As the Medicare system scrambled to respond to the COVID-19 pandemic, which has disproportionately affected older, medically fragile Americans, some of its own financial vulnerabilities were laid bare.
The latest projections from the Congressional Budget Office show that the Medicare Hospital Insurance Trust Fund, which funds hospitalizations, will be insolvent by 2024, two years earlier than a CBO projection made in May before the effects of the pandemic were factored in.
At the same time, the Centers for Medicare & Medicaid Services took a number of steps to provide better care for seniors during the pandemic, including increasing access to telehealth services as well as providing more plan choices for those living in rural areas. CMS Administrator Seema Verma called the changes “a godsend to patients and providers,” allowing “people to be treated in the safety of their home.”
Medicare beneficiaries, who also include younger adults with long-term disabilities, are covered for COVID-19 testing and antibody testing without getting an order from their physician and at no cost to themselves. If a vaccine were to be approved, Medicare would cover it with no cost-sharing for people enrolled in both traditional Medicare and Medicare Advantage plans.
Pandemic, tax cuts impact Medicare
But the pandemic has clearly taken a toll on the Medicare program. As Americans lost their jobs and had their wages and hours cut, less money was coming in from payroll taxes, the primary funding source for Medicare Part A. Medicare A pays for hospital stays, rehab centers, skilled nursing facilities and hospice and home health services.
Long and extremely costly hospitalizations for some COVID-19 patients on Medicare, however, have been offset by Medicare patients choosing to forgo elective surgeries and other care during the pandemic.
Even before the pandemic rippled across the United States, however, the Medicare Hospital Insurance Trust Fund was in trouble.
“The pandemic is certainly a contributing factor on top of several legislative changes signed into law in the last few years by the Trump administration,” said David Lipschutz, associate director of the Center for Medicare Advocacy.
Among them are the tax cuts of 2017 and repeal of the “Cadillac tax” on high-cost, employer-sponsored health plans.
“All of the changes had the indirect effect of decreasing revenue or increasing spending, accelerating the glide path toward insolvency,” said Tricia Neuman, senior vice president of KFF, a Washington-based nonprofit that focuses on healthcare issues. “The acceleration [in the insolvency timetable] is due to the pandemic.”
Medicare trust fund could be insolvent by 2024
Insolvency doesn’t mean the Hospital Insurance Trust Fund will be broke by 2024, but it does mean that more money will be going out than coming in, a situation that is not sustainable and will require tough decisions by Congress and the next president.
According to CBO projections, the fund would be able to cover about 95 percent of Part A spending in 2024 but after that it would only have enough money to cover about 80 percent.
Among possible fixes are reducing benefits or Part A payments, raising the age of Medicare eligibility, lowering payments to providers or Medicare plans, increasing payroll taxes or finding some other way to increase revenues. The fund has teetered on the brink of insolvency a few times in the past, but Congress has always moved to shore it up.
In a move to help workers during the pandemic, the Trump administration signed an executive order in August to defer payment of the 6.2 percent payroll tax employees pay to fund Social Security, but that means employees, if their employers deferred these taxes, would get smaller paychecks from Jan. 1 - April 30 next year, when the deferred taxes would have to be repaid. The 1.45 percent Medicare portion of payroll taxes isn’t affected by the deferral.
At an August press briefing, Trump said that assuming he wins in November, “we will be ending that tax. We’ll be terminating it,” raising concerns that rather than making the tax holiday permanent for just Social Security payroll taxes, he was taking aim at the 1.45 percent Medicare portion. Any permanent changes in payroll taxes would require congressional approval.
“Assuming the worst, it could mean directly impacting Medicare’s primary funding source,” said Lipschutz. “We’ll hear more about this when Congress gets back to work, presumably in the new year.”
Teleheath may be extended
There also is talk of making the new telehealth benefits, which currently only apply during the pandemic, permanent. But some analysts worry that telehealth visits could increasingly be used to take the place of in-person visits to providers.
“Telehealth should supplement, not supplant,” said Lipschutz. “On one hand, it’s been a lifeline for some and clearly helped people, but there is a digital divide in this country.”
Some seniors may not be tech-savvy or have a cellphone or computer. Others might have equipment that is too old to handle telehealth visits, are too ill to use their computers or might be apprehensive about the whole process.
“For older adults, access to broadband Internet and Smartphone technology and facility with using them can be an issue,” said Natalie Kean, a senior staff attorney at Justice in Aging, which focuses on the needs of low-income Medicare beneficiaries who are also eligible for Medicaid.
Those with limited English proficiency face the additional hurdle of needing an interpreter to participate in telehealth, she said.
“We know that a lot of older adults with limited English are reluctant to ask for an interpreter. They’re used to relying on family members to navigate their care and those people may not be accessible during the pandemic,” said Kean. Now, she said, they might just avoid a telehealth appointment.
An AARP survey of U.S. adults showed a growing familiarity with telehealth; 74 percent of those who were interested in such services said they would use it for a routine visit to a doctor and 85 percent said they would use it to renew prescriptions.
