Leadership Council of Aging Organizations Sends Letter to President Obama Urging that his Budget not Shift More Costs onto Medicare Beneficiaries
January 29, 2015 12:03 PM
The Leadership Council of Aging Organizations (LCAO) recently sent a letter to President Obama urging him to resist shifting more costs onto Medicare beneficiaries in his FY16 budget. The LCAO letter, which was signed by NAHC, urges President Obama to exclude provisions that were included in previous budget proposals. Two such provisions - home health copays and additional payment cuts for post-acute care providers - were included in the President’s FY15 budget as well as previous proposals, and would be of great concern to the home health community. For more on NAHC’s position on these budget proposals, please see NAHC Report, March 5, 2014.
The President will be submitting his budget to Congress next week. According to the LCAO letter:
“We urge you to abstain from including proposals in the FY2016 budget, namely those included in past budgets, that would shift additional health care costs to people with Medicare. At the same time, we ask you to again express support for securing better prices on prescription drugs, specifically by restoring Medicare drug rebates, accelerating closure of the Part D coverage gap and through patent reforms.
Our opposition to shifting additional costs to older adults and people with disabilities is underscored by the stark economic reality facing many people with Medicare. In 2013, half of all people with Medicare—more than 25 million beneficiaries—lived on annual incomes less than $23,500, and one quarter had annual incomes at or below $14,400. Despite their relatively low incomes, people with Medicare already spend a significant amount on health care. On average, in 2012, Medicare households spent 14% of their total budgets on health care, compared to 5% among non-Medicare households.
While the economic circumstances facing people with Medicare are cause for concern, recent trends related to the financial health of the Medicare program are promising. The rate of Medicare spending growth is at a historic low. From 2010 to 2014, per capita spending increased by only 0.7% and by just 0.3% in 2014. This trend has contributed to significant improvements in the solvency of the Part A trust fund, while also producing positive returns for seniors and people with disabilities through a stable Part B premium for a third consecutive year.
Shifting additional costs to Medicare beneficiaries to secure federal savings is unwarranted due to these historic reductions in Medicare per capita spending growth, and alongside the ongoing implementation of payment and delivery system initiatives designed to enhance program efficiency. In particular, we oppose Medicare cost shifting proposals intended to discourage Medicare beneficiaries from seeking health care services. These include increasing the Part B deductible, introducing a home health copayment, increasing brand name copayments for low- income beneficiaries and taxing comprehensive Medigap supplemental plans.
NAHC has long considered home health copayments a “sick tax” on beneficiaries, and appreciates that the LCAO explicitly asked the President not to include such proposals in his budget.
The LCAO letter goes on to emphasize that:
“Decades of empirical literature on patient behavior and cost sharing finds that these so-called structural reforms will not yield the result of encouraging Medicare beneficiaries to seek high- value care. Raising cost sharing, including deductibles and copayments, amounts to a regressive tax which would force many beneficiaries to forgo necessary care. These ill effects would be borne disproportionately by those with the lowest incomes (most of whom do not receive assistance to pay for these expenses), and may result in the increased use of costly ambulance rides, emergency room visits and hospital stays…
[A]dded health care costs put the health and financial well-being of people with Medicare at risk. Therefore, in this 50th anniversary year for the Medicare program, we urge you to omit past proposals to shift additional health care costs to Medicare beneficiaries from your FY2016 budget request.”
Once the President submits his budget to Congress, NAHC Report will highlight its key provisions – including whether or not President Obama has once again included provisions that shift more costs to Medicare beneficiaries.
To read the full LCAO letter, please click here.