan they've chosen. And that plan may not be best for them when they develop a certain condition. There are tradeoffs involved in terms of can you go to any doctor? Can you go to any hospital? Because these plans, by definition, have networks of hospitals and doctors so that there are issues to be thought through. And while these plans sound relatively appealing and in some cases are quite appealing for the various reasons we talked about earlier, they may or may not be the best option for people when they get sick and there are issues about whether or not people can go back to traditional Medicare, which they can do, but they may not be able to buy a supplement if they are sick, because Medigap plans, which are Medicare supplements, they don't have the same guaranteed issue protections for people with pre-existing conditions. So people might get stuck and not know about it. And unfortunately, we're hearing more and more cases like.

Laura Knoy:
I see. So when you're younger first signing up for all this, it looks great. But if you get older and sicker and have, you know, some health complications, it might not be what you need. Stephen, do you want to jump in on that? And then I'd love to fold in some comments from our listeners that are already coming in. Go ahead, Stephen.

Stephen Zuckerman:
So I think I think one of the issues that is still to be determined is exactly how comparable patients are treated in Medicare Advantage and in traditional Medicare. I mean, at this point, I think the data that's available to really understand what types of services people are getting in Medicare Advantage plans is really not as extensive as you'd like it to be. I mean, so we did a recent study looking at beneficiaries who need home health care or use home health care, which is certainly a covered benefit in traditional Medicare and Medicare Advantage. And we're finding that there's a not dramatic but a significantly lower rate of people using home health care within Medicare Advantage than a traditional Medicare, for comparable types of patients. And we're also finding that the amount of time people receive home health care is shorter within Medicare Advantage. So the obvious question is Medicare Advantage providing services more efficiently or they potentially, you know, skimping on services that the beneficiaries need. And, you know, at this point, it's a new enough phenomena, this movement to private plans, that it's still an open question as to how well kind of long term the private plans will actually serve beneficiaries with significant health needs.

Laura Knoy:
Wow. OK. Well, lots of questions coming in. From our listeners, so let's go to them and then I have a bunch more questions for you both as well.

Laura Knoy:
Let's go to Jill in Harrisville first. Hi, Jill, you're on The Exchange. Thanks for calling in.

Caller:
Thank you for taking my call. Sure. I'm 71 years old. I'm on Medicare. I have a Medigap and a Medicare Part D supplements. And I have modest savings for a boome, now that I'm sort of semi-retired I'm still working maybe two thirds time. But what I would really like is a 100 percent Medicare option where I'm already paying a premium for my Medicare Medigap policy and I would rather pay that money to the government and get one hundred percent Medicare coverage that would also include long term care. And I could see what would happen to me if I go the way my father did, in my mid 80s. I start having TIA's and end up spending the last year of my life in a nursing home. Now the way the system is right now I would lose all my assets and not be able to pass anything on to my son and that extra cost once I went onto Medicaid would hit the local, the local and the state government. And Medicaid, I know is a budget buster for state government. I was a state rep for three terms. And I would like to see Medicare completely take over that long term care and wipe out that Medicaid burden to the states. This would help standardize the health care that seniors receive across the nation. And in case, you know, at some point, a senior has to move closer to their children who are 2000 miles away, and they'll be assured of getting the same nursing home care if they need it.

Laura Knoy:
Well, and Jill, I'm going to jump in here because we're heading into a break. But when we come back, Tricia and Stephen, I'd love your thoughts on the many points that Jill raises. The idea that, you know, Medicare sounds like you sign up and you're all set, there's sort of this ease, this feeling that you're all taken care of. But then, as Jill points out, we'll know that's not the case. And there are still some pretty scary financial challenges. So I definitely want both of your thoughts on that after a short break.

Laura Knoy:
This is The Exchange. I'm Laura Knoy. Today with all the talk about Medicare-for-all and the presidential campaign, we're looking this hour at Medicare right now. Helping us out this hour, Tricia Neuman, senior vice president of the Kaiser Family Foundation and director of the foundation's program on Medicare policy, along with Stephen Zuckerman, senior fellow and vice president of health policy at the Urban Institute. Both of them join us from D.C.. And Stephen, I'd love to throw Jill's concerns to you. We talked to her just before the break. She sounds, you know, like she's got some major worries about Medicare, not providing everything that she'll need as she gets older, having nothing left over to give her son, having to spend down her assets and having to end up in that county nursing home.

