Back to the future — from a year ago

Back to the future -- from a year ago!

Remember, a year or so ago we dialogued about the then-forecast burgeoning future cost of taking care of our seniors, including ourselves? We cited some causes:

▪ Increasing life expectancy.

▪ New high-tech expensive medical miracles, and our and Doc’s zeal in opting to use them, thus enabling us to survive and continue spending fortunes on illnesses.

▪ The baby boomers’ and gen-xers’ population bulges reaching senior “status”.

▪ Entitlements’ (Medicare, Medicaid, etc.) shrinking proportional contribution to health and long-term-care costs.

▪ And the zooming cost of operating the labor-intensive successor to the fading tradition of living at home with the family -- long-term care facilities.

Now that we’re into that future already, what’s up? Sure enough, it’s all happening. No surprise, right? And everybody’s writing about it. Here are some of their reports:

Lisa Rapaport of Reuters (March 18) says that, although males’ life expectancies have risen a little more than females’ have, senior women are incurring disproportionately higher and longer health care expenses. Why? Generally, maybe because women have less preventive financial resources, pay more and keener attention to their own health care, are increasingly active, suffer more widowhood and family-care-deprived aloneness, and increasingly pursue hazards-genic life styles.

The actuaries surprised both themselves and us this year, discovering that a segment of the white young to middle-aged male population actually is incurring a decline in longevity, because of accidents, suicide, health-weakening substance use, junk food, lifestyles and obesity. But those factors also escalate their medical treatment and living costs before they die.

Our long-term care outlook: The independent and assisted living industry remains robust, but its profits aren’t, as rising and newly-mandated payroll costs consume more revenue. The nursing home sector now seems to be experiencing a shake-out that’s bringing closures and consolidations, driven by declining Medicare and Medicaid allowances and market shrinkage driven by the unaffordable out-of-pocket costs. As in many industries, only the few financially strongest, biggest, most state-of-the-art, most services-innovative full-service nursing home providers will survive.

Accordingly, behold the cost-saving resurgence of at-home family care -- More and growing home-care agencies and a surge in training and hiring home health care workers and professionals.

Insurance gurus tell us that we who fortunately heeded our agents years ago and bought long term care insurance now are incurring claims far above the industry’s projections. The result, of course: Sharp premium increases. Our progeny now buying theirs must settle for far lower maximum benefit limits and tighter benefits eligibilities. That’s not about to improve.

About commercial private and Obamacare health insurance, we see the current news reports of premium rate increases near or above the forecasts, caused by partisan political negativism and its resulting inefficiencies, and the now-emerging operating results. Despite the tax penalty and the subsidy, fewer-than-expected young, healthy premium-payers have enrolled. Insurers are recoiling, some withdrawing entirely. We’re about to see a federal remedial enrollment campaign.

Obamacare still is a major guru-writers’ and politicians’ topic, and as usual their opinions vary widely. But now some proponents are doubting its survivability and as you know, we’re continuously hearing about schemes to replace Obamacare. If its millions of insureds became uninsured or less insured again, we know that their health care costs would be dumped back onto the folks who can pay and onto their insurers, especially Medicare. We know what that would do to health insurance’s future costs, benefits and taxes, especially Medicare, right?

But, the “rays of light” that we embraced hopefully last year are indeed happening, however slowly. Some already are reality, some just now emerging, and some not-too-distant. We mentioned some last time, such as Medicare’s “Merit Based Payment System” replacing “fee-for-service” and the related flat-fee “bundled” pricing; the comprehensive, consolidated, detailed, instant patient data system; the new expanded patient chart-data coding system; multi-discipline specialty “Accountable Care Organization” firms, and more.

Anti-fraud projects now significantly reduce scam “leakage”, and legislators are providing us more legal protections and fight-back tools. Remarkably and commendably, health care providers are resisting big fee-structure increases. But, not so remarkable or commendable, we consumers aren’t stashing more cash in our health care catastrophe savings plans, despite the tax incentive.

Perhaps this year’s most ominous developing health-care tsunami is drug pricing. We’ve seen the reports: Pharmaceutical companies invoking “what the traffic will bear” policies, sharply raising their prices for many of their products, hundreds and thousands of percentage points for some of their sophisticated single-source limited-production miracle drugs. They’re also feeling the heat for massive unethical and immoral, if not illegal, market-manipulation practices.

The Sun News ran (June 16) Ricardo Alonso-Zaldivar’s Associated Press story addressing the pharmaceutical tsunami, citing Congress’s reaction: “Unsustainable”. He reports that Congress now is studying its nonpartisan Medicare Payment Advisory Commission’s remedial recommendations. They don’t advocate direct government price negotiations or controls, but do advocate several protective limits on our high-end and “doughnut hole” out-of-pocket costs. It also suggests -- get this -- a statutory annual limit on the amount that all seniors would have to pay for medications.

Over 39 million Americans (and growing) have opted for commercial alternative Medicare Part “D” drug coverage. He opines that the insurance companies on the risk for those plans will be unhappy about, and will resist, the increased cost-control duties that MedPAC recommends to impose on them.

Whatever happens impacts directly on Medicare Part “D” prescription drug coverage and costs, and therefore inseparably also on our other RX insurance and out-of-pocket exposure. So will the influence of “Big Pharm”, the drug industry lobby, of course.

He suggests that we won’t see new legislation in this election year, but will see robust congressional staff and committee work preparing for vigorous floor debate, and some sort of legislation next year. Why expect something desirable to emerge? Seniors vote, and another election’s only two years ahead, for 435 House and 33 Senate seats.

More and more of us opt for the increasingly-powerful commercial insurers to provide alternative Medicare benefits. But even they don’t seem able to control the exploding cost problem. Thus, as with Obamacare, alternative proposals persist, ranging across the entire spectrum from the European comprehensive government single-payer idea, to big centrally-managed Medicare for all, to the voucher-funded totally competitive private enterprise model.

All of the commentators agree: Medicare and its sibling entitlements are major forces shaping our lives. We all are, or will be, insured by them, and pay taxes and premiums for them. We all sell to, buy from, work for (or are workers’ dependents) businesses and agencies whose existence depends on the system. Along with Social Security, they’re just about the nation’s most impactful income-redistributing entitlement systems.

This year, other financial sectors of our lives seem to be stable, or changing only moderately. But Medicare is evolving significantly. So, for all of the above reasons, wouldn’t we do well to explore that more closely? There’s enough to say about it to fill at least a whole column segment, so let’s do that next time.

This story was originally published August 26, 2016 at 5:00 AM with the headline "Back to the future — from a year ago."