[Senate Hearing 110-729]
[From the U.S. Government Publishing Office]
S. Hrg. 110-729
SENIORS AT RISK: IMPROVING MEDICARE FOR OUR MOST VULNERABLE
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HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
__________
May 22, 2008
__________
Serial No. 110-29
Printed for the use of the Special Committee on Aging
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
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SPECIAL COMMITTEE ON AGING
HERB KOHL, Wisconsin, Chairman
RON WYDEN, Oregon GORDON H. SMITH, Oregon
BLANCHE L. LINCOLN, Arkansas RICHARD SHELBY, Alabama
EVAN BAYH, Indiana SUSAN COLLINS, Maine
THOMAS R. CARPER, Delaware MEL MARTINEZ, Florida
BILL NELSON, Florida LARRY E. CRAIG, Idaho
HILLARY RODHAM CLINTON, New York ELIZABETH DOLE, North Carolina
KEN SALAZAR, Colorado NORM COLEMAN, Minnesota
ROBERT P. CASEY, Jr., Pennsylvania DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri BOB CORKER, Tennessee
SHELDON WHITEHOUSE, Rhode Island ARLEN SPECTER, Pennsylvania
Debra Whitman, Majority Staff Director
Catherine Finley, Ranking Member Staff Director
(ii)
C O N T E N T S
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Page
Opening Statement of Senator Gordon H. Smith..................... 1
Statement of Senator Sheldon Whitehouse.......................... 2
Statement of Senator Ken Salazar................................. 4
Panel of Witnesses
Statement of Judy Korynasz, beneficiary witness, caregiver for
her Mother, Hillsboro, OR...................................... 6
Statement of Barbara Bovbjerg, director, Education, Workforce,
and Income Security Issues, U.S. General Accountability Office,
Washington, DC................................................. 12
Statement of Joyce Payne, member, AARP Board of Directors,
Washington, DC................................................. 33
Statement of Laura Summer, senior research scholar, Georgetown
University, Health Policy Institute, Washington, DC............ 44
Statement of Lisa Emerson, program manager, The Senior Health
Insurance Benefits Assistance (SHIBA)/director, Oregon State
Health Insurance Counseling and Assistance Programs (SHIPs),
Salem, OR...................................................... 55
APPENDIX
Prepared Statement of Senator Robert P. Casey, Jr................ 75
Statement of Richard Grimes, president and CEO, Assisted Living
Federation of America.......................................... 75
Statement for the Record from Alliance for Retired Americans..... 76
(iii)
SENIORS AT RISK: IMPROVING MEDICARE FOR OUR MOST VULNERABLE
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Thursday, May 22, 2008
U.S. Senate
Special Committee on Aging
Washington, DC.
The committee met, pursuant to notice, at 10:33 a.m. in
Room SH-216, Hart Senate Office Building, Hon. Gordon H. Smith,
presiding.
Present: Senators Smith [presiding], Salazar, and
Whitehouse.
OPENING STATEMENT OF SENATOR GORDON H. SMITH, RANKING MEMBER
Senator Smith. Good morning. With the blessing of Senator
Kohl, we will begin the hearing. With respect to our witnesses,
we want to be mindful of your time and take advantage of what
you have to contribute today to the U.S. Senate Special
Committee on Aging.
We have an impressive list of witnesses, all of whom will
share with us their perspective on the improvements that are
needed to ensure the Medicare program provides help to
America's most vulnerable seniors.
I want to extend a personal welcome to Judy Korynasz and
Lisa Emerson, both of whom have flown all the way from Oregon,
a trek I know all too well. Thank you for being here this
morning despite the jet lag you no doubt feel. I always enjoy
having Oregonians testify before Senate committees, and we
truly appreciate your efforts to better our understanding of
this important issue to America's seniors.
All too often, seniors and their needs get lost in the
flurry of debate over spending priorities and the race to
finish legislation. I want everyone to know that I will not let
that happen. I intend to fight for seniors and will work to
ensure that the Medicare package includes policies that make
healthcare more affordable to our most vulnerable.
It was just 2 years ago that the Medicare program began
offering seniors the option of receiving coverage for their
prescription drugs. Since that time, the program has been
highly successful, with 85 percent of eligible seniors
receiving some form of coverage for their medication.
Every good program, however, always has room for
improvement. In fact, as I think back on my 12 years here, I
have never voted on a perfect bill yet. There is always a new
chapter in democracy and a chance to improve on success.
As of January 2008, the Centers for Medicare and Medicaid
Services estimated that of the 12.5 million beneficiaries
eligible for the low-income subsidy, 2.6 million still have not
enrolled. In addition, the Social Security Administration has
reported a significant percentage of those applying for the
subsidy who qualified based on their income were determined
ineligible because their assets exceeded the eligibility
requirement.
