Congress is in the midst of putting together an historic legislative package that would expand and strengthen our country’s safety net in a number of ways, including broad changes to health coverage. This could include adding dental, hearing and vision coverage to the Medicare program, a long-overdue and critical update to the nation’s flagship insurance program. In an effort to thwart this historic opportunity, opponents of such expansion are circulating various myths about Medicare and Medicare beneficiaries. We aim to dispel these myths with the facts.
1. Critical Dental, Hearing and Vision Services Are Needed and Largely Unaffordable for Most Medicare Beneficiaries
Myth: Medicare beneficiaries are “wealthy” and don’t need dental, vision and hearing coverage.
Fact: Most Medicare Beneficiaries Are Not Wealthy and Cannot Afford These Services
A recent column by the editorial board of the Washington Post offered general support for the developing legislative package, but cautioned against some of the provisions, noting: “While some seniors could use the dental, vision and other new Medicare benefits Democrats are considering, extending these generous new entitlements to wealthy beneficiaries should not be a priority.”
Contrary to regular assertions, the vast majority of Medicare beneficiaries are not “wealthy” and many struggle to afford the healthcare that they have, and must, of course, pay full freight for things not covered by their insurance. As noted in a report by the Kaiser Family Foundation (KFF) analyzing 2019 data, “many Medicare beneficiaries lived on limited incomes and modest, if any, savings, with wide disparities by age, gender and race/ethnicity.” Among the key findings, the report noted:
- “Half of all Medicare beneficiaries lived on incomes below $29,650 per person in 2019; one in four had incomes below $17,000 per person
- Half of all Medicare beneficiaries had savings below $73,800 per person in 2019; one fourth had less than $8,500 per person in savings, and 12% had no savings or were in debt.”
Further, only 5% of Medicare beneficiaries had incomes above $117,700 in 2019. A 2019 KFF report analyzing out-of-pocket spending found that “Medicare beneficiaries spent $5,460 out of their own pockets for health care in 2016, on average, with more than half (58%) spent on medical and long-term care services ($3,166), and the remainder (42%) spent on premiums for Medicare and other types of supplemental insurance ($2,294).” People over 85, women and those with multiple chronic conditions spent more than the average. The same report found that “half of all beneficiaries in traditional Medicare spent at least 12% of their income on out-of-pocket health care costs in 2016. One quarter of all beneficiaries spent at least 23% of their incomes on health-related services in 2016, while 10% spent nearly half of their income” – with greater burdens generally borne by lower-income, older and those with multiple chronic conditions.
Fact: The Need for Dental, Hearing and Vision is Great
The unmet need among Medicare beneficiaries for dental, hearing and vision care is great. As noted by the Kaiser Family Foundation (KFF), “Lack of dental care can exacerbate chronic medical conditions, such as diabetes and cardiovascular disease, contribute to delayed diagnosis of serious medical conditions, and lead to preventable complications that sometimes result in costly emergency room visits.” As noted in a recent STAT article highlighted in a Center Weekly Alert, hearing loss impacts two-thirds of adults over age 70, and is understood to be leading risk factor contributing to the development of dementia. According to the New York Times, “[i]n 2016, 39 percent of Medicare beneficiaries reported having trouble seeing even with their glasses, and only 58 percent of those beneficiaries reported having had an eye exam in the previous 12 months.”
Medicare is a social insurance benefit that should be equitable in coverage to all. While there is certain assistance for lower-income individuals, and higher premiums charged for certain higher-income individuals, Medicare is not a means tested program. Access to benefits should not be differentiated by income, as some coverage expansion proposals would do by only extending benefits to lower-income individuals. Everyone should have equal access to all benefits – regardless of their income and whether or not they choose to enroll in a private plan.
2. Dental, Vision and Hearing Benefits Should be Comprehensive and Available for all Beneficiaries, Not Just Through Private Plans
Myth: These “extra” benefits (dental, hearing and vision) are already available in private Medicare Advantage plans so we don’t need to expand them to everyone in traditional Medicare.
A common talking point used by those opposed to expanding Medicare benefits is that such benefits are “duplicative” or provide “duplicate coverage” to what is already available through private Medicare Advantage (MA) plans. For example, according to a recent statement issued by AHIP, the health insurance lobbying organization, “Lawmakers are considering using Medicare Advantage to pay for adding new dental, vision, and hearing benefits in traditional Medicare. These are important benefits, but adding them to Medicare Part B is duplicative and paying for them by cutting Medicare Advantage benefits is unfair to the tens of millions of seniors who actively choose to enroll in Medicare Advantage.” Neither of these points are accurate.
Fact: Expanding ng Dental, Vision and Hearing Benefits Would Not be “Duplicative” or Unfair
In 2021, roughly 42% of Medicare beneficiaries are enrolled in Medicare Advantage (MA). Since dental, hearing and vision services are not generally covered under Part B, there is clearly no “duplication” of coverage for the roughly 58% of Medicare beneficiaries who are not in MA plans. While many MA plans offer some of these optional services, they are “supplemental” and are offered at a plan sponsor’s discretion on an annual basis, using rebate dollars (discussed below).
