Chapter 7: Medicare, Medication And Healthcare Costs

Good to Excellent Health

Older people reporting good to excellent health differed according to ethnicity. Those 65 and over reporting good to excellent health were 76% of whites, 59% of blacks and 63% of Hispanics. As would be expected, the percentage of those enjoying good health declined as age increased. Those between the ages of 65 and 74 who reported enjoying good health included 80% of whites, 62% of blacks and 65% of Hispanics, as compared to 67% of whites, 52% of blacks and 53% of Hispanics age 85 and older. Although health does decline with age, some might see it as impressive that the majority report good to excellent health after the age of 85. (Federal Interagency Forum 2008, 29)

Medicare, Medication and Healthcare Costs

Hospital stays for those covered by Medicare showed a proportional increase from 300/1000 hospital stays by Medicare enrollees in 1992 to about 350/1000 in 2001. A higher percent age increase was found in those staying in skilled nursing facilities (nursing homes) which increased from about 30/1000 to 70/1000 of Medicare enrollees. (Federal Interagency Forum 2008, 48)

The average annual health care costs for Medicare enrollees went up from 1992 to 2004. Adjusting for inflation to 2004, a Medicare current beneficiary survey found that costs went up as follows (Federal Interagency Forum 2008, 50, Chart 2008 30a rev 1):



These benefit costs were broken down in the following specific categories of health care costs (Federal Interagency Forum 2008, 51):



The average annual prescription drug costs and sources of payment among non-institutionalized Medicare enrollees from 1992-2000 are as follows (Federal Interagency Forum 2008, 52, chart 2008-31a rev. 1):

Medicare: Parts A, B, C, D
(Medicare 2008)

Medicare is a government health insurance program, with about 40 million Americans participating. To be eligible one must be a citizen of the U.S. and be 65 years of age or older. Others may also be eligible, but they are not pertinent here.

Medicare choices include the Original Medicare Plan and Medicare Advantage Plans.

[QN.No.#52.Medicare : is:]

The Original Medicare Plan is a fee-for-service plan that covers many health care services, supplies, and certain drugs, but it doesn’t pay all of one's health care costs. There are costs that one must pay, like coinsurance, copayments, and deductibles. These costs are called "gaps" in Medicare coverage. Many consumers buy a Medigap policy to cover these gaps in Medicare coverage. Prescription drug coverage may be added to by joining a Medicare Prescription Drug Plan. An individual can go to any doctor or hospital that accepts Medicare.

[QN.No.#53.The Original Medicare Plan is a fee-for-service plan that covers all health care services, supplies, drugs, and covers all of one's health care costs.True/False?]

Medicare Advantage Plans are available in many areas. A person with one of these plans doesn't need a Medigap policy. The plans include:

• Health Maintenance Organizations (HMO)
• Preferred Provider Organizations (PPO)
• Private Fee-for Service Plans
• Medicare Special Needs Plans
• Medicare Medical Savings Account Plans (MSA)

These plans may cover more services and have lower out-of-pocket costs than the Original Medicare Plan. Some plans cover prescription drugs. In some plans, like HMOs, one may only be able to see certain doctors or go to certain hospitals to get covered services.

To join a Medicare Advantage Plan, you must have Medicare Part A and Part B. You will have to pay your monthly Medicare Part B premium to Medicare. In addition, you might have to pay a monthly premium to your Medicare Advantage Plan for the extra benefits that they offer.

[QN.No.#54.To join a Medicare Advantage Plan, one must have:]

Medicare plans each include four parts: A, B, C, and D.

Part A is hospital insurance provided by Medicare. Most people do not pay a premium for this coverage. Part A covers inpatient care in skilled nursing facilities, critical access hospitals, and hospitals. Hospice and home health care are also covered by Part A.

Part B is insurance to pay for medically necessary services and supplies provided by Medicare. Most people do pay for Part B. Part B covers outpatient care, doctor's services, physical or occupational therapists, and additional home health care.

Part C is the combination of Part A and Part B. The main difference in Part C is that it is provided through private insurance companies approved by Medicare. With this program, you may have lower costs and receive extra benefits.

Part D is stand-alone prescription drug coverage insurance. Plans vary and cover different drugs, but all medically necessary drugs are covered. You can choose what drug plan will be best suited to your needs. Your costs will vary depending on your financial situation and which Medicare Prescription Drug Plan you choose. If you have limited income and resources, you may get extra help to cover prescription drugs for little or no cost.

Alternatives

Of course you can decline Medicare coverage. If you have private health insurance (you cannot have that plus Medicare), compare the cost and coverage of each. Federal law requires employers with a staff of 20 or more to offer their employees over age 65 and their spouses the same group hospitalization coverage they give to their younger employees. Do take note, however, that all Medicare premiums and copayments are adjusted annually and that you will have to pay a 10% penalty for every year after age 65 that you do not enroll (King 2009). That usually makes declining Medicare coverage when you are working a losing proposition unless you plan to work until you die.

[QN.No.#55.If a senior chooses not to take Medicare at age 65, but at age 70 decides it is time to take it, Medicare will charge a penalty]