We also must look at other Medicare assistance programs
that like the Part D low-income subsidy, are intended to help
our poorest and most vulnerable seniors afford their
healthcare. Sadly, low utilization, overly restrictive asset
limits, and poor coordination among our agencies are just a few
of the reasons these programs also aren't being utilized by
those who need help.
Congress must consider creating parity between Medicare's
different programs. Right now, the low-income assistance
programs under Part B are significantly more restrictive than
the help offered under Part D. Even the congressional advisory
panel, MedPAC, recommends that the program's eligibility
criteria should be the same.
We also need to look at policies that ensure the agencies
are doing a better job of sharing information and coordinating
application processes. We can and should do better to ensure
that seniors with the greatest need are eligible and receiving
assistance.
Last year, Senator Bingaman and I introduced a package of
bills to improve Medicare Part D for most of our vulnerable
seniors. One important aspect of our legislation would help us
to target beneficiaries who might be eligible for LIS by
allowing the Internal Revenue Service to share tax-filing
information with the Social Security Administration. Our
legislation also raises the asset test limits to allow seniors
like Mrs. Korynasz, her mother, to qualify for the low-income
subsidy.
As Congress continues to develop the Medicare package
needed to stave off the 10 percent physician payment cut, I
hope my colleagues will remember that the most vulnerable of
our seniors also need help. I hope today's discussion will
provide some valuable information to guide us as we make
Medicare successful and beneficial for all seniors.
With that, we have been joined by two of my colleagues. We
will go to Senator Whitehouse first, then Senator Salazar for
any opening statement you may have.
STATEMENT OF SENATOR SHELDON WHITEHOUSE
Senator Whitehouse. Thank you, Chairman.
I just wanted to express my appreciation to you for holding
this hearing. I particularly want to welcome Ms. Korynasz, who
wins the prize for most miles traveled to get here today, and I
am glad you did because I think it is an important issue.
I think that in the discussion, particularly about Part D,
the powerful vested interests in Washington hold far too much
sway, and individual seniors are far too often overlooked.
I am from Rhode Island. Rhode Island has the eighth-
highest senior population of any State. States that have a
higher senior population include Florida and Arizona, which are
destination States for seniors, very often well-off seniors who
go there to retire and enjoy the benefits of the weather and so
forth.
Which leaves Rhode Island as a State that has a uniquely
high profile of seniors who need the kind of assistance that
Part D provides. Over and over and over again, we have
witnessed the tragedy of seniors falling into what is benignly
and falsely called the ``donut hole'' and what should probably
be called the Bush senior trap for unforeseen expenses.
Yes, clearly, if they had looked through all of the fine
print, they could have seen that this was waiting for them, and
they would ultimately fall into it. But a lot of the seniors
who are highly dependent on multiple medications--heck, I will
confess, I don't read through the complex medical forms that I
get myself. I think it is a lot to expect elderly seniors who
are very dependent on multiple medications to do the same. So
it often comes as a surprise.
There was a woman from Woonsocket, who had been independent
her entire life. She lived in a tenement, which is Rhode Island
for a three-decker, and walked wherever she went. She
discovered that she had fallen into the trap when she went to
her pharmacist, and they said, ``Well, you will have to pay for
these. I am sorry. Your coverage is not good.''
She had no idea that was going to happen, and she didn't
have the money. So she had to walk away from the pharmacy
window empty-handed. It was a terrible and frightening thing
for her, and she had to face the prospect of losing her
independence, losing her apartment. I mean, this was a woman
who had fought for her independence for 90 years, and she did
not want to give it up lightly.
But she was really presented with no choice, except for the
fact that she had a grandson who was willing to come and look
after her and take care of it. But stories like that play out
over and over and over and over again. They are all completely
avoidable, completely avoidable.
If this organization, the U.S. Congress, would simply have
the courage to stand up to the pharmaceutical industry and say
you have to behave like every other business and negotiate over
the price of pharmaceuticals with buyers, instead of doing what
we did, which is to disable CMS from negotiating with the
pharmaceutical industry and allow this industry to dictate
pricing to our Government and for our seniors.
I understand that if we had made that simple correction,
there would be enough savings from the lower prices that we
would be able to fill this trap into which so many seniors
unwittingly fall. So, to me, it is really a terrible exercise
in public policy and shows the power of organized lobbyists,
surrounded special interests up against folks like Ms. Korynasz
and her family and like the lady in Woonsocket, who have nobody
looking out for them other than us. If we are not doing our
jobs, they are the ones who pay the price.
Thank you very much, Senator.
Senator Smith. Thank you, Senator Whitehouse.
Senator Salazar.
