Saturday, August 21, 2010



Most of our kupunas are on Medicare, a program designed and implemented in 1965 under the "Great Society" and was to serve the elderly once they reach age 65. The program is difficult to understand, but, since many of you couldn't pass the entrance exam to get into Farrington, and thus, were deprived of the fine education that I was privileged to get, I will help you.

The program has evolved over the years and has two basic parts and two other optional parts. Part A is hospital insurance and will cover the expenses when a person is an inpatient in a hospital, nursing home, or a hospice facility. Thus, (for those of you who went to Punahou or Iolani) MEDICARE DOES NOT PAY FOR CUSTODIAL CARE!

Everyone who is eligible for Medicare has this coverage and there is no premium required to be covered.  To become eligible for Medicare, one must enroll in the initial enrollment period (3 months before and 3 months after reaching age 65), be disabled, or have kidney failure.

Part B pays for the costs of doctors' visits and outpatient care. There is a premium charge for this and in 2010, the amount is $96.46 each month and could go up to $400+, depending on a person's income. This is called "means testing" and is likely where our entitlement programs are heading because frankly, the government over-promised and will have to turn programs from "earned benefits" to welfare, or wealth transfers.

Medicare is also financed through payroll taxes, deductibles and co-pays. Those who do not sign up for it during the initial enrollment period at age 65 pay a higher premium (premium surcharge) for not signing up in a timely manner.

In 2010, the government passed a massive healthcare law with the hope of covering 48 million "poor" uninsured people. To keep the cost of the program below $1 trillion (which they felt was politically acceptable), they plan to cut Medicare by $500 billion. We don't yet know where and how much these cuts are going to be and how they're going to be applied.

Many practitioners are beginning to opt out of accepting Medicare patients because the limits on payments on services are already too low and further cuts will cause them to lose too much to remain in business. This will create more "gaps" in coverage which we'll discuss in Part C and Part D.

Part C is the part that allows Medicare participants to receive their coverage through private insurance plans and private arrangements. This was introduced into law in 1997 and reintroduced in 2003 as "Medicare Advantage". These private insurance companies contract with, and are approved by the Centers for Medicare and Medicaid Services.

Under this arrangement, the Medicare Advantage program is paid by the government a fixed amount each month to provide services to the Medicare beneficiary, rather than pay on each service or procedure provided. Most Medicare Advantage plans offer additional services and the premiums charged is based upon how extensive the additional services are, the deductibles and the co-pays. Those involved in providing Medicare Advantage plans are preferred provider organizations, health maintenance organizations, medical savings accounts, private fee-for-service plans and special needs plans.

Part D was added in 2006 and provides for prescription drug coverage. It is sometimes included in Medicare Advantage (Part C) plans but beneficiaries can purchase drug-only coverage under Part D.

These are concepts difficult to understand because beneficiaries must always be aware of the yearly deductibles, the cost-sharing up to a predetermined limit ($2,830 in 2010) and then the coverage gap or "donut hole" where Medicare pays nothing until the patient reaches a catastrophic limit ($4,550 in 2010). After that limit, the plan pays for all of the prescription drug costs for the rest of the year, except for a nominal co-payment of a few dollars.

There are many gaps in Medicare coverage and thus the need to consider additional Medigap plans. Part A has a deductible, then pays 100% for the first 60 days, then there is a co-pay from 61 to 90 days and a higher co-pay from 91 to 150 days of hospitalization. This lifetime 150 days, once exhausted leaves the beneficiary responsible for all hospital costs thereafter. There are differing amounts and differing rules for nursing care, hospice care and home health care.

In Part B, the gaps are found in the annual deductibles, the 20% co-pay and the amounts above the "approved"charges. To further confuse us, there are 11 different standardized Medigap plans that insurers can offer after June 11, 2010. Insurers can't mix and match Medigap benefits and have to stick to these 11 standardized plans.

We still don't know what changes will occur when the Health Care Reform law goes into full speed. Most people suspect that the government will further enslave us as they did with Social Security, Medicaid and Medicare. Insurers have already increased their premiums in anticipating covering adult children of their current policyholders. Younger people subsidize older people and healthy people subsidize unhealthy ones.

At this writing, private insurers are offloading their insureds with pre-existing conditions to a new plan similar to the government plan called Government Employees Health Association. Businesses are not hiring people because they're afraid of the rising health insurance premiums. This new class of insureds with pre-existing conditions will be subjected to a monthly premium, but also a huge $2,500 deductible before one penny is paid in benefits. It operates like a Medical Savings Account.

I don't have a possible solution because I don't know how the healthcare plans and coverages will evolve. We are at the mercy of our government. All that I've presented above will likely change in the next few years. Or weeks.

Meanwhile, our kupunas will be facing denial of treatment and procedures based not on what the doctor and patient chooses, but what some bureaucrat in Washington decides is best. The kupunas can no longer work to earn an income to make up for any cutbacks that the government imposes. They are out of options.

We need to step up our volunteer efforts. If you know someone who is a caregiver, volunteer to give them 4 hours of respite every week. Or, offer to do errands for them. Lanakila, Hospices, nursing homes and adult day-care centers are always looking for help. Volunteers help them to keep their costs down.

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