Free Perks With Medicare Advantage Plans Aren't Really Free - washingtonpost.com

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By Philip Rucker
Washington Post Staff Writer
Thursday, October 15, 2009

TUCSON -- Patrick Higney, 66, doesn't want to give up the freebies that come with his zero-premium Medicare Advantage plan: free aspirin and free Band-Aids, a free blood pressure machine and a free ear thermometer.

Nancy Smyth, 68, wants to keep the free gym membership that comes with the Medicare Advantage policy she bought from Health Net, a private HMO. And John Kizer, 72, hopes his plan will continue to offer free prescription eyeglasses and free hearing aids.

"Everybody's trying to save their little kingdom," Kizer, a retired dairy farmer, said last week after receiving a flu shot. The shot was free, of course.

Seniors in this Sun Belt retirement haven and across the country revel in the free perks that private insurance companies bundle with legally mandated benefits to entice people 65 and older to forgo traditional Medicare and sign up for private Medicare Advantage policies.

The trouble is, the extra benefits are not exactly free; they are subsidized by the government. And some of the plans pass their costs on to seniors, who pay higher co-pays and additional fees to get care.

"It's a wasteful, inefficient program and always has been," Sen. John D. Rockefeller IV (D-W.Va.) said at a recent hearing. At its core, Rockefeller added, Medicare Advantage is "stuffing money into the pockets of private insurers, and it doesn't provide any better benefits to anybody."

President Obama has proposed cutting more than $100 billion in subsidies over 10 years, a contentious component of health-care reform that will be fought in earnest as the bills move through Congress. But unlike some issues that touch off partisan sparring, Medicare Advantage has an unlikely band of bipartisan defenders who have already battled to restore $10 billion of the proposed reductions.

In a health-care debate defined by big numbers and confusing details, the prospect of losing benefits such as a free gym membership through the Silver Sneakers program is tangible, and it has spooked some seniors, who are the nation's most reliable voters and have been most skeptical about reform.

Medicare Advantage was established in the 1970s (under a different name) when private insurers convinced Congress that they could deliver care at lower costs than Medicare. The program blossomed in the late 1990s when Congress bolstered it with millions in additional federal subsidies to for-profit HMOs. It has proven popular among younger, active seniors who had managed-care plans as workers, and about a quarter of Medicare's 45 million beneficiaries are enrolled.

Many private plans require no additional monthly premiums, yet the government pays an average of $849.90 in monthly subsidies to insurance companies for a person on Medicare Advantage, according to the Kaiser Family Foundation. That is about 14 percent more than the government spends on people with standard Medicare, according to the nonpartisan Medicare Payment Advisory Commission.

"The promise of Medicare Advantage and Medicare HMOs was to save the government money, to save consumers money, all the while providing additional benefits and coordinating care," said Joseph Baker, president of the Medicare Rights Center. "That promise has been unfulfilled overall because the plans are overpaid by the federal government at this point."

The insurance industry, foreseeing a loss in profits, warns that cuts would hurt seniors by increasing their premiums or co-payments and taking away some benefits. America's Health Insurance Plans (AHIP), an industry trade group, on Tuesday launched ads in several states citing a projection by the nonpartisan Congressional Budget Office that "many seniors will see cuts in benefits."

"This is a program that more than 11 million seniors currently rely on, and seniors have expressed very high satisfaction with this program and want to be able to keep the coverage," said AHIP communications director Robert Zirkelbach. "Seniors are going to be shocked when they find out what these cuts are going to mean."

As Congress inches toward a final debate, millions of Medicare Advantage beneficiaries such as those here in Tucson are factoring heavily in the political calculus for lawmakers who want to cut spending without alienating this powerful constituency.

Their anxieties are leading to regional alliances among Democratic senators, such as Florida's Bill Nelson and New York's Charles E. Schumer, and GOP senators, including Arizona's Jon Kyl, whose states are home to disproportionately high numbers of Medicare Advantage beneficiaries.

Federal subsidies to Medicare Advantage insurers vary based on location. In Arizona, insurers stand to lose between $35 and $57 in monthly subsidies per beneficiary under the bills in Congress, according to AHIP.

Nationally, about 25 percent of Medicare beneficiaries have Medicare Advantage policies. But in Arizona, that figure is about 32 percent, and in Tucson it's nearly 40 percent, which explains why Kyl has been so outspoken.