STATEMENT OF SENATOR KEN SALAZAR
Senator Salazar. Thank you very much, Senator Smith, as
Ranking Member, for keeping a focus on the vulnerable.
I thank Chairman Kohl also for scheduling this hearing
today.
Listening to my friend and colleague, Senator Whitehouse, I
remember our days as fellow attorneys general, when he was
attorney general of Rhode Island and I was attorney general of
Colorado, and one of the things that we had a focus on was the
protection of the elderly, the protection of the most
vulnerable. In my own State, we had many different summits
where we brought our senior citizens together and other
interested stakeholders to make sure that we were protecting
them.
Today's hearing really is about how we make sure that the
programs that we have created are, in fact, programs that are
made available and that seniors know how to take advantage of
those opportunities that we have created. This is an excellent
opportunity to discuss the state of Medicare low-income
assistance programs and how to reform these programs to meet
the needs of seniors and to increase enrollment.
In my State of Colorado and across this country, many
families are feeling the serious financial pressures as a
result of the rising cost of energy, gas prices, and medical
care. Seniors with limited incomes are those who I think are
particularly most vulnerable. Government programs, such as the
low-income subsidy, are critical for helping millions of
seniors cover the cost of care, including 91,000 seniors in my
home State of Colorado.
Most Medicare experts, including MedPAC, believe the low-
income programs for Medicare beneficiaries are broken. The
Congressional Budget Office estimates the participation rates
of beneficiaries are very low in the various programs. Only 33
percent of eligible beneficiaries are participating in some of
those programs, while 13 percent in the SLMB program.
When you exclude dual-eligibles that were auto-enrolled in
2006, almost two thirds--that is almost two thirds--of low-
income Medicare beneficiaries qualified for the drug benefit
low-income subsidy but did not receive the benefit. That is two
thirds who qualified did not receive the benefit. Reasons cited
for this include lack of awareness that the program exists and
an inability to complete the application to receive the
benefit.
Compared to other Federal benefit programs, participation
in Medicare low-income programs falls far, far behind.
Participation rates are estimated to be 75 percent for the
earned-income tax credit, 66 percent for supplemental security
income, and 66 percent for Medicaid. Experts are all in
agreement that to fix these programs we must align the
eligibility requirements and significantly improve outreach and
enrollment.
It is critical that we have similar, if not better,
participation rates in our Medicare low-income programs so that
elderly patients have access to the care they need at the time
that they need it. Using these programs to increase access to
care helps us prevent costly and unnecessary treatments for
advanced disease, which is critical to reducing our healthcare
spending and improving patients' quality of life.
We have been working with Senator Smith and my colleagues
in the Finance Committee on some of these same issues, and I am
delighted that the Aging Committee is also putting a focus on
this issue here in this Committee.
When I consider the programs we are discussing here today,
I am confident, I am convinced that we can reform our system so
that low-income seniors are receiving the care they deserve.
The fundamental principles of the programs are sound, but we
need to make necessary adjustments to include everyone who
should be included.
Thank you, Ranking Member Smith.
Senator Smith. Thank you, Senator Salazar.
To introduce our panel for the record, we will first hear
from an Oregonian, Judy Korynasz. She will be sharing her
experience with us as a caretaker of her mother, Charlotte
Wachdorf. I am inspired and appreciative of her time and
dedication to ensuring her mother continues to receive proper
quality care and look forward to her testimony.
Barbara Bovbjerg is no stranger to this Committee. We
appreciate, Barbara, your being here again. She is the director
of GAO's Education, Workforce, and Income Security team. She
will discuss GAO's work regarding the Social Security
Administration's enrollment of beneficiaries into the LIS
program and give an update on these efforts.
Joyce Payne is a member of the AARP Board of Directors. She
will discuss what AARP is hearing from its members in regards
to Medicare's low-income assistance programs and elaborate on
recommendations for reform to these programs to ensure that the
poorest and most vulnerable seniors receive the help they need
with their healthcare costs.
Laura Summer is a senior research scholar at Georgetown
University Health and Policy Institute. Ms. Summer is a senior
research scholar at Georgetown University with over 20 years of
experience in Federal, State government, independent policy
organizations, and academic institutions. We look forward to
hearing her testimony and recommendations on the obstacles
faced by beneficiaries and how we can improve enrollment in
Medicare's low-income assistance programs.
Lisa Emerson is also from Oregon, and is the director for
Oregon's Senior Health Insurance Benefits Assistance Program.
Ms. Emerson will testify on her experience in this capacity.
She, her colleagues, and volunteers deserve our gratitude for
their hard work in helping Oregon seniors navigate the Medicare
program. I am very interested in her thoughts on what
improvements can be made to make her difficult job easier.
So, with that, Judy, why don't we begin with you?