Stephen Zuckerman:
I think, unfortunately, that's a that's a very common problem and it's a very big problem within Medicare. And it relates to the fact that Medicare does not cover long term care, does not cover long term support services, and that has been left to Medicaid. And Medicaid is a program for people with lower incomes and very few assets. And, you know, a lot of people, when they're in this situation that they will need care in a nursing home, the nursing home will very actively make sure that they're going to be eligible for Medicaid because nursing home care can be so expensive that it's really unlikely that most people, you know, in middle income ranges with modest savings, as Jill pointed out, would be able to afford to pay for themselves to be in a nursing home long term. So this is actually one of the one of the areas that many of the proposals that are focusing on Medicare-for-all is looking at as an enhanced benefit, adding long term support services to this federally funded national health insurance program that would be Medicare for all.

Laura Knoy:
So long term care, Stephen, right now that's not included, even though that's what a lot of people are going to need.

Stephen Zuckerman:
That's absolutely correct. That's that's probably in terms of the services, the expensive services that are not covered by Medicare, that maybe the biggest one.

Laura Knoy:
Let's take another call. This is Tim in Portsmouth. Go ahead, Tim. Thanks for being with us. You're on the air.

Caller:
Hello. Thanks for taking my call. So I'm 67. I am a Medicare booster. So I want to just go over briefly why I have really positive feelings about Medicare. Number one, I'm I'm not chronically ill. I'm still working. I'm still active. And number two, I have heard that it's complicated, when you get into the Medicare Advantage programs in supplemental programs and all that. So when I was first offered Medicare, I jumped. I just got part A, part B, which was very simple to do and the monthly premium comes out of your Social Security check automatically. You don't have to. (I actually had to send it in for a couple of years because I didn't collect Social Security right away but Itook Medicare as soon as possible). So my story is this. I go to a Dartmouth-Hitchcock hospital in Lebanon, the most expensive hospital in northern New England, at least the best hospital in northern New England. And in August, I had a major operation and it was fifty five thousand dollars. It took a while for me to get my bill. But when I got my bill, my co-pay, what I ended up having to pay, was thirteen hundred dollars on a fifty five thousand dollar operation, which I thought was outstanding. And here's the thing about Medicare. Not only was this, is it simple and easy for me, and at this stage in my life, it's covering my medical expenses very, very adequately. When I go to the doctors, I pay the general practitioner. I pay $13 co-pay on a regular doctor's visit. And I talk a lot- I'm out in the in the world working - and I talk a lot with senior people because in my trade, we're all senior people. And I haven't found anybody that has had a problem.

Laura Knoy:
Let me jump in for a second, because it's so interesting to hear from you. There's a lot to unpack from this call. And Tricia, to you first, please. So a fifty five thousand dollar operation, a thirteen hundred dollar co-pay, Tim is understandably very happy with Medicare coverage. What do you pull out of this, Tricia?

Tricia Neuman:
Well, Tim is not alone. People on Medicare are generally very, very satisfied with the coverage that they get. Often people, people who are buying their own insurance before they turn 65 are paying quite a lot in premiums and often have very high deductibles. So by the time they get on Medicare, they're quite relieved about the coverage that they get. It sounds like the thirteen hundred dollars, it was a deductible, which is the hospital deductible. And Tim, I don't know if you have thought about a Medigap policy, which you might want to do for even more protection and drug coverage, too. But people with Medicare generally have good coverage. And it's. And I'm delighted to hear that it's working for you.

Laura Knoy:
Well, it's interesting. So, Stephen, you know, it sounds like when it comes to hospital procedures, Medicare does a good job. The problem comes in with other stuff that, you know, frankly, people are more likely to need, like dental care, glasses, you know, all that other stuff. So I'd love your thoughts, too, on sort of what Medicare covers well, Stephen, clearly, operations is one of them. And what Medicare doesn't cover so well.