"Seniors like the choices they now have, and they don't deserve to have them ripped away to help pay for this bill," Kyl, a member of the Senate Finance Committee, said Tuesday before voting against the panel's bill.

"It's going to be one of the biggest factors in the debate because seniors are a political force in this country," Kyl said in an interview. "The argument we're going to make is, 'That's not right, that's not fair to take these benefits away from seniors.' "

Smyth, a life coach who visits the Tucson Jewish Community Center several times a week for cardio workouts and yoga classes, said she supports health-care reform but does not want Medicare Advantage subsidies to decrease. "Where are they going to cut back?" Smyth asked. "I'm worried they'll cut Silver Sneakers."

In Tucson, many Medicare Advantage policies have no premiums, while some beneficiaries pay relatively small monthly fees to get added benefits such as dental care. But many pay fees for each doctor's visit, on top of co-payments as high as 20 percent of costs.

Many seniors said they were drawn to the plans because they were relatively healthy and visit hospitals rarely, and because their premiums would be substantially higher if they bought full-coverage supplements to traditional Medicare.

"The appeal is cost, obviously," said Norman Powers, 72, a retired electrical engineer, who signed up with his wife, Carole. He said they have not had any costly medical operations -- and then knocked on a wooden table. The gym membership that Health Net gave away has been a plus, he said.

"We do the full workout, treadmill, the works," Powers boasted. "And it's all free. We were paying $600 a year for our gym membership before."

With the annual Medicare enrollment period a few weeks away, Humana and other HMOs have hired new insurance agents in the Tucson area to hawk private plans to the swelling senior population, said Denise Early, an independent insurance agent. About 57,000 people here are on Medicare Advantage, and Pima County data show there were 58 policies on the market this year.

"The bottom line is, if you are living on $1,500 a month, and you're paying rent and have a car and groceries and other expenses, then Medicare Advantage with zero premium is attractive," said Lydia Baker of the Pima Council on Aging.

But Medicare Advantage policies can be frustrating, too. As with traditional managed-care programs, beneficiaries must consult through primary-care physicians in their insurers' networks, and the companies sometimes deny coverage. Bernie Keegan, 68, was hospitalized in March when he got sick and was throwing up blood. But his HMO did not cover some of his bloodwork or doctor's fees, leaving him with hundreds of dollars in medical bills.

"I'm kind of rolling over on my back here like a whipped dog," said Keegan, who directs a nonprofit organization. "I don't want to fight with insurance companies."

Keegan has a free gym membership. But he has yet to use it.

Stagnant Prices Prevent Social Security Increase - washingtonpost.com

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Obama Endorses $250 Emergency Payments

By Amy Goldstein and Neil Irwin
Washington Post Staff Writers
Thursday, October 15, 2009

President Obama on Wednesday attempted to preempt the announcement that Social Security recipients will not get an increase in their benefit checks for the first time in three decades, encouraging Congress to provide a one-time payment of $250 to help seniors and disabled Americans weather the recession.

Obama endorsed the idea, which is expected to cost at least $13 billion, as the administration gropes for ways to sustain an apparent economic rebound without the kind of massive spending package that critics could label a second stimulus act

The administration is already developing plans to direct billions of dollars in federal money to small businesses through community banks, government sources said Wednesday. That would probably include funds originally targeted to help bail out huge corporations. Obama aides are also attempting to extend programs to make loans from the Small Business Administration cheaper and easier to obtain.

In recent weeks, the White House has examined a wide range of proposals to funnel money to constituencies seen as suffering. Administration officials have also been supportive of extending unemployment insurance benefits that were to expire at the end of the year and are contemplating an extension of an $8,000 tax credit for first-time home buyers due to expire Nov. 30.

An increase in benefit checks each January has been a yearly ritual since the mid-1970s, when the government moved to ensure that its subsidies to retirees, pension recipients and others who receive Social Security benefits kept pace with inflation. Thursday's announcement by the Labor Department will mark the first time that the federal formula used since then, which is tied to the consumer price index, will translate into no increase at all. That is because consumer prices have remained stagnant in the weak economy -- a sharp reversal from this past year, when Social Security checks grew by 5.8 percent, an unusually large amount.