STATEMENT OF JUDY KORYNASZ, BENEFICIARY WITNESS, CAREGIVER FOR
HER MOTHER, HILLSBORO, OR
Ms. Korynasz. OK. Good morning, Mr. Chairman, Ranking
Member Smith, and members of the Committee.
Thank you for inviting me to testify today. My name is Judy
Korynasz. I am 66 years old, and I live in Hillsboro, OR. I
have Medicare, as does my husband, John, and my mother,
Charlotte Wachdorf, who lives with us.
I am here today to tell you about my family's experience
with Medicare. In particular, I am going to focus on my
family's experiences with the Medicare prescription drug
benefits and its effect on people like us who have modest
incomes and savings.
My mother's name is Charlotte Wachdorf. She is 87 years
old, soon to be 88, and will turn 88 on June 2. She has lived
with my husband and I since last November. Before that, she
lived with my brother, a retired Air Force colonel, and his
wife for 5 years after my father died. When my sister-in-law
developed serious back ailments, my mother moved in with us.
My mother's health has been declining for several years.
She currently has chronic obstructive pulmonary disease, better
known as COPD, diabetes, neuropathy, which causes nerve damage
in her feet and up through her legs. As a result of the
diabetes, she has congestive heart failure, chronic anemia, and
an aneurysm and a blood clot in her heart.
She takes more than 15 medications. She takes Procrit once
a month, and the following medications at least daily. She has
Synthroid, Detrol, Hydroco, which is a form of Vicodin,
Gemfibrozil, Folbic, Actos, Lisinopril, Spironolactone, Advair
Diskus, Combivent, Fluticasone, SennaGen, Mirtazapine, and
Singulair. Claritin and an iron supplement and a multi-vitamin.
She also uses a walker and is on oxygen full time.
The good news is that, thanks to her doctors and these many
medications, her health has been stabilizing recently.
Unfortunately, paying for these medications takes up a good
portion of her financial resources.
Even with help from Medicare Part D, my mother's only
income is $1,027 per month in Social Security, an annual income
of $12,324. She also has, as of this month, $15,213 left in her
savings. This means she meets the income requirements for the
Part D extra help program, but she has $3,223 too much in
savings.
As a result, every year since Part D started in 2006 she
has fallen into the coverage gap and has spent over $3,000 of
her own money on prescription drugs. She has only reached
catastrophic coverage in December, if at all. Because she has
been on hospice care during this time as well, she has paid for
only about half through Part D. If she were not on hospice, she
would have even higher costs.
This year, she entered the coverage gap in April, and this
month, she paid for her Procrit and five other prescriptions,
which amounted to $585.13 even with a discount that she
obtained from the Oregon prescription discount program.
If her health continues to stabilize, she will leave
hospice care. We are grateful for that, but she will then have
to pay for the rest of her drugs. I don't know for sure how
much that will cost, but I expect it would consume most of all
of her Social Security check while she is in the coverage gap.
My husband and I will help her as best we can. However, our
resources are limited as well. Our only incomes are Social
Security because our former employer went bankrupt, and our
401(k)s were lost as a result of that bankruptcy. Although my
health is fairly good, my husband is a colon cancer survivor
and has glaucoma. He takes several expensive eye drops to
preserve his sight----Cosopt, Alphagan, and Lumigan.
This month, due to the amount that he had to pay out before
he met his--I forget the name of what they call that. Anyway,
he had to lay out $273.50 just for two medications, and then
the rest was covered by his Part D and his health insurance. So
we were grateful for that.
Unfortunately, my husband has also recently been diagnosed
with the early stages of Alzheimer's disease. His doctor has
told us his prescription drugs are likely to increase
significantly soon. He, too, will probably fall into the
coverage gap this year.
If the limits on financial assets for the extra help
program were increased, my mother would qualify for the
program. She would not have a gap in her coverage, and she
would not have to spend most of her income and the little
savings she does have left on prescription drugs. It would also
provide my husband and me with considerable peace of mind to
know that my mother's prescription drugs would be affordable.
Finally, I would like to let the Committee know about some
of the difficulty we have had figuring out Medicare Advantage
and the Medicare drug benefit. Last fall, when my mother moved
in with us, I called 1-800-MEDICARE to help us choose a
Medicare plan for her. I tried every day for 2 weeks several
times a day. The line would ring, and then I would get cutoff.
I never did get an answer.
As you know, the Part D program is exceptionally
complicated. I could not get reliable information for my
mother's Medicare Advantage plan or the mail-order pharmacies
either because they would give me different information every
time I called. I spent hours wading through information to
figure out the best coverage for my mother, my husband, and
myself.
Finally, I received invaluable help from the counselors at
SHIBA, the Senior Health Insurance Benefits Assistance Program.
