Page images
PDF
EPUB

28

FIGURE 3.5 MEDICARE PART B PREMIUM AS
COMPARED

TO

ONE-HALF AVERAGE MONTHLY SOCIAL SECURITY BENEFIT FOR RETIRED WORKERS POR 1977 THROUGH 1995.

[blocks in formation]

Looking ahead, the President's 1991 Budget proposes a permanent increase in the Part B premium by tying it to increases in overall Part B costs. Under current law, the premium cannot increase fast than the Social Security COLA and is estimated to be $34.80 per month in 1995. If the President's proposal is enacted into law, the Medicare Part B premium would reach $47 per month in 1995, assuming the President's other Part B cuts were enacted. If the President's other Part B cuts were not enacted, the Part B premium would be higher at $50 per month.

29

Over the 1991-95 period, the President's proposal would increase the Part B premium much faster than the Social Security COLA. Under the President's best case, where he gets all of his other Part B cuts, the premium would rise an average of 9.6 percent annually as compared to average Social Security COLAs of 3.7 percent. If Medicare Part B is not cut as he proposes, the premium would rise an average of 10.0 percent annually. In both cases, the elderly lose ground as Social Security payments grow more slowly than the Part B premium. Another source of concern

is over
the access

and quality consequences for the elderly if the President does get his other Medicare Part B and Part A cuts.

MEDICAL CARE PRICES AS COMPARED TO ELDERLY INCOME. Most of the previous analysis has focused on senior citizens because they are most likely to have the combination of substantial health and long term care costs and relatively fixed incomes. However, when medical prices are charted against elderly income, a picture is drawn that also applies to persons of any age who have major health costs and relatively fixed incomes. As detailed earlier, medical price increases for the past seven years are much higher than increases in several indicators of elderly income. (See Figure 3.6) On average between 1983 and 1989, medical prices rose twice as fast as did the average monthly Social Security payment and the Consumer Price Index (CPI-W), the basis for setting Social Security COLAs. For the same period, growth in medical price also easily outdistanced growth in mean income for those aged 65 and older and median income for those aged 70 and older.

[merged small][ocr errors]

30

FIGURE 3.6 – INCREASES IN MEDICAL CARE PRICES AS COMPARED TO SOCIAL SECURITY, AND ELDERLY MEAN

INCOME.

Medical Price Index Growth Compared to Elderly Income and Social Security

[merged small][graphic][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small]

31

CONCLUSION: "CONSUMER COST CONTAINMENT AS CRITICAL OR MORE THAN FEDERAL, STATE AND EMPLOYER COST CONTAINMENT

As this analysis clearly documents, the elderly, as well as any other group of people with relatively fixed incomes and substantial health care costs, have a problem now and are likely to have a bigger problem in the future. Though the problem is acute for all low and middle income elderly, it is particularly acute for those live in the "high risk zone," a place where incomes are limited and health care costs may be high.

Unless there is a significant cost containment intervention on behalf of beneficiaries, there is every reason to believe that the future is likely to look much like the past where health care costs grow everywhere from one and one-half to two times faster than general inflation and than elderly income.

There is little doubt that federal and state governments will continue to pursue cost containment to restrain costs for both Medicare and Medicaid. There is also little doubt that employers and unions will continue cost containment efforts for the care they buy for the employed. What continues to be in doubt is whether or not there will be a significant cost containment effort to restrain out-of-pocket costs for Medicare beneficiaries and to restrain out-of-pocket costs for the uninsured and for those not represented by employers and unions.

What is missing and desperately needed is a coordinated cost containment approach that restrains cost for all payers, whether they be government, employers, or individuals. To be successful, a coordinated strategy must be applied fairly so that health care providers receive reasonable payment for their services. It must be applied with great care to ensure that health and long term care quality and accessibility do not suffer.

[blocks in formation]

“Access to Health Care and Long-Term Care for All Americans”

March 2, 1990

« PreviousContinue »