Journal of Gerontological Nursing

EDITORIAL 

Health Care Policy 101: What Nurses and Their Clients Need to Know

Kathleen C Buckwalter, PhD

Abstract

Many consumers and health care providers are confused and concerned by all the talk about Congress cutting health care dollars and programs targeted for senior citizens. Gerontological nurses in a variety of settings may be asked by their clients and/or colleagues to provide information and clarification about these proposed cuts and their potential impact on the elderly and the health care delivery system. At present, the elderly spend slightly more than 21/2 times as much of their income (21% vs. 8%) as younger persons on health care. Therefore, the purpose of this editorial commentary is to provide a usable overview of some of the more important legislative changes that have been proposed, and to encourage readers who are concerned to take a proactive stance by expressing their views to Congressional representatives.

OLDER AMERICANS ACT

Recently, the House appropriations sub-committee cut over $100 million from the Older Americans Act (OAA) for the next fiscal year. The Older Americans Act, which is up for reauthorization this year, funds community-based programs such as senior dining and home-delivered meals, adult day care programs, rural transportation, chore services for the elderly, and some case management services - programs designed to keep elders functioning at an optimal level in their own homes for as long as possible.

MEDICARE

Proposed changes in Medicare have also received increased attention. Medicare, a federal program which was established by legislation in 1965 to assist elderly and disabled persons with health care needs, currently has about 36 million enrollees, of whom 90% are over the age of 65. In 1995, Medicare spending is expected to total about $176 billion, accounting for around 18% of all health care expenditures, even though there are coverage gaps such as prescription drugs and community-based long-term care services, and the hospital deductible of $716 is higher than most in the private sector. The House has proposed to cut Medicare by $187 billion over the next seven years, the Senate by $175 billion, and the President by $127 billion over a 10-year period. Medicare is one of the fastest growing programs in the federal budget, with costs projected to rise at an annual rate of 10%. Demographic changes and new health care technologies account for a considerable proportion of this growth - as more people live into their 80's and 90's who are receiving hip replacements and heart bypass surgery, Medicare costs will inevitably be affected. Without cuts, the current Part A Trust Fund is projected to be exhausted by the year 2002!

Certainly, no one would argue that Medicare is not in need of reform, especially in terms of the fragmentation between acute and long-term care services. But how will these drastic reductions be achieved? It is expected that cuts in Part A (Hospital Insurance, with an expanding home health benefit and limited skilled nursing benefit) will be made by reducing fees paid to hospitals, encouraging elders to enroll in HMOs, and possibly replacing the current Medicare system with a voucher plan to buy private insurance. Part B (Supplementary Medical Insurance covering physician services, outpatient care, laboratory services, and ambulatory care) cuts include raising the premium rates ( from the current $46 per month to anywhere from $83 to $106), doubling the deductible, and increasing co-payments on home health, lab expenses, and skilled nursing facility care by 20%. It has been projected that these changes would result in significant out-ofpocket increases in medical costs for the average older American, somewhere around $3,500 over the next seven years in higher premiums and reduced coverage alone. Other options have also been set forth, including: payroll tax increases, reducing…

Many consumers and health care providers are confused and concerned by all the talk about Congress cutting health care dollars and programs targeted for senior citizens. Gerontological nurses in a variety of settings may be asked by their clients and/or colleagues to provide information and clarification about these proposed cuts and their potential impact on the elderly and the health care delivery system. At present, the elderly spend slightly more than 21/2 times as much of their income (21% vs. 8%) as younger persons on health care. Therefore, the purpose of this editorial commentary is to provide a usable overview of some of the more important legislative changes that have been proposed, and to encourage readers who are concerned to take a proactive stance by expressing their views to Congressional representatives.

OLDER AMERICANS ACT

Recently, the House appropriations sub-committee cut over $100 million from the Older Americans Act (OAA) for the next fiscal year. The Older Americans Act, which is up for reauthorization this year, funds community-based programs such as senior dining and home-delivered meals, adult day care programs, rural transportation, chore services for the elderly, and some case management services - programs designed to keep elders functioning at an optimal level in their own homes for as long as possible.