Stephen Zuckerman:
Well, Medicare, you're you're right. Medicare covers hospital services, physician services. If someone needs to go to a skilled nursing facility or a rehab facility or have home health care after a hospitalization or for some other reason, Medicare covers that very well. What it doesn't cover and many people end up paying for out of pocket is either vision services, dental services, hearing aids and of course, as we talked about before, long term care and long term support services that many people need. One thing I would point out about to, Tim, is that the hospital bill may have said fifty five thousand dollars on it when he when he looked at it. But it's unlikely that Medicare paid the hospital that much. Medicare tends to set rates for hospital care and the beneficiaries don't see that. But hospital bills sometimes look a lot bigger than the hospital payment that is made by the Medicare program.

Laura Knoy:
How much do you think, Stephen, hospitals jack up the cost for Medicare patients, knowing that, hey, the federal government is going to pay for it, so why not charge as much as possible?

Stephen Zuckerman:
In terms of Medicare patients, I don't think hospitals have have that much discretion at all. Medicare really does set the rates that it's going to pay. And it, you know, it varies those rates across the country based on the costs of nurses salaries, the costs of rents in an area. Bu the hospitals don't really control what they're going to receive from the Medicare program. They may lobby a little bit to get those rates higher. But they don't have the same ability to negotiate with the federal government that they do with commercial health insurance plans.

Laura Knoy:
Tim, I'm glad you called. And let's go to Brennan in New Durham. Go ahead. Thanks for being with us. You're on the air.

Caller:
Hi there. So I'm 21 years old and my grandparents are enrolled Medicare and I've had a lot of conversations with them about concerns I have about the solvency of the program going into the 2020s and 2030s. Now, as an active taxpayer and having, you know, this payroll tax of, I believe 1.5 percent or something like that, taken it out of my paycheck,I'm keenly aware of the fact that it's very unlikely come 2060, 2070, that there is going to actually b,e there's going to be enough in the fund really for it to pay for itself. So I'm seeing kind of a negative. So these great benefits that your previous listener who call in to describe sound great, but then you realize the fact that my generation Gen Z and a lot of these millennials, too, are going to be in the process of paying for all these very generous benefits for the oldest generation. And I kind of have the feeling that it's a little screwed up because going into the future with 20 trillion dollars of national debt, I really doubt with our interest payments that a lot of us in the younger generations are ever going to see these benefits. Unless there's some massive tax hikes and we actually cut spending significantly. These entitlements, even like Social Security as well, they just, very nice for the oldest generation but I'm doubting I'm ever going to see them.

Laura Knoy:
Wow. Brennan, I'm so very glad that you called. And I've got to Gen Z kids. So, you know, I hear your frustration. How about you first, Tricia? You know, there's Brennan and he hears about the great benefits Tim is receiving and he says, OK, nice for you but doubting it's going to be there for me. What do you think, Tricia?

Tricia Neuman:
I think it's a good question, Brennan. I'm glad you raised this. There is a financing challenge facing Medicare. There's the nation has an aging population. And really there hasn't been a lot of conversation about how will we pay and who will pay to provide health care for aging and older Americans. And Congress itself hasn't really focused on this in many years, which is unusual because Medicare financing used to come up fairly often. There are a number of ways to look at the financing of Medicare. And one of them is something called the Hospital Trust Fund, which is solvent through 2026, I believe. That's a number that's helpful in that it's a signal that policymakers need to pay attention to either spending or financing. And that is something that has been done in the past. I mean, I can remember when the government actuaries were saying that Medicare will run out of funds to pay full benefits in 2001.

Laura Knoy:
Oh, really? So we've heard these predictions before.

Tricia Neuman:
We hear these predictions annually. And we have now gone beyond the years in which they have made dire predictions. And there are actions that can be taken to strengthen the financing of the program because there is a commitment to people. And you are, Brennan, paying in a payroll tax with the understanding that it will be there for you. And it's a fair question to ask policymakers: how will this country decide to pay for people? Because truthfully, if the government's not doing it through the Medicare program, then it falls back on people. And it's highly unlikely that individuals will be able to afford the costs of health care on their own. So some sort of serious discussion needs to take place about how we as a nation are going to finance care for an aging population.

Laura Knoy:
Stephen, what do you think? I'd really like your thoughts, too, because this is a fundamental point that Brennan is raising. And Brennan, again, thank you. Older listeners may think, hey, I paid into this. I'm owed this money. You know, this isn't a free handout for me. I've been paying in all these years. But younger listeners are thinking, yeah, I'm paying in right now. But I highly doubt it's going to be there when I'm old. So I'd love your thoughts too Stephen.