The unprecedented lack of a cost-of-living increase was first hinted at last spring in congressional budget estimates and in an annual report by the trustees who oversee Social Security and Medicare, the government's main financial props for the elderly and the disabled. Since then, some senior citizens have complained to government offices and seniors advocates, and federal officials are anticipating a fresh and more vociferous outpouring of complaint once the announcement is official.

In recent weeks, several members of Congress have proposed legislation that would, in varying ways, compensate Social Security beneficiaries and veterans for the lack of a built-in increase. Until Wednesday, those bills had attracted little notice. Their prospects have been uncertain at a time when deficits are rising, lawmakers are working on expensive changes to the health-care system and Congress has already enacted a stimulus package that included a similar $250 payment to retirees and others who depend on Social Security, veterans' benefits and federal pensions.

Obama's announcement, however, focused new attention on the prospect of further help to some of the nation's most economically vulnerable people. Senate Majority Leader Harry M. Reid (D-Nev.) said for the first time Wednesday that he, too, thought that "providing another economic recovery payment is the right thing to do." In the House, Speaker Nancy Pelosi (D-Calif.) urged lawmakers to support the idea, saying the original $250 payments in the stimulus package "proved an effective way to offer stability and security to millions of Americans and a boost to our economy."

House Majority Leader Steny H. Hoyer (D-Md.), however, has resisted the proposal, saying recently that, in light of the emergency payments for older Americans in the stimulus package, "it's not as if the Congress has forgotten seniors."

The new payments would cost an estimated $14 billion, according to legislative sources, although the White House said the price tag would be $1 billion less than that.

In urging lawmakers to provide a second round of payments to older Americans, the president said the extra help would "not only make a difference for them, but for our economy as a whole," adding that it would "be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis."

The White House has essentially latched on to an approach envisioned in legislation introduced last month by Sen. Bernard Sanders (I-Vt.) and Rep. Peter DeFazio (D-Ore.). Their bills propose that the $14 billion measure be covered through extra Social Security payroll taxes on wealthy Americans -- specifically, on income between $250,000 and $359,000. "In the midst of a recession, when we are appropriately worried about unemployment and underemployment, we can't forget about seniors who are also hurting," Sanders said in an interview.

Since its origins in the Great Depression, Social Security has been a significant buffer between older Americans and poverty. It also provides subsidies to people who are disabled or who are survivors of workers who die prematurely. The average retiree gets a monthly check of about $1,150. The program provides 40 percent of all income received by elderly people in the United States; one in five older married couples and two in five older single people rely on it for at least 90 percent of their income.

The Social Security cost-of-living adjustment is set every year based on the percentage change in the consumer price index during the July-to-September quarter, compared with the previous year. The consumer price index captures changes in the prices of the full range of goods and services that people buy, including bananas, heating oil, telephone service, rent and hundreds of other items.

The consumer price index will be updated Thursday.

Lobbyists for AARP, the largest advocacy group for older Americans, contended Wednesday that the elderly need extra help even in a time of declining prices because they tend to spend more of their money than younger people on health care, the cost of which has been climbing more rapidly than the rate of inflation.

On the other hand, Andrew Biggs, a resident scholar at the American Enterprise Institute and former deputy commissioner of the Social Security Administration under the Republican administration of President George W. Bush, said: "There is essentially no substantive case for this on policy grounds. . . . This is a case of both Democrats and Republicans bending over backward to do the politically popular thing for seniors."

High costs and low wages in Singapore - geraldgiam.sg

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A comprehensive survey released by UBS has confirmed what economists, academics, opposition politicians and ordinary Singaporeans have known all along: That the Singaporean worker’s wages has decreased over the past 3 years, while the cost of living has shot up.

The Prices and Earnings 2009 survey by the Swiss bank, which the Straits Times did an Insight article on, offers a detailed look at prices for goods and services, and wages and working hours in 73 major cities worldwide. The survey found that:

offers a detailed look

at prices for goods and services, and wages and working

hours for 14 professions in 73 cities worldwide

• Singapore’s wages after taxes and social security contributions rank us at 41 out of 73;
• Singapore ranks as the 15th most expensive city, after factoring in the cost of rent (a major expenditure for Singaporeans);
• Our workers’ purchasing power is ranked 50 out of 73;
• Three years ago a Singaporean worker had to work 22 minutes to earn enough to afford a Big Mac. Today that same worker has to work for 36 minutes, because his wages have decreased and the cost of living has increased.

