"Off The Charts" - Medicare: Who Benefits From Medicare Advantage?
Wednesday, February 16, 2005SUSIE GHARIB: Making a prescription drug benefit available to Medicare patients next year will dramatically raise that program`s costs. But Medicare costs are already going up at a rate that the head of the Congressional Budget Office calls unsustainable. As we continue our series "off the charts: can medical costs be controlled," Jeff Yastine looks at Medicare`s cost crunch and how it might be solved.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Mac and Vicki Rosen are living a quiet and healthy retirement. Whether it`s a game of Scrabble or visiting with friends, they have no complaints about their lives. But there is one thing they see that could spell trouble in the years ahead: the rising costs of Max`s Medicare coverage.
MAC & VICKI ROSEN, RETIREES: This increase monetarily that we have experienced since Medicare started. I was looking at old reports that we had gotten because he`s been on Medicare for a few years. Originally, it had gone up 8 percent, 8 percent. Then, all of a sudden, it went up 13 percent. But this year, it`s 17.5 percent.
YASTINE: For now, the Medicare cost increases don`t represent a problem for people like the Rosens, but the same can`t be said for millions of retirees living on fixed incomes nor for the millions more baby boomers destined to retire in the decades ahead It represents a troubling challenge in public policy. Policy experts say Medicare is plagued by many of the same trends that contribute to rising costs in private health plans, but some observers point to the fact that Medicare is one of the last health plans to still offer the fee-for-service payment system, where patients can go to any doctor or hospital that accepts Medicare without restriction. Some critics say that`s an anachronism, while others say the agency needs to find more efficient ways to use medical resources.
GAIL WILENSKY, SR. FELLOW, PROJECT HOPE: There`s a lot of interest to see whether we can`t find ways that will target the better use of devices or expensive therapeutics with the people who really need them. There`s a lot of interest in trying to use pay for performance, where you would reward the providers -- physicians or hospitals or nursing homes or homecare providers -- who do it right the first time and who do it with a conservative practice style.
YASTINE: To do this, the government is counting on a program called "Medicare advantage," which lets private, managed care providers compete for Medicare patients. The provider gets a flat fee for each Medicare patient enrolled and aims to make a profit over the cost of care. The benefit for seniors, supplemental coverage such as mammograms and colonoscopies not covered under standard Medicare.
DR. MARCIA GOMEZ, MEDICAL DIR. OF HEALTH SVCS., HUMANA FLORIDA: Medicare advantage allows for a much more coordinated effort. For example, we can look at programs anywhere from preventive medicine programs, programs such as healthy lifestyles, which is a program we`re developing here really geared for the mature man and woman.
YASTINE: But in taking Medicare advantage, the recipient is essentially signing on to a managed care program. That means healthcare is restricted to the doctors and facilities set by the provider. And some say the program doesn`t do much in terms of its main objective in cutting the government`s costs.
MARSHA GOLD, SR. FELLOW, MATHEMATICA POLICY RESEARCH: They`ve given people better benefits. They have a little bit of a drug benefit when Medicare didn`t. They had low premiums when Medigap had a high one. They picked up a lot of Medicare`s cost-sharing. And so it`s been a good deal for beneficiaries. It hasn`t saved the government that much money.
YASTINE: In Florida, with its heavy concentration of elderly, the race to sign up Medicare patients for Medicare advantage is heating up. The question now is whether it will hold down costs enough to do much for Medicare`s bottom line. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.
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02/16/05: "Money File"-Saving For College 101
SUSIE GHARIB: In the "Money File" tonight, learning the tricks of the trade when it comes to saving money for college. Let the IRS help you. Here`s Kathy Kristof, business writer of the "Los Angeles Times" and author of "Investing 101."
KATHY KRISTOF, AUTHOR, "INVESTING 101": It`s tax time, and that brings both good news and bad to parents of college-age children. The good news is that Congress offers a litany of tax breaks for those paying college bills. The bad news is that all these tax breaks are income-tested and complicated, so it`s tough to know whether you`ll qualify. Still, it`s worth the effort. These tax breaks can shave Federal income tax bills by as much as $2,000 per qualifying student. In some cases, they`ll cut state income tax bills as well. So who can qualify? There are numerous different breaks with different qualification standards. But the three most generous are the Hope Tax Credit, the Lifetime Learning Credit and the Tuition and Fees Deduction. The Hope Tax Credit and the Lifetime Learning Credit have virtually the same qualification standards. Single filers who earn less than $52,000 and married couples earning less than $105,000 can take a tax credit ranging from 20 percent to 100 percent of qualifying education expenses. The Tuition and Fees Deduction allows singles who earn less than $80,000 and married couples earning less than $160,000 to claim a write-off of up to $4,000 for their qualified education bills. If you want to know more, ask the IRS to send you their booklet on education tax breaks. It may take some figuring to know which breaks you qualify for and which are best, but if you are paying college bills, it`s time well spent. I`m Kathy Kristof.