Stephen Zuckerman:
Well, you know, as Tricia points out, I mean, this is not a new problem. I mean, the actuaries estimate how long the money available to the trust funds will be, you know, will last. And they do that every year. And historically, these predictions have always been met with policy changes when the issue becomes quite dire. So when the program is facing a very short time horizon for solvency, policymakers step in and make some changes to the financing. I mean, one of the changes that was made a few years back was to raise the limit of income that got taxed. So Social Security taxes are taken out of income up to a certain limit of income. I think around $120,000 this year. But Medicare now, to improve the program's solvency a few years back, that tax comes out no matter how high your income is, so people earning $300000 a year may not be paying any Social Security taxes after they hit, they exceed the limit, but they're still paying Medicare taxes. That, combined with the fact that what providers get paid, can be controlled by the federal government. Providers are not always happy about it. But there are changes that are made both on the revenue and the costs side to keep the programs solvent. Historically, that's what's happened. Now, how long that can continue to go on and exactly how extreme some of those policy changes may need to be - that's an open question that people will have to debate. But there's no question that I think there's a strong commitment at the federal government to keep the program solvent and keep it available for people well into the future.

Laura Knoy:
So let me make sure I have this right, Stephen, and maybe this will make Brennan feel a little bit better. So, Stephen, there's a cap on the income level that gets charged Social Security taxes. Above a certain level, you can't impose Social Security taxes, but with Medicare, that is not the case. So on super high income folks, the government has said, look, you got to kick in more for the Medicare system. Is that right?

Stephen Zuckerman:
Exactly, that's exactly the case.

Laura Knoy:
And since you mentioned providers, Stephen, do providers have to accept Medicare or can they say, no, the reimbursement, not enough. We don't want these folks.

Stephen Zuckerman:
Well, it's a voluntary system and providers don't have to accept Medicare and hospitals are quite unlikely not to accept Medicare patients. I mean, Medicare beneficiaries represent a very significant portion of the other hospitals, patient load, and they're unlikely. There are physicians who will say that they don't want to accept Medicare, but even that is is much more unlikely than, let's say, physicians who are not willing to accept Medicaid patients. So it's not a requirement that physicians accept Medicare. But a very large majority of them do.

Laura Knoy:
Well and given the size of the elderly population, that's a lot of customers that they would be denying themselves. Thank you again so much for those calls. And I'd like to share a couple e-mails. Deborah in Concord says, our family of five have four different medical plans. Debra says, I recently signed up for Medicare Advantage because of the extra benefits, but now I'm worried for the reasons that have been brought up on this program. One of my daughters is permanently disabled and she has been shuffled around to different coverage, which at one time left her without coverage. It took about 40 hours of my time to get it all straightened out. This is only one example of the problems we've encountered over the years. I've also had to keep track of my elderly parents plan with dementia. I've spent hundreds of hours over the past five years dealing with health insurance issues. Deborah, I'm so sorry and that is so frustrating and so draining. Tricia, to just deal with all that, given that the population of elderly people is growing in this country. Does Medicare have the staff, the resources to help people navigate it so that they don't end up like Deborah, spending hours and hours and hours on the phone?

Tricia Neuman:
Well, there are two issues, one is staff and the other is sort of the system and the complexity. So Medicare operates a 1-800 number and Medicare, there is something called state health insurance programs in every state which are set up to give people advice and information. But the system itself is complicated and there are issues involved about what is and is not covered. And sounds like Deborah's dealing with all sorts of issues that have to do with Medicare and non-Medicare. I mean, caring for an aging parent with dementia, as anybody who has done that knows,is tricky. And a lot of the services that would be helpful are not covered. And that's a concern in the Medicare program that Steve talked about earlier. And then with respect to people with disabilities, her daughter with a disability, that's challenging, too. And I'm not sure of her daughters on Medicare. But there are a lot of issues. And once you go on Social Security disability, there's a waiting period for Medicare. There's a two year waiting period. And people have to figure out how to fill that gap.

Laura Knoy:
All right. Got another question on the complexity and possible efforts to make it a little less complicated for people like Deborah. Deborah, thank you for the e-mail and good luck to you. We're finding out today about Medicare, how it works, how it might work better.