MEDICARE

Proposed changes in Medicare have also received increased attention. Medicare, a federal program which was established by legislation in 1965 to assist elderly and disabled persons with health care needs, currently has about 36 million enrollees, of whom 90% are over the age of 65. In 1995, Medicare spending is expected to total about $176 billion, accounting for around 18% of all health care expenditures, even though there are coverage gaps such as prescription drugs and community-based long-term care services, and the hospital deductible of $716 is higher than most in the private sector. The House has proposed to cut Medicare by $187 billion over the next seven years, the Senate by $175 billion, and the President by $127 billion over a 10-year period. Medicare is one of the fastest growing programs in the federal budget, with costs projected to rise at an annual rate of 10%. Demographic changes and new health care technologies account for a considerable proportion of this growth - as more people live into their 80's and 90's who are receiving hip replacements and heart bypass surgery, Medicare costs will inevitably be affected. Without cuts, the current Part A Trust Fund is projected to be exhausted by the year 2002!

Certainly, no one would argue that Medicare is not in need of reform, especially in terms of the fragmentation between acute and long-term care services. But how will these drastic reductions be achieved? It is expected that cuts in Part A (Hospital Insurance, with an expanding home health benefit and limited skilled nursing benefit) will be made by reducing fees paid to hospitals, encouraging elders to enroll in HMOs, and possibly replacing the current Medicare system with a voucher plan to buy private insurance. Part B (Supplementary Medical Insurance covering physician services, outpatient care, laboratory services, and ambulatory care) cuts include raising the premium rates ( from the current $46 per month to anywhere from $83 to $106), doubling the deductible, and increasing co-payments on home health, lab expenses, and skilled nursing facility care by 20%. It has been projected that these changes would result in significant out-ofpocket increases in medical costs for the average older American, somewhere around $3,500 over the next seven years in higher premiums and reduced coverage alone. Other options have also been set forth, including: payroll tax increases, reducing eligibility requirements (e.g., means testing, increasing age of eligibility), reduced payments to providers, restricting use of new technologies and service coverage, and taxing the actuarial value of Medicare.

MEDICAID

Medicaid, a combined federai and state health care program, provides coverage for 32 million Americans, including nearly 4 million elderly, at a total annual cost of over $125 billion. Of this, approximately $31 billion is spent on the elderly, 73% of which provides long-term care services for 1 .4 million elderly persons. Although trie elderly comprise only 12% of Medicaid beneficiaries, they account for 28% of title program's total expenditures.

States essentially run Medicaid within federal guidelines, and there is a great deal of variation among states in terms of who is covered, the services and benefits offered, and how much money is spent on care. Medicaid is a means-tested program, providing assistance only when financial resources are exhausted.

Medicaid was originally designed to provide health benefits for persons who were unable to get coverage through employment. Medicaid's role has expanded greatly over the last 30 years and it is currently the primary health insurance program for low-income families and disabled persons. Importantly, Medicaid is the only public source of financial assistance for long-term care. It also allows low-income elderly to participate in Medicare by paying the premium and cost-sharing requirements under Medicare, and covers some medical benefits that Medicare does not, such as prescription drugs. In addition to nursing home coverage, Medicaid pays for skilled home health care in all states and 29 states also cover the optional benefit of personal care in the home. In 1993 Medicaid spent $2.8 billion on home health and personal care services for more than 300,000 persons, but community-based care still accounts for only a small percentage (15%) of the total Medicaid long-term care spending, the majority of which continues to be directed toward nursing home care.

Medicaid spending is projected to increase at about 10% per year, and the program has thus been targeted for large reductions by both the House and the Senate. Proposals for reform include putting limits on federal financial obligations and increasing state flexibility in program design and operation in the form of block grants to the states. Assuming a 5% cap on expenditures, in my home state of Iowa mis would mean a loss of $299 million in long-term care dollars alone by the year 2000! The potential impact on the nursing home industry, and those impoverished elders who rely on care in those facilities, is enormous. A major issue facing Medicaid is thus how to continue to provide coverage for acute and long-term care for low income and vulnerable populations in the face of intense pressure to limit spending.

What can gerontologicai nurses do to increase involvement in and understanding of the current situation? A number of activities come to mind:

1) Help to organize/ sponsor informational community meetings for elders regarding Medicare rights and coverage, the hospital payment system and its effect on health care in their respective states;

2) Write articles for local newspapers and senior center newsletters about the proposed budget reforms and the potential impact locally and statewide;

3) Assist interested persons in contacting their representatives and senators to communicate their concerns, including suggesting alternative cuts to Medicare and Medicaid such as tax cuts for the rich ($350 billion), new defense spending ($63 billion over seven years), or eliminating the home mortgage interest deduction on homes costing over $300,000 ($50 billion over seven years).

10.3928/0098-9134-19951101-03

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