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Medicare_Modernization2003.ppt
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Medicare Modernization Act

  • 1965, Medicare and Medicaid established under the responsibility of the Social Security Administration
  • CMS (Center for Medicare and Medicaid Services) is the federal agency which currently administers the program

Medicare

  • Medicare is an entitlement program because people, after paying into the program for years, are entitled to receive benefits.
  • 88% of Medicare enrollees are over 65
  • 56% are female
  • 41% have considered indigent
  • The number of uninsured in the U.S. would be much higher if these programs did not exist

Medicaid

  • Medical Assistance for low income families or individuals, or who have disabilities
  • Jointly funded by Federal and State Governments
  • Prescription medicines are covered
  • This is the single biggest purchaser of prescription drugs in the US
  • Medicaid spending was $329 billion which was a slight decrease from 2006.

Medicare 2007

  • Approximately 40 million Americans are covered
  • In 2007, Medicare spending was $431 billion which is an increase of 7.2% from 2006.
  • Prescription medicines were not covered
  • Criteria :
  • People over age 65
  • Some people under 65 with disabilities
  • People with permanent kidney failure

  • 2018: 55.5 million are currently on Medicare

Medicare Modernization Act

  • New law December 2003
  • Seniors sign up for an insurance policy to cover their medications
  • “Voters believe the pharmaceutical companies and the insurance companies are the biggest beneficiaries of this new law”

© 2010 Jones and Bartlett Publishers, LLC

Medicare Part D
Prescription Drug Benefit

  • The Medicare Prescription Drug improvement and Modernization Act of 2003, which authorized Medicare Part D, produced the largest additions and changes to Medicare and was projected to cost nearly $750 billion in the first 10 years .
  • Federal spending: 78% of program costs
  • Monthly premiums: 10%
  • Stated spending: 11%

  • It is purpose was to provide relief from costly prescription costs for seniors.
  • Like Part B, it is a voluntary program because enrollees pay a premium for coverage.

"With the Medicare Act of 2003, our government is finally bringing prescription drug coverage to the seniors of America. With this law, we're giving older Americans better choices and more control over their health care, so they can receive the modern medical care they deserve...Our nation has the best health care system in the world. And we want our seniors to share in the benefits of that system. Our nation has made a promise, a solemn promise to America's seniors. We have pledged to help our citizens find affordable medical care in the later years of life. Lyndon Johnson established that commitment by signing the Medicare Act of 1965. And today, by reforming and modernizing this vital program, we are honoring the commitments of Medicare to all our seniors." President George W. Bush, White House Press Release, 12/08/2003

2006
Prescription Drug Plan
In 2006 the Medicare Discount card program will end as this part of the act comes into effect. Anyone with Medicare coverage will be eligible to sign up.

Beneficiaries will have a choice of plans with an estimated monthly premium of about $35.00 (about $420/year).

Beneficiaries will pay a deductible of $250 per year (they will pay out of pocket for the first $250 in drug costs)

Medicare will pay 75% of drug costs for drug spending between $250 and $2,250.

If your spending for drug costs reaches above $2,250 you will then pay %100 of the costs until your out-of-pocket spending for drugs reaches $3,600.

After you have spent out-of-pocket costs of $3,600 for prescription drugs Medicare will pay about 95% of of the costs.

Some plans may offer additional options to help pay the out-of-pocket costs.

Low income individuals will get additional help in paying for drugs with waivers of premium or deductibles depending on income and need. The rules and income levels for this will be set in 2005.

Congressional Budget Office Estimate

COSTS: Distribution of National Health Expenditures, by Type of Service, 2008

Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.

Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2008; file nhe2008.zip).

Average Annual Growth Rates for Nominal NHE and GDP for Selected Time Periods

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2008; file nhegdp08.zip).

© 2010 Jones and Bartlett Publishers, LLC

HEALTH CARE SPENDING BY STATE

  • In 2004, the state of Massachusetts per capita of personal health care spending was $6,683 compared to a low of $3972 in Utah.
  • The highest per capita spending was Massachusetts, Maine, New York, Alaska, and Connecticut.
  • The lowest per capita spending was Utah, Arizona, Idaho, New Mexico and Nevada.
  • Medicare expenditures per beneficiary were the highest in Louisiana ($8659) and lowest in South Dakota ($5,640).
  • Medicaid expenditures per enrollee were the highest in Alaska ($10,417) and lowest in California ($3,664).
  • California’s total personal health care spending was the highest at 10.8% with the lowest in Wyoming at .1%.
  • All states except Delaware and Wyoming spent at least 10% or greater of the gross domestic product

Medicare outlays are projected to increase from

$527 billion in 2015 to

$866 billion in 2020, according to CBO

to $1.1 trillion in 2024.6 

OACT projects that total Medicare spending will increase from $649 billion in 2017 to $1.2 trillion in 2024.7

Rx Drug use in USA 2008

Had trouble Paying for Rx

  • Could not fill Rx 29%
  • Skipped doses, cost 23%
  • Serious problem for family 16%
  • At least one of above 40%