Laura Knoy:
This is The Exchange, I'm Laura Knoy. This hour with all the talk about Medicare-for-all in this presidential cycle, we're looking at Medicare itself, how it works today and what the concerns are. And we've been hearing from you. Joining us from D.C., both our guests, Stephen Zuckerman, senior fellow and vice president of health policy at the Urban Institute, and Tricia Neuman, senior vice president of the Kaiser Family Foundation and director of the Foundations Program on Medicare policy. And just before the break, we were talking about, once again, how complicated Medicare is. Tracy sent us an e-mail. She says it's like stumbling through the dark and then just waiting to see what bills come through. And Stephen, to you first, what efforts are federal administrators making right now to make it less complicated?

Stephen Zuckerman:
Well, I mean, I think the the problem that people have is that they go to the doctor, they're not quite sure what the services are going to cost and what their co-payments are going to be. And I mean, I think the system right now is administered by a lot of private contractors around the country, processing claims. And I mean my sense, and Tricia may have a different take on this, is that it's probably no more complicated than than private health insurance. Might actually be a little bit simpler, because you're going through a single administrative system. But I think that there aren't a lot of changes that I'm aware pf in terms of administering the program and processing of claims to make it simpler.

Laura Knoy:
What about assistance then? Tricia, is there a one stop shopping place where people can go to get help navigating this? It's complicated.

Tricia Neuman:
You know, there really are a couple of issues we're talking about. One is choosing a plan. And I think we've talked a lot about how complicated that is. Once people have Medicare, whatever plan they're in, it's not necessarily so complicated. There are some times when people want to appeal decisions and Medicare actually sends a letter that says, here's how you would do that if you've been denied a claim and you think that's unfair. But in general, the default is people have their insurance. It gets paid for. They may have a co-pay if they don't have a Medigap policy. But in general, they don't. I think the real complication is in choosing and again, where people can do it is call 1 800 Medicare. If they're not sure how to handle a billing problem or they can call their local SHIP, the state health insurance assistance programs if they're trying to figure out which plan they need.

Laura Knoy:
Let's go to another caller and Joanne is calling in from Hooksett. Hi, Joanne. Thanks for being with us. Go ahead.

Caller:
Yes. So I'm 66 and just went on traditional Medicare. I worked in health care my entire life. And I want to know when Medicare will switch over to a wellness model such as the Affordable Care Act is for private insurance. It's still on an illness model, including an annual physical, your annual physical is not covered.

Laura Knoy:
You know, this is a great question, Joanne. And Stephen, if you could sort of first elaborate on what Joanne is talking about, a wellness model versus an illness model. I think most people know what that is, but I'd love your thoughts there.

Stephen Zuckerman:
All right, I think what Johanna is getting at is sort of giving people maybe greater incentives to engage in healthy behaviors, you know, exercise, diet and the annual physical that Joanne talked about would be cut would be covered. So, I think that that's what she's getting at. And it's true that Medicare, traditional Medicare, doesn't have those those kind of incentives. But it's also not clear to what extent those incentives have much of an impact on private health insurance costs, even even when they're available.

Laura Knoy:
Interesting. So even when wellness incentives are available under, you know, regular health insurance that anybody might have, it's not clear that people really take advantage of that, Stephen, is that what you're saying?

Stephen Zuckerman:
People may take advantage of it, but it's just not clear exactly what that does to improve their health in the long term.

Laura Knoy:
Wow. So like weight loss, smoking cessation, all those incentives, we're not really sure how much that shakes out and makes people more healthy.

Stephen Zuckerman:
Yes. And to what extent they actually lead to people quitting smoking and losing weight and keeping it off.

Laura Knoy:
Wow. Joanne, thank you very much for the call. And to Langdon where Kate is calling in. Hi, Kate. Go ahead. You're on The Exchange. Hi.

Caller:
I'm piggybacking on the man who called in about the $55,000 bill, and he was pleased with how much he had to pay. I just recently got quite a large bill. I'm 72. I'm on Medicare, but not on supplemental. And the total of the bill, I just added it up. The total that that the hospital could have charged was $8224. The amount that Medicare allowed was $559.

Laura Knoy:
Oh, wow. It's a big difference. Yeah.