There are no requirements regarding the scope of such optional coverage offered by MA plans. Instead of uniform and comprehensive coverage for these services were they covered under Part B, a 2021KFF report notes that
“[alt]hough these benefits are widely available, the scope of specific services varies. For example, a dental benefit may include preventive services only, such as cleanings or x-rays, or more comprehensive coverage, such as crowns or dentures. Plans also vary in terms of cost sharing for various services and limits on the number of services covered per year and many impose an annual dollar cap on the amount the plan will pay toward covered services.”
The 2021 KFF report focusing on Medicare and dental coverage found that, as of 2019, nearly half of all Medicare beneficiaries (47%) have no dental coverage at all. Of the MA enrollees who are in plans that offer some dental coverage, there are usually significant limitations. For example, more than half (59%) of MA enrollees are in a plan with a maximum dental benefit of $1,000 or less (among those in plans with an annual limit), and for more extensive dental services (beyond preventive services), “50% coinsurance and caps are the norm”.
A May 2021 fact sheet by the Center for Medicare Advocacy, Justice in Aging and Families USA outlines why simply offering oral health coverage through MA plans (or Medigap plans) is not the solution for various reasons:
- MA is not the right coverage choice for everyone,
- MA coverage of these services, if available, is not free or comprehensive,
- Keeping such coverage only in MA adds to the complex set of choices beneficiaries must make with respect to how they access their benefits, and
- Expanding MA adds to the cost of the Medicare program.
Fact: Expanded Benefits Should be Added to Part B of Medicare
Instead of limiting these benefits to MA or other private plans, as noted in our joint fact sheet, “adding oral health coverage into Part B integrates oral health with the delivery of other health benefits, including preventive services. Using Part B’s coverage criteria, payment structure, rate setting, appeals, and low-income beneficiary protections that are already in place also minimizes administrative complexity and makes the benefit easier to navigate.” Further, MA plans would have to cover such benefits to the same extent required under Part B, rather than set their own criteria and impose their own limitations.
In short, if dental, hearing and vision benefits were added to Medicare Part B, they would be available to all Medicare beneficiaries – not just those who choose (or are forced by their employer) to enroll in a private plan.
3. Now is the Time to Expand Medicare Coverage
Myth: Medicare is going “broke. This is no time to add benefits.
Fact: Medicare is “not going broke” and if properly implemented in Medicare Part B, these benefits will not negatively impact the Trust Fund
With Congress poised to act, there is currently a rare opportunity to make meaningful improvements to Medicare and other critical programs. Yet the associated costs and concerns about the Medicare Trust Fund are often raised as barriers to doing so.
Fact: The 2021 Medicare Trustees Report is Unchanged Since 2020
The annual release of the Medicare Trustees report, which projects the fiscal health of the Medicare program, focusing on the Part A Trust Fund, often serves as an impetus for calling for Medicare changes and cuts. The 2021 report released on August 31, 2021, projects that the Part A Trust Fund will be depleted by 2026 – unchanged from last year’s projection, despite the impact of the COVID-19 pandemic.
As we noted last year, and in previous years, even if the Trust Fund were to be depleted as projected, the program would still be able to pay out approximately 90% of Medicare Part A benefits. While not ideal, this is far from “bankruptcy.” Further, the date of projected insolvency is an estimate, and could easily change again – as it has many times before.
The Trust Fund largely reflects the health of the economy. At various times since 1970, the trustees have projected Trust Fund insolvency in as few as four years or as many as 28 years. While the Part A Trust Fund is mostly funded by payroll taxes, Medicare Part B, which would cover these expanded benefits, is funded by a certain percent of general revenues and premiums, and therefore cannot “go broke.”
Medicare’s fiscal solvency can be strengthened through various means, including by addressing ongoing Medicare Advantage overpayments, discussed below. In a May 2021 issue brief, Center for Medicare Advocacy Visiting Scholar Marilyn Moon examines how Medicare has operated over time, how well it is doing at present, and what changes have been used in the past to keep the program financially strong. The brief outlines potential short-term and long-term funding solutions through raising additional revenues.
In short, Medicare is not “going broke.” As we have also noted in previous years, the Trustees’ projection should not be used as an excuse to cut Medicare benefits for older and disabled people, nor, in the current context, should it be used as a barrier to expand benefits. This is particularly true since the proposed dental, hearing, and vision benefits would be covered under Medicare Part B, not through Part A and the Trust Fund.
Fact: There is Untapped Potential for Cost Savings in Medicare
Unlike the Part D prescription drug benefit that Congress created in 2003, the costs of which were not offset, Congress aims to pay for much of the expense of this additional Medicare coverage through various means – including by reducing the costs of certain prescription drugs paid for by both the Medicare program and its beneficiaries.
