Kinh tế học - Medicare - Professor vivian ho health economics fall 2009

MedicareProfessor Vivian HoHealth Economics Fall 20091TopicsCoverageFinancingCase Study2The Medicare ProgramTarget population - individuals 65+, certain disabled people, and people with kidney failurePart A - Hospital Insurance program (compulsory)Inpatient hospital servicesSkilled nursing careHome health careHospice care19.1m enrollees in 1966; 44.9m in 2008*Source: www.cms.hhs.gov3Part B - Supplemental Medical Insurance program (voluntary)Physician servicesOutpatient careEmergency room services17.7m enrollees in 1966, 41.7m in 2008*Source: www.cms.hhs.gov4 1966 1.8 1980 37.2 1990 109.5 1995 182.4 2000 225.2 2003 283.8 2006 408.3 2008 468.0Medicare CostsTotal Expenditures ($ billions)5Medicare Financing - Part AFunding Sources2.9% payroll tax shared equally by employers and employeesFederal Hospital Insurance Trust FundEnrollee deductibles and copayments6Part A Trust Fund ($ millions)1967 $ 3,0891975 12,5681980 25,4151985 50,9331990 79,5631995 114,8472000 159,6812005 196,9212008 230,815 2,597 1,343 10,612 9,870 24,288 14,490 48,654 21,277 66,687 95,631114,883 129,520130,284 168,084184,142 277,723235,556 321,270YearIncomeDisbursementsBalance7Part A Patient Cost SharingNo hospital inpatient coverage after 90 daysExcept for 60-day lifetime reserveMedicare offers no coverage in “catastrophic circumstances.”8Part A Patient Costs1966 $ 401975 921980 1801985 4001990 5921995 7162000 7762005 9122009 1068 10 --- 23 46 45 90 100 200 148 296 179 358 194 388 228 456 267 534YearDays 1-60Days 61-90After 90 DaysDeductibleDaily Coinsurance9Medicare Part B FinancingFunding sourcesMonthly premium paymentsContributions from general revenue of the U.S. Treasury10Part B Trust Fund1967 $ 1,2851975 4,3221980 10,2751985 24,5771990 46,1381995 58,1692000 89,2392005 151,3072008 200,623 799 486 4,170 1,424 10,737 4,532 22,730 10,646 43,022 14,527 65,213 13,874 88,992 45,896151,536 16,885183,303 59,382YearIncomeDisbursementsBalance11Part B Patient Costs1966 $ 501975 601980 601985 751990 751995 1002000 1002005 1102009 135 20 3.00 20 6.70 40 8.70 20 15.50 20 28.60 20 46.10 20 45.50 20 78.20 20 96.40YearAnnual DeductibleCoinsurance RateMonthly Premium12Medicare Part CSince the 1980s, the aged could voluntarily enroll in Medicare HMOsHMO receives capitated payment based on Part A and B beneficiary costs adjusted for age, sex, region, etc.HMO can provide lower copays and outpatient drugs not covered by Medicare Part B13Medicare Part C: Medicare+Choice1997 BBA increased the variety of managed care plans under MedicarePPOs - physician networksPSOs - owned by hospitals and physiciansPOS - extra fee for out-of-network carePrivate FFSno limits on premiums charged to beneficiariesMSAsTurnover reduced by requiring enrollment for at least 1 year14Medicare Part C: Medicare+Choice15Medicare Part C: Medicare+ChoiceEnrollment and plan participation has varied over time, but shows a strong net gainPlans are putting more limits and copays for prescription drug coverageMost elderly have access to a plan with no premiums, but the share is falling1617Medicare Part A Provider Reimbursement1983, Prospective Payment SystemMedicare patients were classified by principal diagnosis into 1 of 470 Diagnosis Related Groups (DRGs)18DRG weight - index # reflecting relative cost of careExamples from 2003:DRG 33 - concussion, age $5100‘catastrophic coverage’292003 Medicare Modernization ActPlans may compete for customers based on:premium priceformularies for which drugs are covereddrug prices they negotiate with drug manufacturersdisease management services302003 Medicare Modernization ActCMS pays insurers a subsidy equal to 75% of the expected costs of all accepted plansInsurers bid for access to the Medicare market before they know their actual costs312003 Medicare Modernization ActInitial cost impact of MMA may be low, because copayments are so highBut the number of highly effective, high-cost drugs > $10,000 is growingNumerous regulations restrict price competitionLimited penalties for cost over-runsInsurers reimbursed 80% of costs if > 2.5% of projected costs3233Medicare CostsProjected Medicare cost increases are alarmingh costs must be paid for w/ h taxes or i other spendingPart B & D premiums are set to cover 25% of costs2003 Part B premiums = 15% of average SS benefitPart B & D premiums expected to = 35% of average SS benefit in 2010, 50% by 203034