Caller:
And so I only had to pay $118. For what could have been, although my understanding from a friend who's a medical coder is that that eight thousand dollars is the highest that they could possibly charge for those procedures. So as he said, I'm really pleased with how little I have to pay. But I do wonder as the population gets older, how hospitals will continue to be able to afford to continue to provide services when Medicare pays $559 out of a possible $8000.

Laura Knoy:
Wow this is a great question and it's sort of similar to what we talked about with Brennan, Tricia, but with a different angle to it, a more specific angle. And I really appreciate the call, Kate, what do you think, Tricia?

Tricia Neuman:
Well, I think the eight thousand dollar figure is a charge and not necessarily a true cost. So that's one thought that I do have. Medicare, there is a sort of a way of measuring how well or how appropriately Medicare is making payments. And they use the term margins. And Medicare margins have been declining. So the hospitals are not making so much money. But the more efficient hospitals seem to be doing better than what people think of as the less efficient hospitals. But one thought that I do have that I think is also coming up in some of the larger debates is that private insurers are actually paying a fair amount more on average than Medicare pays for the same service. And there have been a lot of studies done that have looked at how much more private insurers are paying. And one of the issues of, with people struggling, and this is not exactly a Medicare issue, it's really a bad just a general issue about health care costs. Is are private insurers really paying too much? And what is that doing for health care costs for people in our country? And there is interest and candidates have been talking about ways to sort of bring down private insurance payments so that they come closer to Medicare payments, which would still have hospitals operating profitably, maybe not as profitably as they do today, but it would lower price, which is really sort of the key issue in driving up health care costs in our country, in a way to make health care more affordable for people with private insurance.

Laura Knoy:
Really interesting. So, Tricia, just because the hospital says, you know, we think this procedure, Kate, should have cost around $8000. Medicare says to the hospital, we think it's 559. And here you go. That's all you're getting from us. That is really a big gap. And again, it raises the question that I asked earlier, how much are hospitals inflating these costs in hopes of just recouping as much as possible? Tricia, you wanna grab that one or Stephen?

Stephen Zuckerman:
I'll come in and grab that. So the eight thousand dollar charge shouldn't really be thought of as what it costs the hospital to provide that service. It's what the hospital, it's the price tag that the hospital puts on it. And sometimes and I know this is can be hard to believe, when you look at data from hospitals, those charges can sometimes be three and four times as high as you might estimate the the actual costs of the service. So it's a very ... it can be very deceptive, looking at hospital charges and equating those with what it costs to provide the service. And it's really, I think, something that a lot of people don't understand when they see a hospital bill. It's just another complication within the system and whether or not hospitals could accept that $559 for every patient that's receiving the service, you know, is a legitimate question to ask. But right now, private payers, commercial payers, are probably paying more than 559 dollars. And there's kind of a balancing act that hospitals are doing in this, in a health care system where you have different types of payers paying for different types of patients.

Laura Knoy:
So, Tricia, that raises sort of a meta question in my mind. How does Medicare, as it exists today, affect other parts of the health care market from drug costs to how doctors' offices are run to, you know, what I pay with my private insurance? What's the impact of Medicare on the rest of the system?

Tricia Neuman:
The impact is enormous. And what we have seen is that private insurers have used Medicare as a model in establishing the way in which they make payments to physicians and hospitals, although sometimes they end up paying Medicare plus somewhat more. They they often use a similar structure. So Medicare, it's a huge factor and it's too big it's too big a part of the system to not have a big impact. It used to be that Medicare was no big deal in the drug industry because Medicare didn't pay for prescription drugs. But now Medicare is something like 30 percent of national spending on prescription drugs. That's another example of how Medicare can come in and really make a big difference in an industry

Laura Knoy:
And has Medicare's coverage of prescription drugs, which started in the mid 2000s, Part D, this was much celebrated. Tricia, how much of an impact has that had on, again, the drug prices that the rest of us pay?

Tricia Neuman:
Well, first, let me just say Medicare, the drug benefit, has had a huge impact on the costs that people on Medicare pay.

Laura Knoy:
Sure. And to their benefit largely.