You may know it as Oregon's SHIP program. The staff at SHIBA
has created an excellent booklet that guides people through
Medicare, Medicare Advantage, Medigap, and Part D plans.
The SHIBA counselors were wonderful in helping me
understand my options and sorting out the information that
could otherwise be overwhelming. The staff and volunteers at
SHIBA do a terrific job, and I would like to take this
opportunity to thank them publicly.
I want to thank the Committee, and especially Senator
Smith, for taking an interest in this issue and for inviting me
to testify about my family's experience with Medicare.
I hope that the rules can be changed to allow people like
my mother to get the healthcare she needs without spending the
last penny she has. It seems to me that in a country as wealthy
as this one, there should not be people who cannot take their
medications just because they cannot afford them.
Thank you.
[The prepared statement of Ms. Korynasz follows:]
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Senator Smith. Thank you, Judy.
Barbara, welcome back.
STATEMENT OF BARBARA BOVBJERG, DIRECTOR, EDUCATION, WORKFORCE,
AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTABILITY OFFICE,
WASHINGTON, DC
Ms. Bovbjerg. Thank you, Mr. Chairman.
Mr. Chairman, Senators, I was originally really pleased to
be here to talk about Social Security Administration and the
low-income subsidy of the Medicare Part D program, though I am
very sobered by the story we just heard. As someone who worries
a lot about retirement income, I was particularly horrified to
hear about your 401(k)s, but that is a topic for another day.
SSA is charged with publicizing the subsidy, with taking
and evaluating applications, and with determining participants'
continuing eligibility. My testimony today is going to focus on
the numbers of applicants that have been approved and denied so
far for the subsidy and the status of SSA's outreach efforts.
My statement is drawn from a report that we issued last year
about this time on this topic and we have updated a little for
progress since then.
First, SSA's progress on processing. Since the beginning of
the program, 7.2 million individuals have applied for the
subsidy, and SSA has approved about 2.8 million of these. SSA
received 1.3 million applications in Fiscal 2007, of which they
approved 43 percent and denied 32 percent. The rest required no
decision for a variety of reasons, including duplicate
applications or applications that were withdrawn.
SSA's goal is to process 75 percent of the subsidy
applications within 60 days. And in the first 6 months of
Fiscal 2008, SSA reports they processed 93 percent of
applications within that timeframe, which is well exceeding its
service goal.
Also, we now have more detailed information on income and
asset levels for those denied the subsidy than we had
previously. According to SSA data for 2007, over 60 percent
earned income above the subsidy program's limits. About 17
percent were denied because their assets exceeded program
limits, and another 10 percent exceeded both asset and income
limits. The rest were denied, again, for other reasons, such as
not being eligible for Medicare to begin with.
The extent to which denials exceeded the limit varied, but
a significant percentage were barely disqualified. For income-
related denials, although the median excess income was $4,500,
10 percent of this group had income that was no more than $500
over the limit. So they just were barely cutoff. As for assets,
although the median excess was $13,700, meaning that half were
above and half were below that amount, about 6 percent of these
denials were only $500 over the threshold.
I will turn now to SSA's outreach efforts. When we began
this outreach campaign in May 2005, SSA sent targeted mailings,
which included an application form, to almost 19 million
individuals identified as potentially eligible, and had
contractors call more than 9 million of those individuals who
didn't respond to the initial mailing. SSA also conducted other
specific follow-up efforts, including sending notices to
individuals they couldn't contact by phone and more than 76,000
events at senior centers, churches, and other community
centers.
Today, however, that focused campaign is more muted.
Although some subsidy-specific initiatives remain, including a
new campaign of automated phone calls to those potentially
subsidy-eligible, SSA has largely incorporated the subsidy
outreach into its overall outreach activities for the entire
Social Security program. This is understandable, SSA resources
are stretched thin, particularly in field offices where much of
the outreach is carried out, but is likely less effective than
a more concentrated approach.
Of course, as we noted last year, it is difficult to know
whether the outreach measures have been effective or not
because no one really knows how many people are eligible for
the subsidy. Reliable data are simply not available to help SSA
with its task of reaching the eligible population.
SSA believes that tax data held by the IRS could help. They
feel that even if many lower-income individuals do not file tax
returns, they could at least use asset information from the
Form 1099 and 1098 to eliminate some ineligibles from their
list.
However, by law, IRS cannot provide such information
without specific authorization from the Congress, and IRS staff
have expressed doubts that tax information would provide
meaningful help anyway. This is why last year we recommended
that SSA and IRS work together to assess whether tax data
could, indeed, help. The two agencies are working together
today to answer this question and anticipate results next
month.
