Medicare and Health Care Reform

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Private Medicare is not the answer





private medicare:  too much for taxpayers, too little for beneficiaries


When Medicare was created in 1965 over 50% of everyone 65 or older had no health insurance. Private insurance failed to meet their needs. Medicare, on the other hand, is a success. It increased the number of insured older adults to 95%. In 1972 Medicare coverage was extended to people with significant disabilities. But Medicare's success in providing access to health care for millions of people is in danger. Ironically, the threat comes from private insurance plans. Funded by windfall subsidies from taxpayer dollars, privatization is jeopardizing the cost-effective, dependable Medicare program.


Since 2003 the number and costs of private Medicare plans have increased exponentially as a result of the design of Medicare Part D and "Medicare Advantage". Unlike plans to privatize Social Security, which were debated and largely rejected by lay people and professionals alike, the privatization of Medicare is well underway and has occurred largely without public knowledge or discussion. Medicare privatization and the billions of dollars being spent to subsidize private plans threaten the future of Medicare and the health and economic security the Medicare public program has provided for America’s older and disabled people and their families.


Medicare wasn't broken, but because of the ever-increasing private Medicare options, it is breaking. The myriad private plans are creating confusion and barriers to care for real people. The Center for Medicare Advocacy is contacted everyday by people who were inappropriately marketed to, people who did not understand what they were getting into, people who have been unable to get the health care services they need from their Medicare Advantage (MA) plan, and people who are "locked into" their MA plan. Further, the Center gets calls for help from people who thought they had MA "on top of" their regular Medicare and/or Medigap and are surprised to find out that is not true when the service or provider they need is not covered by their MA plan.


Medicare privatization costs taxpayers approximately $15 billion a year, while it hurts many people with Medicare and strangles the traditional Medicare program. Consider these stories from just a few of  the Center’s clients:


"Medicare Advantage" is starving the successful traditional Medicare program and hurting beneficiaries. Studies by MedPAC, the Congressional Budget Office, and the Commonwealth Fund and numerous scholars confirm that taxpayers are spending between 12% – 19% more on private plans than it would cost to serve the same people in the traditional Medicare program.  Meanwhile, private Medicare has proven far less able to provide secure health insurance and a wide choice of doctors and other health care providers for older people and people with disabilities.


Medicare was enacted in 1965 because private industry failed to insure more than 50% of older people. It would be ironic if privatization condemned Medicare now, returning older and disabled people to the vagaries of the private, for-profit insurance industry.


The solution for the Medicare crisis is not to increase the eligibility age or decrease benefits, but to stop privatizing it at the expense of older people and taxpayers.


Judith Stein • Center for Medicare Advocacy, Inc.

   October 15, 2008




Much of the current talk about the problems of Medicare misses the point. The proposals could end up "fixing" a successful program out of existence. Before supporting any fix, remember:

Medicare has been a success

Any efforts to reform Medicare should

We must strive to make Medicare work for all by building on its established track-record of providing guaranteed benefits. Policy makers should make choices that keep Medicare a strong program with uniform benefits available to all beneficiaries.

Preserving a Structurally Sound Program for Tomorrow

A Position Paper from the Undersigned Organizations*


The Medicare program is a success story. It reflects our national commitment to the concept of social insurance by providing one health insurance system with a defined set of benefits for our nation’s elderly and disabled. Any discussion of reforms to the Medicare program and responses to the Medicare Commission must begin with understanding this important commitment.

As stated by Nancy-Ann Min DeParle, Administrator of the Health Care Financing Administration (HCFA), United States Department of Health and Human Services:

Medicare is clearly a success story, an achievement of social insurance. And yet, as the millennium approaches, the program faces challenges that cannot be ignored. While the Balanced Budget Act of 1997 extended the solvency of the Medicare Part A Trust Fund, the broader, longer term challenge of meeting the complex health needs of an aging society is not diminished. The number of elderly is growing and their life expectancy is lengthening. In addition, the traditional Medicare benefit package, reflective of average indemnity plans in 1965, is less generous than most large employer sponsored fee-for-service plans. Gaps in coverage contribute to high out of pocket expenses relative to income for many seniors, particularly those with low incomes. Indeed, only about half of the elderly’s health care costs are paid for by Medicare. (Preface, A Profile of Medicare  May, 1998)

Basic Tenets and Principles that Must be Observed

Concerns and Cautions

Ideas for Further Study and Exploration


The public should be informed of the dramatic changes envisioned by the Medicare Commission and should be given an opportunity to consider seriously whether they want these changes. As we continue the dialogue about Medicare solvency and reform, we must remember that the Medicare program is sound, and that it has served our nation’s elderly and disabled well. Again, as HCFA Administrator, Nancy-Ann Min DeParle, has stated:

[f]ew programs in the history of the United States have brought as much benefit to society as Medicare. Since its enactment in 1965, Medicare has provided access to quality health care for those Americans least likely to be attractive to private insurers – those over age 65, disabled, or with end stage renal disease. Medicare has also prevented many Americans from slipping into poverty. The elderly’s poverty rate has declined dramatically since Medicare was enacted – from 29 percent in 1966 to 10.5 percent in 1995. Medicare also provides security across generations: it has given American families assurance that they will not have to bear the full burden of health care costs of their elderly or disabled parents or relatives at the expense of their young families. (Preface, A Profile of Medicare, May 1998.)

Medicare must remain a strong and reliable program with specific benefits. It must be available to all eligible persons, irrespective of health or financial status. This must be our commitment. This must be our national goal.

Center for Medicare Advocacy, Inc.
National Senior Citizens Law Center
Consumer Coalition for Quality Health Care
National Academy of Elder Law Attorneys (NAELA)
Alzheimers Association
American Federation of State, County and Municipal Employees (AFSCME)
National Council of Senior Citizens
Connecticut Association of Area Agencies on Aging, Inc.
Medicare Advocacy Project, Greater Boston Legal Services
Legal Assistance to the Elderly (San Francisco)
Tennessee Justice Center
Samuel Sadin Institute on Law, Brookdale Center on Aging, Hunter College (NY)
Vermont Senior Citizens Law Project
Vermont Medicare Advocacy Project
Council of Vermont Elders
Connecticut Legal Services
Greater Upstate Law Project, Inc. (NY)
Neighbor to Neighbor
Northern California Lawyers for Civil Justice
Coalition of Wisconsin Aging Groups/Elder Law Center
National Health Law Program
*Authored by the Center for Medicare Advocacy, Inc., the National Senior Citizens Law Center, and the Consumer Coalition for Quality Health Care.  (3/3/99)


The Bipartisan Commission on Medicare completed its work on March 16, 1999 without reaching agreement on a recommendation to Congress about the future of Medicare. Having missed its initial deadline, the Commission declared itself unable to come to consensus on a set of recommendations.

The Commission’s only proposal, the Breaux-Thomas proposal, known as a "Premium Support" or "Voucher" program, creates great concern among both current and future Medicare beneficiaries because it:

We must move on! Medicare remains a vital and successful program. Now is the time for dialogue and action. The debate has just begun, and we must help lead it.

We are left with an important opportunity to:

Participate in this critical discussion. Help preserve Medicare as a national program which promotes the important value of ensuring basic health care for all of our elders.

For further information contact:
Alfred J. Chiplin, Esq. or Vicki Gottlich, Esq.
Center for Medicare Advocacy, Inc.
1025 Connecticut Ave., NW Suite 709
Washington, DC 20036, (202) 293-5760

Copyright © 2010 Center for Medicare Advocacy, Inc.