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Preserve and Strengthen Medicare No. 144

Adopted 1997
Reaffirmed 1999
Amended 2001
Reaffirmed 2002
Amended 2003
Amended 2004
Amended 2005


Medicare is a successful single-payer system for the elderly and disabled. Medicare faces two principal threats from the Bush Administration. First, to pay for a tax cut for the wealthy, the Administration is raiding the Medicare Trust Fund, Medicare Part A, which pays for most of the hospitalization costs of seniors and disabled individuals. Second, the Administration and its insurance company allies seek to provide seniors with vouchers to buy private insurance. In the name of "reform," they would transform Medicare from a guaranteed medical care benefit program, which provides whatever services are needed while in the hospital -- most of the cost for medical care, surgery, and medications while hospitalized - into a voucher that will buy fewer benefits, whatever the insurance companies and Health Maintenance Organizations (HMOs) choose to offer for the price of the voucher. Medicare saves millions of Americans - including millions of middle-income families - from impoverishment every year, as the cost of hospitalization has becomes unmanageable for all but the wealthiest individuals. The Bush Administration has also proposed Medicare savings accounts which favor the wealthy and healthy, to the detriments of middle class Americans and families facing illness.

Medicare faces a short-term financial shortfall due to escalating medical costs. Any solution will require measures specifically designed to meet the urgent and serious financial problems of providing medical care, including prescription drugs to disabled person and senior citizens.

An effective prescription drug reimbursement plan should be passed to replace the inappropriate and costly plan recently enacted. Medicare should be required to negotiate lower rates with pharmaceutical companies. With the Federal government, rather than private companies, serving as payer, cost effectiveness would be further increased.

The costs of medical care must be controlled, but not by cutting services and pushing seniors into HMOs that cut services. Many HMOs and hospitals are offering inferior care; dismissing registered nurses, forcing hospitals to cut necessary services and training programs, while paying their executives outlandish salaries. Hospital reimbursement rates should be sufficient so that hospitals don't lose money on Medicare patients, including patients with complex problems. Reimbursement must cover physician-ordered physical therapy, increased nursing home payments for patients requiring costly and extensive care, increased outpatient services including diagnostic tests, treatments and procedures, and fair reimbursements for physicians' services. Funding for clinical education must be stabilized, with increased funding for teaching hospitals.

Medicare is the most efficient segment of the United States health care system, charging just 2.5 cents to pay a dollar's worth of claims, compared to 25 to 30 cents for the average private insurer. One way to cut long-term costs would be to provide prescription drug coverage under Medicare. This would provide the federal government with leverage to negotiate lower prices from the pharmaceutical industry that today milks retirees to support exorbitant profits and extravagant advertising.

Today Medicare pays for the sickest, most costly segment of the population - the elderly and disabled. Medicare's sustainability would be enhanced if the program were expanded to cover healthier populations, particularly children and pregnant women. Covering these two groups would lead to significant long-term savings in the nation's medical costs.

ADA supports the extension of Medicare coverage to all Medicare-eligible United States citizens living abroad.

Medicare is under funded: Appropriate funding would solve the above problems.

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No. 144

Social and Domestic Policy