In conclusion, reaching the millions of people who are
foregoing the subsidy remains a significant challenge. While
SSA continues to approve applications, its efforts to attract
new recipients have slowed and been folded into the overall SSA
outreach. This approach, while likely less effective than a
subsidy-focused campaign, should not be surprising given SSA's
workload in its field offices and its likely inability to
devote more time and attention to this program.
Better information to narrow the list of who may be
eligible could help, and we are encouraged that IRS and SSA are
working together to assess the utility of tax data in this role
because a better understanding of who is eligible could help
SSA make more efficient use of its limited staff resources by
targeting outreach more narrowly to the population who is more
likely to be eligible.
That concludes my statement, Mr. Chairman. Thank you for
the extra time.
[The prepared statement of Ms. Bovbjerg follows:]
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Senator Smith. Thank you, Barbara.
Joyce Payne.
STATEMENT OF JOYCE PAYNE, MEMBER, AARP BOARD OF DIRECTORS,
WASHINGTON, DC
Ms. Payne. I am Joyce Payne of AARP's Board of Directors.
We want to thank you for inviting us to testify on the need to
strengthen Part D low-income subsidy and Medicare savings
programs.
One in four people on Medicare live on incomes of 150
percent or less of the poverty level. That is just $15,600 for
individuals and $21,000 for couples. They desperately need the
help these programs provide.
The low-income subsidy covers up to 95 percent of drug
costs and closes the Part D donut hole. The Medicare savings
programs pay Part B premiums and for those below the poverty
level all Medicare cost sharing. However, millions of older
Americans who need the help LIS and MSPs provide are not
getting it because these programs have a serious flaw, an asset
test.
For LIS, beneficiaries can have no more than $11,990 in
savings, $23,970 for a couple, no matter how low their income
or how high their living expenses. For MSPs, the asset test or
the asset limits are even more unreasonable--$4,000 for
individuals and $6,000 for couples in most States, a limit that
has not changed for the last 20 years. These amounts are hardly
enough to get people through retirement. But anyone who has
saved even one dollar over these limits is not eligible for
help.
Asset tests contradict efforts to encourage people to save
by penalizing those who, despite limited incomes, put away a
small nest egg for retirement. We should encourage people to
save for retirement, not penalize those who do. Asset tests are
also a barrier to enrollment, even for those who meet the
limits because they make the application process so very
daunting and invasive. The result is that millions of people
are not getting the needed assistance.
AARP believes there should be no asset test in Medicare.
Again, we should encourage people to save for retirement. As a
first step, AARP supports the Part D Equity for Low-Income
Seniors Act introduced by Senators Jeff Bingaman of New Mexico
and the Ranking Member of this Committee, of course, Senator
Gordon Smith of Oregon.
This legislation would increase the asset test limits,
simplify the LIS application, and help target efforts to
identify and enroll people. It takes an additional important
step of allowing Social Security to screen LIS applicants for
MSPs.
We are committed to seeing enactment of first steps toward
that goal this year as part of the Medicare package currently
being considered by the Senate, and we look forward to working
with Members of the Congress from both sides of the aisle to
improve the Medicare prescription drug benefit and to ensure
that all older Americans have access to affordable prescription
drugs and healthcare.
Again, we thank the Committee for this opportunity to speak
on behalf of our 40 million members who want the Congress to
strengthen Medicare low-income programs.
We thank you.
[The prepared statement of Ms. Payne follows:]
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Senator Smith. Thank you very much, Joyce.
Laura Summer.
STATEMENT OF LAURA SUMMER, SENIOR RESEARCH SCHOLAR, GEORGETOWN
UNIVERSITY, HEALTH POLICY INSTITUTE, WASHINGTON, DC
Ms. Summer. Mr. Chairman and members of the Committee, I
appreciate the opportunity to testify today.
Much of my work at Georgetown has involved examining the
impact of Federal and State policies on enrollment for public
benefit programs and particularly recently for the low-income
subsidy for Part D as well as the Medicare Savings Programs.
Today, I would like to discuss some program changes to
initiate a shift from the current enrollment process, which
requires that individuals learn about and seek benefits, to one
that relies on the use of available data to identify and inform
low-income individuals about their eligibility and to help them
enroll.
First, I would like to make an important distinction. We
often hear that 80 percent approximately of those who are
eligible for the low-income subsidy are receiving it. But there
are two groups of people who qualify for the subsidy, those who
are deemed eligible by virtue of their participation in other
programs and those who have to file a separate application for
the subsidy.
Of that group, the 4.2 million who have to file that
separate application, it appears from CMS data that only about
38 percent are receiving the subsidy, and that is obviously a
very low enrollment rate.