  • Kaiser Family Foundation 2004

Government Regulation

  • Testing Rx for safety adequate 55%
  • Government should regulate more 64%

  • Gov should regulate prices more 64%
  • Favor Gov negotiating Rx price 85%
  • Buying Rx from Canada is safe 79%
  • Should be more available 70%

Buying Canadian drugs

  • USA bought more than $700,000 worth of RX from Canada 2003,(Harvard School of Public Health)
  • Department of Defense and Veterans Administration were allowed to purchase from Canada
  • Illinois, Michigan, New Hampshire, Boston currently have similar programs to MaineRx

FDA Declares Foreign Drugs Unsafe

  • “ We want people to understand that importation is illegal and unsafe” Tom McGinnis, FDA 2004
  • Suggest medicines may be contaminated, counterfeit or expired
  • (2005, Vioxx is pulled off the market because it is dangerous; 9000 lawsuits pending)

Regulatory Steps
for New Prescription Drugs

*

Vioxx: how could this happen?

  • Rofecoxib became another milestone in the punctuated evolution of drug-safety science and policy. In the wake of its withdrawal, influential reports from the Institute of Medicine and the Government Accountability Office, along with Congressional hearings, questioned how a drug that nearly doubled the risk of myocardial infarction or stroke could have been used by more than 20 million Americans over 5 years without that risk being widely appreciated. 

Vioxx: how could this happen?

  • The debate highlighted the inadequacy of the FDA's reliance on spontaneously reported adverse events as a main method of ongoing drug-safety surveillance. In the resulting FDA Amendments Act of 2007, Congress required the FDA to develop a near-real-time surveillance system capable of scanning the electronic records of more than 100 million Americans by 2012. This “Sentinel System” is now operational (2011b).
  • Two Centuries of Assessing Drug Risks
  • Jerry Avorn, M.D.
  • N Engl J Med 2012; 367:193-197July 19, 2012DOI: 10.1056/NEJMp1206652

Top positive views of Rx Drugs and Drug Companies

  • Rx have generally made lives better
  • Rx drug ads educate people
  • Rx made you/your family better
  • Drug co’s are ethical in research
  • Rx reduce need for medical procedures
  • Rx reduce costs by preventing illness
  • Rx co’s test and monitor safety

Top negative views of Rx Drugs and Drug Companies

  • Costs of Rx are unreasonable
  • Costs of Rx ads make drugs too expensive
  • Rx companies make too much profit
  • Rx companies too concerned about profits and not enough about people
  • Too many ads on TV
  • Ads encourage people to take rx they don’t need
  • Rx companies spend too much $ on ads
  • Too much $ on “lifestyle” drugs (viagra, botox)
  • Too much $ advertising to doctors

Opposing viewpoints

  • Pharmaceutical companies and the FDA insist that Americans only buy medicine through US certified pharmacies
  • Citizens and State governments look for less expensive options
  • Americans have no way of knowing if drugs are safe, effective or best quality

Related Actions

  • Colorado - HB 1162 - died at end of regular session
    Florida - SB 2098 - died at end of regular session
    Georgia - SB 112 - died at end of regular session
    Illinois - HB 209 - signed by governor, 6/16/03
    Indiana - HB 1688 - did not pass by end of session
    Massachusetts - S 494 pending
    Michigan - SB 75 pending
    Minnesota - HF 281, SF 535, HF 799 - did not pass by end of '03 session*
    Mississippi - HB 828 - died in committee
    Missouri - HB 37 - died in committee
  • New Jersey - A 3406 did not pass by end of regular session
    New York - A 5491 - pending
    Ohio - S 14 - pending
    Rhode Island - HB 5607 - did not pass by end of session
    Tennessee - HB. 200, HB. 205, SB 1072, SB 1073 - did not pass by end of '03 session*
    Texas - HB 1545; HB 1933; SB 797 - died at end of regular session
    Vermont - H. 178, S. 148 - did not pass by end of session.*
    West Virginia - H 2263 - did not pass by end of regular session  

Irreconcilable Differences

  • Everyone has access vs destroying innovation
  • Govt regulation vs free market
  • Social justice vs Market Justice
  • Opposing viewpoints offer opposing solutions

  • How can we finance our drug costs?
  • What benefit do we get from prescription drugs?

Works cited

  • Niles,Nancy J., Basics of the US Health Care System,(2015)Second Edition, Jones and Bartlett Publisher
  • Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2008; file nhegdp08.zip).
  • Kaiser Family Foundation; The Facts on Medicare Spending and Financing, (2015), retrieved Oct 2015, http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/

Physician/

Clinical

Services

21.2%

Hospital Care

30.7%

Other Personal

Health Care

12.9%

Nursing Home

Care, 5.9%

Prescription

Drugs

10.0%

Home Health

Care, 2.8%

Other Health

Spending

16.5%

7.8%

5.5%

4.8%

7.2%

12.7%

10.8%

6.6%

7.1%

9.5%

10.6%

0%

2%

4%

6%

8%

10%

12%

14%

1970s1980s1990s2000-20081970-2008

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