Facts About Medicare Reform

Developed by Civic Action's Senior Ministries Network

The Medicare Modernization Act (MMA) of 2003 threatens the survival of Medicare as we know it. Medicare is the nation’s largest and most successful health insurance system, serving the health needs of 41.7 million senior and disabled beneficiaries. Medicare is also financially efficient—administrative costs average only 2 percent of program outlays compared with 5-6 percent in the large private plans. All retired citizens are entitled to benefits, regardless of age, income or health status. However, the MMA not only created prescription drug coverage, it enacted changes to Medicare that threaten the universality and affordability of the program, permitted the first steps towards privatization, and jeopardized its solvency. We must ensure Medicare remains strong, protects beneficiaries and upholds our commitment to affordable, accessible health care.

PROBLEM: The MMA cuts Medicare’s future short.
FACT: The most recent Medicare Board of Trustees report indicates that the Medicare will no longer be a financially viable program by 2018, a decline of 11 years since 2001. The decline in solvency is due to the Bush administration’s excessive subsidies to health maintenance organizations and private insurers and a failure to control national health care costs.

PROBLEM: The MMA undermines Medicare as we know it.
FACT: The MMA forces Medicare to compete with private insurance companies in 2010. This experiment allows private insurance companies to “cherry-pick” enrollees, that is they will accept healthier seniors, leaving less healthy seniors in the traditional Medicare program. This means Medicare will have to pay more to cover the sickest beneficiaries, while private insurance companies pay less to cover healthier beneficiaries.

PROBLEM: The MMA begins the privatization of Medicare.
FACT: The MMA included provisions for health savings accounts, which give tax shelters to wealthy non-Medicare citizens. Health Savings Accounts will cost the federal government about $6.7 billion over 10 years. These tax shelters will also provide an incentive for more beneficiaries to opt into private insurance plans, exposing beneficiaries to unpredictable costs and changes in coverage.

PROBLEM: The MMA conditions Medicare costs and Medicaid assistance on individual income or assets changing the fundamental nature of this universal earned benefit.
FACT: The MMA establishes “means test” for the Medicare program. One test determines who will get assistance with deductibles and co-pays based on a beneficiary’s income and assets. Under MMA, this test for assistance will disqualify 2.8 million very low-income seniors. Another income test will determine how much wealthier seniors will pay in premiums for Medicare Part B.

These facts were taken from the following websites: http://www.retiredamericans.org/ and http://www.aarp.org/issues/.


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