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The New Health Care Law

How Health Care Reforms Affect Medicare

Controlling the rising costs of Medicare doesn’t mean cutting benefits.

Older Americans are speaking out in polls and public forums across the country—voicing their angry suspicions that health care reforms would cut Medicare benefits or increase their costs to help pay for covering the uninsured. While this summer’s spate of anti-reform propaganda—with predictions of “death panels,” care denied to those who are “too old” and even the “elimination” of Medicare—has consistently been exposed as false, it inevitably feeds those fears.

Experts who have studied the proposals now being debated generally say the changes actually aim to strengthen Medicare and improve beneficiaries’ care and access to physicians. The proposals even add new benefits; for example, making preventive measures, such as mammograms and colonoscopies, free to beneficiaries and substantially improving prescription drug coverage. Still, the fears remain.

“Medicare beneficiaries are the most satisfied of any Americans with their health coverage, so it’s natural for them to worry about any changes that might alter it, especially when they’re being lied to in a deliberate attempt to make them feel anxious,” says Jonathan Oberlander, a professor of social medicine and health policy at the University of North Carolina, Chapel Hill, and author of The Political Life of Medicare.

Almost no Americans can now remember what it was like to be 65 or older before Medicare began in 1966. “In those days,” Oberlander says, “insurance companies wouldn’t insure seniors because they were considered bad risks, so millions had no health coverage and often faced financial ruin if they became very sick.” In other words, the same predicament as millions of people under 65 face now.

Today, older Americans on Medicare “have an incredibly valuable security blanket,” says Joe Baker, president of the Medicare Rights Center, a nonprofit advocacy and help group. “So once you start rocking that boat, they react viscerally. But I think if you don’t scare them, seniors view reform more positively. They’d love for their children and grandchildren to have the same sense of security that they have now.”

The complexity of reforming the system only adds to uncertainties. Details of some proposals—especially financing measures—are bafflingly technical. When supporters of reform, and even President Obama, use phrases like “bending the cost curve” to explain how potential savings from Medicare can help fund reform without cutting benefits, millions of eyes glaze over. But opposition sound bites about “rationing” and “pulling the plug on Granny” resonate because they’re frighteningly simple.

Although media coverage of town hall meetings across the country this summer focused on seniors protesting against reform, many members of Congress reported that their own unpublicized town halls were calm affairs with Medicare beneficiaries raising sensible concerns about how reform might affect them personally. Can billions of dollars be carved out of Medicare to help pay for it, without affecting benefits? If reform succeeds in covering the 46 million who are currently uninsured, will there be enough doctors to treat everyone? And what’s the outlook if no action is taken?

What happens to Medicare without reforms?

Often missing from the public conversation is what happens to Medicare if nothing is done. If Medicare’s expenditures exceed its income—which for the hospital side of the program is projected to happen as early as 2017—the only way it could then get out of the hole would be to raise payroll taxes, or reduce benefits, or increase enrollees’ share of the costs, or a combination of all three.

If nothing is done, beneficiaries’ out-of-pocket Medicare expenses will eat up an increasing part of their Social Security checks, according to the 2009 Medicare trustees’ report.

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