However, respondents aged 65 and older cited lack of access to a computer and high-speed Internet, as well as their lack of knowledge of the technology as barriers that would preclude their using telehealth services.
“There is a lot of pressure to make the telehealth flexibility permanent. But we say slow down. I think we need a more thorough discussion and analysis before making it permanent,” said Lipschutz.
“It’s important to make sure patients always have a choice,” said Kean.
Medicare rule changes as a result of COVID
Other Medicare rule changes put in effect by the CARES Act include provision of a 90-day supply of drugs covered under Part D for enrollees who request it, and more leeway to get Medicare-covered services from out-of-network providers, pharmacies and facilities, if necessary.
Medicare Advantage plans also can’t charge enrollees affected by the health emergency more if they go out of network than they would be expected to pay for care in-network.
The CMS also has waived a requirement for a three-day prior hospitalization before receiving coverage at a skilled nursing facility.
“The Medicare flexibilities were welcome. We’d like to see more of them,” Kean said.
Home healthcare needed after COVID
Another issue that may bubble to the surface as Medicare beneficiaries who were seriously ill from the coronavirus make their recoveries is home healthcare. After long hospital stays, some patients need to relearn how to walk and do other basic tasks.
Medicare doesn’t provide coverage for family caregivers, and help with bathing, meals and so on is only available through home healthcare aides provided through Medicare-certified home health agencies.
“Even before the pandemic, there was declining access to a full spectrum of home-health services, aides in particular,” said Lipschutz. Since the pandemic hit, he said, it’s been even more difficult to access home-health services.
“When Medicare coverage is unavailable or unfairly denied, beneficiaries are often unable to afford the home care they need,” said the Center for Medicare Advocacy in an issue brief. Private in-home aides might cost as much as $3,000 a month.
The pandemic comes at a time when the number of unpaid caregivers was already on the rise. A study by the National Alliance for Caregiving and AARP found that the number of family caregivers providing care for adults or children with special needs rose by 9.5 million from 2015 to 2020.
The study found that more young people are now providing care and Hispanics are the youngest group caring for an adult with a mean age of 43.3 years. The study also showed that Hispanics experience more adverse financial impacts, such as difficulty paying bills, than non-Hispanic whites when they are serving as caregivers.
“The pandemic has highlighted the hurdles family caregivers face while trying to keep themselves and their loved ones safe,” said Yvette Peña, an AARP vice president who deals with multicultural issues.
Among the Center for Medicare Advocacy’s recommendations is creating a new stand-alone home health aide benefit within the existing Medicare structure.
Open enrollment to begin Oct. 15
With the open enrollment period for Medicare set to begin Oct. 15, beneficiaries should consider their risk factors for COVID-19 and other pandemic-related needs as they make their choices.
With more than 40 Medicare Advantage Plans available in Florida, plus the options of purchasing Medigap insurance in conjunction with traditional Medicare, it’s more important than ever to carefully consider coverage decisions. The cost of COVID-19 treatment will depend on the type of coverage a person has.
During the past two months, SHINE (Serving Health Insurance Needs of Elders), a free program administered by the Florida Department of Elder Affairs, has seen an uptick in calls from older people who have lost their jobs or think they are in danger of losing their jobs.
“They are already age 65 so they want to know what Medicare covers,” said Kathleen Sarmiento, the SHINE Medicare/Medicaid director at the Alliance for Aging in South Florida. “SHINE has been receiving approximately 20 calls a day from people who are either going on Medicare for the first time and want us to guide them about how it all works, and also from people who already have Medicare and they want to change their coverage.”
Ullmann said during the pandemic he expects to see more seniors, who have not previously enrolled in Medicare Part B because they had health insurance through their employers, to sign up for that coverage, which pays for physicians, lab work, wheelchairs and other medical equipment, outpatient hospital services and some home healthcare services.
Seniors who have lost jobs or are retiring and those entering or leaving a skilled nursing facility don’t have to wait for the open enrollment period to alter their coverage, but others do.
“If people are nervous about their finances, they might want to shift over to a Medicare Advantage Plan, which tends to be less expensive than traditional Medicare,” said Ullmann.
But Kaiser’s Neuman said that a hospital stay during the pandemic might not necessarily be less expensive for an Advantage Plan member.
A KFF analysis early in the pandemic found that while out-of-pocket costs for Advantage Plan patients for hospital stays of three days would be less than the outlays of traditional Medicare patients, at least half of Advantage Plan enrollees could be expected to pay more for hospital stays of five days or more.
More than 72 percent of Advantage enrollees are in a plan with a higher cost-sharing component for a 10-day inpatient stay than the hospital deductible for traditional Medicare, according to KFF.
“We were surprised,” Neuman said of the analysis.
Some Medicare Advantage Plans are now waiving cost-sharing and co-pays for hospital stays for treatment of COVID-19. “It’s important for everyone who has Medicare to be aware of what his or her co-payments are,” said Sarmiento.
Mimi Whitefield can be reached at firstname.lastname@example.org