There is a tendency in thinking about how to improve
enrollment in a program to want to publicize it more. But as
Mr. Salazar noted before, low enrollment occurs not only
because people don't know about the program, but also because
they find the program difficult to apply for. They aren't
familiar with the financial eligibility requirements or the
financial benefits, and they simply don't know how to apply.
This is what we generally hear when we ask beneficiaries and
their counselors about the reasons that people don't apply for
the subsidy.
So some administrative simplification could really help
increase enrollment. The elimination of the resource test is a
key program change to simplify enrollment for beneficiaries and
for those who process applications. As we have heard already
this morning, that step would allow us to be able to identify
the people who really qualify for the subsidy and also to
target outreach more effectively because we have good data from
national surveys about the income of these folks. But we don't
have good information about the resources of low-income
seniors.
If the resource test is not eliminated, some steps
certainly should be taken to increase the resource limit and
also to simplify the way that resources are counted and
verified. But simply eliminating a resource test or raising the
resource limits will not ensure increased enrollment. We have
an example from the State of Maine, which last year decided
that they would do without a resource test for the Medicare
Savings Program.
Following that decision, they saw very little increase in
enrollment in that State for the Medicare Savings Programs. But
then a subsequent decision to deem eligible all of those people
who were participating in the State Pharmacy Assistance Program
for the Medicare Savings Programs brought a very dramatic
increase in enrollment.
As you have heard from others today, the idea of having the
Social Security Administration and the IRS work together to
determine--to use information on hand to determine who might be
eligible for the subsidy is certainly one that has a great deal
of merit. Without a resource test, it would be even easier to
identify those individuals who are eligible for the subsidy.
At the current time, SSA enrolls Medicare beneficiaries
when they become eligible in both Parts A and Part B of the
Medicare program, and there is an option to opt out of Part B.
Thinking about a streamlined way to promote enrollment, the
Social Security Administration could also enroll people
eligible for the subsidy and give them an opt-out provision.
We have also heard this morning about the fact that LIS and
MSP benefits are available for a similar, but not exactly the
same population, and two program changes could achieve
administrative efficiency and increase enrollment in both
programs.
First, a mandate that no matter where a person applies for
a subsidy or for MSP benefits, they be screened and enrolled
for the other program, regardless of whether they apply at the
Medicaid office or through the Social Security Administration,
and a similar mandate that information be shared between those
two programs would be very helpful. Of course, aligning the
eligibility rules for the two programs would foster dual
program enrollment.
I also want to mention that ensuring that benefits continue
uninterrupted from year to year is another very important
factor in achieving high enrollment rates. Some of the people
who are counted in those not participating in the program this
year are people who participated last year, but lost their
eligibility when they lost their deemed status through Medicaid
or when they failed to respond to notices from SSA to
redetermine eligibility.
Barbara did mention some of the new data that are available
from SSA, but there are other data that would be very helpful
to have. It would be good to know about the relative value of
resources to income for the folks who apply and who receive and
who don't qualify for the subsidy. It would also be helpful to
know whether resources change from year to year for this
particular population. Even if the resource test is not
eliminated at the time of application, I would suggest it
certainly should be eliminated at the time of redetermination
because in our research, we found that generally assets do not
change for this population over time.
Finally, I would just say that even with a simpler
enrollment process, there will still be a need for materials
and all kinds of materials, not only publicity and
applications, but also notices, all correspondence to be
available in a variety of languages so that we have
linguistically and culturally appropriate information available
for those people who may qualify for the subsidy.
We know that beneficiaries tend to seek help from trusted
sources and that one-on-one counseling is particularly
effective. Over the past few years, the Federal Government
really has played an important role in ensuring that there is
support for that kind of activity. But as the program is more
established, it is very important to continue to provide that
sort of support so that one-on-one assistance can continue to
be available on a community level.
Thank you.
[The prepared statement of Ms. Summer follows:]
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Senator Smith. Thank you, Laura.
Lisa Emerson.
STATEMENT OF LISA EMERSON, PROGRAM MANAGER, THE SENIOR HEALTH
INSURANCE BENEFITS ASSISTANCE (SHIBA)/DIRECTOR, OREGON STATE
HEALTH INSURANCE COUNSELING AND ASSISTANCE PROGRAMS (SHIPS),
SALEM, OR
Ms. Emerson. Good morning, Ranking Member Smith and Senator
Whitehouse and guests. I am definitely honored and I very much
appreciate being here as well to provide testimony today.
As you know, I am the program manager of the Oregon Senior
Health Insurance Benefits Assistance Program, also known as the
State Health Insurance Assistance Program, funded by a Federal
grant from the Centers for Medicare and Medicaid Services as
well as some State general fund.
I would like to take this opportunity to thank Congress at
this time on behalf of my State and other national partners for
approving additional funding for SHIPs this year.
