Every day, over 7,600 baby boomers turn 65. By 2029, this number will rise to over 11,000. As more and more Americans approach senior citizenship, health care for seniors through Medicare becomes increasingly relevant. The question is, how will this affect you?
We all have questions about how the current budget battle and resulting spending cuts are going to impact Medicare. It seems unavoidable that Medicare costs will have to be reduced in some manner. Both Democrats and Republicans have proposed fixes to counteract these budget cuts. President Obama, in his State of the Union address, recommended adjustments to Medicare Part D that would enforce mandatory rebates–in other words, price controls–on drug companies.
But we need to ask ourselves: why would we make changes to the most successful part of Medicare by far? Polls indicate that 90 percent of seniors are happy with their current Part D coverage. Not only is Part D popular; it is also cost effective. It has cost 30 percent less than originally estimated. Premiums are an average of half the price originally estimated. Meanwhile, price controls are estimated to increase drug costs by 40 percent. Clearly, they are not the answer to cutting Medicare costs.
Think for a moment. If Part D is so successful, why aren’t we using it as a model for the rest of Medicare? Unlike Part D prices, Medicare Part A and Part B prices are rising. Over the course of the last 7 years, the average doctor’s visit has gone from a price of $89 to $105. Obviously we are doing something right with Part D, and something very wrong with Parts A and B.
The difference between the way Parts A and B are run versus the way Part D is run is that with Part D, we are setting the prices. Part D is based on market competition, and when we choose what plan to invest in, we are in effect telling drug companies what we’re willing to pay. In effect, ordinary Americans are driving down Medicare costs, not the government.
Part D should serve as an example of how to effectively run a health care program for seniors. High rates of satisfaction, falling government costs and low premiums are exactly what we need. Reform is clearly necessary. We need to take Parts A and B of Medicare and make them more like Part D. In other words, we need to make them more cost-effective and more popular among seniors.
What has your experience been with Medicare, if any? Are you ready for change? How might we take what we’ve learned from Part D and apply it to Parts A and B?