Again, the expansion in coverage is currently being contemplated under Medicare Part B, which would not affect the Part A Trust Fund and, unlike Part A, has no designated Fund subject to depletion. Further, it is highly likely that spending to expand Medicare coverage to include dental, hearing and vision coverage will actually yield savings to the Medicare program in other areas. Citing a 2020 study in Health Affairs, a June 2021 New York Times article by Mark Miller notes that “poor oral health was associated with higher rates of diabetes, cardiovascular disease and pulmonary infections. Vision loss and hearing loss are associated with a higher risk of falls, depression and cognitive impairment, and hearing loss with higher rates of hospitalization.” Adequately treating mouths, eyes and ears will improve overall health and reduce the risk of more costly interventions.
Fact: Medicare Savings Could be Achieved by Correcting the Imbalance in Medicare Advantage Payment
Overpayments to Medicare Advantage (MA) plans continue to negatively impact Medicare’s finances. The Medicare Payment Advisory Commission (MedPAC) noted in a March 2021 report to Congress that Medicare payments to MA plans average 104% of spending in traditional Medicare. It is through this excess funding, in part, that MA plans are able to offer benefits that are not available to those in traditional Medicare.
Taking full advantage of a broken payment system, according to MedPAC’s report, “[a]lmost all plans (about 87 percent) bid to provide Part A and Part B benefits for less than what the [traditional] Medicare program would spend to provide these benefits […] Although plan bids average less than [traditional Medicare] spending, payments for these plans’ enrollees can exceed [traditional Medicare] spending because the benchmarks (including the quality bonuses) can be high relative to their area’s [traditional Medicare] spending”. A portion of the difference between the plan bid and the Medicare benchmark becomes the “rebate” plans can use to offer extra benefits such as dental, hearing and vision.
As discussed in a recent CMA Alert, the Kaiser Family Foundation (KFF) released a report last month outlining how Medicare spending is higher and growing faster per person for beneficiaries in MA than in traditional Medicare. Despite most plans submitting bids below the local benchmarks, KFF notes that the MA program “has never generated savings relative to traditional Medicare” and while higher payments have led to coverage of some limited extra benefits for plan enrollees, “the higher payments have also led to higher Medicare spending than would have occurred under traditional Medicare and higher Medicare Part B premiums paid by all beneficiaries, including those in traditional Medicare.”
The KKF report concludes, in part:
As more Medicare beneficiaries enroll in private plans, differences in Medicare payments across Medicare Advantage and traditional Medicare will lead to even higher Medicare spending, and more generous benefits for beneficiaries in Medicare Advantage than traditional Medicare. That higher spending increases Part B premiums paid by all Medicare beneficiaries, including those who are not in a Medicare Advantage plan, and contribute to the financing challenges facing the Medicare [Part A] Trust Fund. Further, these projections raise questions of equity between Medicare Advantage and traditional Medicare because the faster growth in spending per Medicare Advantage enrollee, compared to traditional Medicare beneficiaries, is in part due to rising rebates to private plans, which cover the cost of benefits not available to traditional Medicare beneficiaries. Although taking steps to address the fiscal challenges facing Medicare are not front and center in current Medicare policy discussions, policymakers may soon be on the lookout for options to achieve Medicare savings to fund other spending priorities or extend the solvency of the Medicare [Part A] Trust Fund. This analysis suggests that reducing the difference in payments between Medicare Advantage and traditional Medicare would generate savings, with the potential for reductions in extra benefits for Medicare Advantage enrollees.
Not surprisingly, the insurance industry is reluctant to correct this imbalance. AHIP’s CEO recently stated that “Asking 27 million Americans to pay for new dental, vision, and hearing benefits in lieu of services they affirmatively chose and have come to rely on is unnecessary and unfair.”
In other words, all Medicare beneficiaries are subsidizing the limited dental, hearing, vision and other benefits only available through MA plans, to the minority of beneficiaries who choose MA. It’s time we spread this funding around in a more equitable way, to benefit all Medicare beneficiaries – both those in private plans and those in traditional Medicare. To continue with the status quo would be “unnecessary and unfair” to the Medicare program as a whole.
It is clear that policymakers must confront long-term fiscal challenges facing the Medicare program. While various health policy experts are raising MA overpayments as a potential source of addressing the program’s fiscal solvency (as discussed, e.g., in this CMA Alert), wasteful spending on private MA plans is often overlooked by policymakers – particularly those issuing the loudest warnings of the program’s impending fiscal doom.
Congress is poised to add critical missing benefits to Medicare, including dental, hearing and vision coverage, as well as lowering the cost of prescription drugs. These would be vital steps in the process of ensuring that Medicare adequately and equitably covers and cares for all its beneficiaries. Other important improvements, as discussed in this CMA Alert, await attention. We urge Congress to pass, and President Biden to sign into law, this critical health care expansion.
September 2, 2021 – D. Lipschutz