Breaking the bank

PIERRE — The nation’s largest health insurance program, Medicare, will be broke within 11 years, according to estimates.

The Medicare trustees, who monitor the financial condition of the insurance program and that of the Social Security program, estimated in their annual report released March 25, that Medicare’s hospital insurance trust fund will be bankrupt by 2019. If that does happen, those younger than 54 would not have Medicare coverage for hospital care when they turn 65, the age of Medicare eligibility for most Americans.

The strain of the baby boomer population’s march into retirement age is expected to put a strain on the program. But the main cause is that health care costs are growing faster than the economy, meaning the health insurance trust fund will soon spend more than its income according to the U.S. Health and Human Services Department.

“It’s not the demographics that are driving the huge increases in health care spending, it’s the cost itself,” said Sam Wilson, AARP associate state director for South Dakota. “In 2008 you’ve got a Medicare Part B premium of $96.40. Only 7 years ago it was half that price. Those premiums are based directly on the amount of money that is spent to pay for those types of services.”

Medicare Part B, also referred to as medical insurance, covers a variety of physician and outpatient services.

In order to save the Medicare program, President George Bush has proposed a $178-billion reduction to the program throughout five years in his 2009 fiscal budget.

But organizations such as the AARP propose that cutting the budget and rolling back services is not what will solve the problem.

The AARP supports the idea of containing the rising cost of health care, Wilson explained. The organization engages in lobbying Congress in support of such a plan based on four main areas.

Implementing value-based purchasing for health care is one route. Payment for services should be based on quality rather than quantity, Wilson explained. The AARP also supports a similar approach, evidence-based medicine.

Rather than utilizing the most expensive procedure possible, health care providers should focus on utilizing what has been shown to be the most effective procedure.

The organization is also a proponent of more advanced health information technology, which would eliminate a large portion of administrative costs through establishing a secure, safe system of sharing medical records between health care providers. Such a system would cut down on the number of duplicate medical tests and procedures an individual would need to take as well as a more efficient means of health care information transfer from one provider to another. The AARP also promotes coordinated or holistic care. Rather than only treating patients who come in when they’re sick or suffering from a medical problem, working on increasing individuals’ health in general and providing preventive care should be a main focus of physicians.

“These are all things that are really new to the health care field and we really need to expedite their inclusion into Medicare if we’re going to control the cost of these programs,” Wilson said.

Another topic brought up in the discussion of the Medicare and Social Security crises is planning for the future. With the possibility of a recession, a constant worry for many in the nation, putting away for the future and dealing with inflation can be a difficult task. But no matter what age a person is, planning for long-term care down the road is important.

The Long-term Care Partnership Program, administered by the state Department of Social Services and Division of Insurance, provides an alternative to spending down or transferring assets by forming a partnership between Medicaid and private long-term care insurers.

Premiums are based on several factors, including age, marital status and current health level, so the program may not be for everyone, it’s “just an option that’s out there,” Department of Social Services communications director Emily Currey explained.

“We just hope people think about some of their care options before they’re actually going to need them so it gives them more time to choose what’s right for them and their families,” Currey said.

Know the Difference

• MEDICARE:

Medicare is a health insurance program which includes coverage for hospital insurance, medical insurance and prescription drugs.

The program is available to:

— people age 65 and older,

— people younger than 65 with certain disabilities and

— people of all ages with end-stage renal disease, permanent kidney failure requiring dialysis or a kidney transplant.

The program consists of two parts.

Part A, hospital insurance, helps cover inpatient care in hospitals and skilled nursing facilities, but not custodial or long-term care facilities. It also helps cover Hospice care and some home health care. Beneficiaries must meet certain conditions to get these benefits.

Part B, medical insurance, helps cover doctors’ services and outpatient care. It also covers some other medical services that Part A doesn’t cover, such as some of the services of physical and occupational therapists, and some home health care. Most people pay a monthly premium for Part B.

Medicare beneficiaries are also able to receive prescription drug coverage. Medicare Prescription Drug Coverage is insurance. Private companies provide the coverage. Beneficiaries choose the drug plan and pay a monthly premium.

• MEDICAID:

Medicaid is available only to certain low-income individuals and families who fit into an eligibility group that is recognized by federal and state law. The program does not pay money to individuals or families. Instead, it sends payments directly to health care providers.

Medicaid is a state-administered program and each state sets its own guidelines regarding eligibility and services. Some of South Dakota’s requirements are:

— The family must consist of a parent or other adult caretaker relative and a dependent child. A caretaker relative may be a parent, grandparent, brother, sister, stepparent, or similar. A dependent child is a child under age 18 who is living with a parent or caretaker relative. If a child is 18 years old and still a full-time student in high school, the child is considered a dependent child if he or she is expected to complete school before reaching age 19.

— The family’s resources may not exceed $2,000. Resources include items such as checking and savings accounts and certificates of deposit. Certain assets such as the home in which a person lives and one vehicle are not counted.

— From the U.S. Department of Health & Human Services, Centers for Medicare & Medicaid Services, www.cms.hhs.gov, and the South Dakota Department of Social Services, www.dss.sd.gov.