Tricia Neuman:
To their benefit. And so I don't want to sort of skip over a really huge impact of the Medicare drug benefit. In terms of what other people pay, I'm not so sure. They're really different systems at this point. And it's complicated for medha, even for Medicare, because while Medicare has been very successful in lowering the costs of prescription drugs and giving people insurance for their drug costs, relative to what was going on before, drug prices are continuing to rise. And so they are still outstanding issues in terms of what Medicare itself is paying and how those costs are now projected to rise in the future. And what people who take high-cost medications pay for their prescriptions. So there's the drug benefit just in terms of Medicare has done a good job and the so-called donut hole is closing. People have heard about that, that's great. But there's a lot of work still to be done.

Laura Knoy:
Here's an e-mail from Elizabeth who says Basic Medicare is sliding scale based on your earnings of two years ago and to not go broke paying deductibles and co-pays, etc., you need a good Medigap plan. Both of you've talked about, you know, it's often surprising for people that Medicare doesn't cover everything. Elizabeth says that coverage costs real money. Okay. But having to suss out the best deal for a plan for that and the best plan for drug coverage, which is also expensive and seems to cover whatever it wants at the moment, tiers of coverage, high deductibles, co-pays and apparently still the donut hole. And the following year to have to suss it out all over again, change pharmacy, switch insurance companies. Elizabeth says, after what feels like a big shell game played by the insurance companies all working together against us. Elizabeth says, just raise our taxes, go to single payer and be done with it. Elizabeth, thank you for writing in. Stephen, what do you make of that frustration that people have at times -not everyone, obviously - with Medicare?

Stephen Zuckerman:
You know, I think you can't get around the fact that it's a complicated structure. I mean, people have talked for a long time about simplifying the structure even of traditional Medicare, not even Medicare Advantage going in that direction, you know, not having a separate Part A and Part B choice and part D and then supplemental coverage. I mean, there has been some simplification over the years and in supplemental coverage where there's a certain number of types of plans that insurers have to decide to offer. But in terms of, you know, the sliding scale premium, you know, for people with higher incomes in Part B, I mean, there's a lot of there's a lot of moving parts in this system. And there's no question that Medicare could be, the structure of Medicare could very well be simplified. But, you know, there's been a lot of debate over that over the years. But, you know, there hasn't been a lot of political momentum for that to happen.

Laura Knoy:
So a couple terms have come up this hour and just want to make sure that they're clear. So traditional Medicare is what, Stephen, what's the sort of best short description of traditional Medicare?

Stephen Zuckerman:
A traditional Medicare is the part of Medicare that existed, you know, back in 1965, that pays for hospital services through part A, largely physician services through part B, and drug coverage through part D. And not through a private plan, but through a claims processor, a government contractor who processes claims.

Laura Knoy:
And then Medicare Advantage is what Tricia described earlier, Stephen, it's sort of a little simpler. Everything's in one place, but you have to maybe follow more rules under staying under a certain network of providers. Is that is that right?

Stephen Zuckerman:
That's correct. Where there will be as a specific network of providers, you can go out of network in some of the plans, not all of them, but you know, you may be incurring some additional costs.

Laura Knoy:
And then supplemental coverage is extra coverage for glasses, dental, stuff that people need when they get older especially. Is that correct?

Stephen Zuckerman:
Well, supplemental coverage can be for that, but it also can be to cover the the co-payments and deductibles within traditional Medicare. And, you know, one thing we haven't really talked about very much, that can add to the cost, is the fact that traditional Medicare does not have an out-of-pocket limit on what people are required to pay and that can be a problem for people who are incurring, you know, very high expenses. Even with Medicare's lower prices. So, you know, in the Affordable Care Act, people are limited to a little over seven thousand dollars a year in what they might have to pay out of pocket. But traditional Medicare doesn't have that. Medicare Advantage, however, does have that as part of that program. So that's just another thing for people to keep in mind.

Laura Knoy:
Tricia, last, very quick question for you. We started out talking about how presidential candidates are talking a lot about Medicare for all. What do you want them to say about just regular old Medicare?

Tricia Neuman:
I actually think one of the great things about this, the focus on Medicare for all, is that it's bringing back attention to Medicare. And I think Medicare always needs ongoing work and improvement. And I'm glad this conversation is is moving forward.

Laura Knoy:
Well, it's been great to talk to both of you. Thank you very much for helping us out. Tricia, good to have you. Thanks for your time. That's Tricia Neuman, senior vice president of the Kaiser Family Foundation. Stephen Zuckerman, senior fellow and vice president of health policy at the Urban Institute.