The contrast between the ranking of our cost of living (15) and our wages (41) couldn’t be more stark. Yet when asked for their views on these unfavourable survey results, two MPs were dismissive about it.

Mr Seah Kian Peng (Marine Parade GRC) said: “The figures may be right, but the conclusion could be wrong.”

As quoted by the Straits Times, he said that rather than look at prices and wages in isolation, the key considerations should be: Do Singaporeans lead a better life than they did in the past, and are the poor taken care of? If the answer to both is yes, then moving up or down two notches becomes mere semantics.

Mere semantics, Mr Seah?

Tell that to the worker who has had to suffer wage cuts or retrenchment just to keep his company afloat during the recession. Perhaps he needs to teach “semantics” to the housewife who has seen the prices of basic necessities shoot up over the past three years, even though she makes the best effort to purchase the “house brands” from Mr Seah’s supermarkets. (He is the Managing Director of NTUC Fairprice.)

I would have expected a so-called “labour MP” to be calling on the government to take this survey seriously, and look into ways to raise the wages of our workers, and lower the cost of living for the average Singaporean. But I suppose he was speaking with his PAP hat on, not his unionist hat. (I’ve met Mr Seah before. He is a very nice man. But his defence of the indefensible only highlights the lack of value add of ruling party MPs when the debate shifts to fundamental issues of national importance.)

Isn’t it amazing that when there are global surveys that rank Singapore highly, like the corruption or competitiveness indices, the government loves to claim credit for it, but when surveys like this UBS survey put the government’s policies in a bad light, they are dismissed as “mere semantics”?

To rub salt on the wound, we are told to look at the big picture: Compare your life now to 44 years ago. Is it better now than before? If yes, then shut up and stop complaining.

Well if the government wants us to look at things from such a general perspective, then I can also point out that the Taiwanese, South Koreans, Ghanaians and Chileans also have a better life now than 44 years ago. What’s the big deal? We have just been riding on a wave of global prosperity since the 1960s, no?

Another “labour MP” Halimah Yacob (Jurong GRC) questioned the validity of the survey, which has been published every three years for the past 38 years. She wondered whether the indicators include government aid. She claimed that Workfare Income Supplement, rebates and subsidies in health care, education and housing are “significant and help people to cope better”.

I’m not sure if Mdm Halimah really knows what she is asking for. If government aid like a comprehensive social safety net, unemployment benefits, free health care and free education are included, most cities in developed countries would even further outrank Singapore, which provides none of the above.

Causes of the current situation

The current state of affairs of high costs and low wages is not just a by-product of globalization which the government has no control over. This is a cop out and a convenient excuse that this government likes to make.

There is wide agreement among economists and analysts that our low wages, particularly at the bottom rungs, are caused by the flooding of cheap foreign labour into our country. The easy availability of foreign blue collar workers has given our employers little incentive to invest in technology and increase productivity. It has also lowered the bargaining power of local workers who have to compete with them for jobs.

High inflation and high costs too are not just accidental occurrences.

For example, the cost of public housing is directly controlled by the government, which can choose to build more new HDB flats (increase supply) and sell new flats at cost-plus, instead of making such huge profits out of home buyers. This will in turn bring down the prices in the resale market.

The introduction and hikes in the rate of GST has served as a regressive tax on consumers — hitting the low income harder than the wealthy. To date the government has refused opposition MPs’ calls for a GST freeze or reversal.

University tuition fees have risen rapidly in the past decade, yet the government continues to subsidize foreigners’ tertiary education to the tune of $105,600 over a 4-year course, instead of making higher education truly affordable to all Singaporeans.

Instead of just dismissing this survey or nitpicking at its flaws, our government leaders should seriously examine the policies that are causing this dismal state of affairs. They should start listening to the people who really know what’s going on on the ground, instead of brown-nosing “grassroots leaders” or scholar-bureaucrats who rely on charts and statistics to decide which policies will be tolerable for the “median” Singaporean.

Alternatively, they can choose to ignore it at their own peril at the next elections. Ordinary Singaporeans may be paying for the flawed policies now, but come the next election, someone else may be paying.