My primary reason for being here today is to provide
testimony about the low-income subsidy in Oregon and alert you
to the critical role SHIBA plays with people eligible for Part
D coverage. Oregon SHIBA is a State-wide free Medicare
counseling service based in Salem, Oregon's capital. SHIBA has
a certified volunteer base of approximately 200 volunteers that
provide one-on-one counseling assistance to many of Oregon's
over 571,000 Medicare beneficiaries, which makes up 15 percent
of our total State population.
The overriding goal of SHIBA volunteers is to help people
understand and make informed decisions about their Medicare
benefits, particularly the Part D options because they are
complex.
Since January 1 of 2007, the SHIBA counseling network has
provided one-on-one counseling assistance to over 20,000 Oregon
beneficiaries based on the data that we collect. The average
time spent with each beneficiary has been approximately 38
minutes. The estimated in-kind value to the program for over
14,740 volunteer work hours during this period translates to
approximately $250,000. These estimates illustrate the public
reach and impact of Oregon's SHIP.
SHIBA cannot recruit and maintain a volunteer workforce
without the assistance of vital local, county SHIBA partners.
We currently contract with 22 local SHIBA sponsoring
organizations throughout Oregon to provide local SHIBA
counseling services to beneficiaries.
During today's hearing, you did hear directly from Judy and
her family's need for the LIS, and she is one of many
beneficiaries that we speak to in Oregon. These kinds of
stories illustrate a very small sample of the widespread need
for more low-income beneficiaries to be eligible for the
assistance LIS can provide. I have included in the attachment
some additional anecdotal stories from beneficiaries, and
again, it is just a sample.
Oregon SHIBA's experience with Part D prescription
coverage. Beneficiaries repeatedly have expressed the following
concerns to SHIBA about the Part D low-income subsidy program.
The income and asset requirements for LIS are restrictive and
do not make the benefit available to enough low-income people
who need additional assistance with paying for their
prescription drugs.
They report that the income and asset eligibility
guidelines for patient assistance programs, also known as PAPs,
offered by pharmaceutical companies are more generous than
those for the LIS. And they also report concerns with the
eligibility criteria of using cash surrender value of life
insurance policies, in-kind support and maintenance, and
undistributed funds in retirement savings plans such as 401(k)
accounts as assets.
They often receive conflicting information about the LIS
program from representatives from their Medicare Advantage
company, private fee-for-service plan, Medicare, and Social
Security Administration, and even insurance producers or
agents. There has been a lag in coordination of the reduction
in prescription co-pay for LIS beneficiaries when they join new
Part D plans, and it has put the burden of proof that they are
eligible for the LIS onto the beneficiary.
Many LIS beneficiaries with 100 percent subsidy report they
did not realize their subsidy amounts were determined by Social
Security Administration rather than by the particular plan that
they had selected. Letters from the Social Security
Administration can be confusing, and beneficiaries often do not
realize that they must apply or reapply in order to receive
LIS.
I would also like to take this opportunity to address the
Federal grant for SHIBA and other SHIP programs. But in Oregon,
the current Federal grant level has--while it has been
increased slightly, has been insufficient to support the local
level of resources and the volunteer base needed to meet the
CMS/SHIP performance measures and standards and manage the
growing number of calls from retiring baby boomers.
The creation of Part D increased the complexity of the
coverage under Medicare and magnified the confusion among
Oregonians about their choices and the impacts on their out-of-
pocket costs. This, in turn, has increased considerably both
the volume of calls to SHIBA and the amount of time volunteers
spend providing assistance to each caller.
Because the drug benefits offered by individual plans can
change dramatically from year to year, beneficiaries still
require annual assistance to ensure that the plans in which
they are enrolled still cover their prescription medications.
The CMS/SHIP performance measures implemented in 2005 have
put an increased burden on State SHIP programs to maintain or
exceed performance, but the funding base does not support the
resources needed to develop a force of volunteers with the
specialized knowledge to counsel the growing number of Medicare
eligibles.
To appropriately address the increasing demand for
assistance from SHIBA, particularly for Part D coverage, it
would require having a minimum of one counseling site in
every--or in all of Oregon's 36 counties and a volunteer force
of not less than 600 active individuals trained in various
specialty areas of Medicare.
I could go on, but I would like to say thank you again for
this opportunity, Senator Smith, members of the Committee, for
the opportunity to share testimony with you today, and I will
do my best to answer your questions.
[The prepared statement of Ms. Emerson follows:]
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Senator Smith. Thank you, Lisa.
Laura, as you have studied other States, how is Oregon
doing?
Ms. Summer. Well, Oregon really does have a very active
SHIBA program that is doing a great job.
Senator Smith. Well, that is great. I appreciate that. As
you think about the kind of information, the data that would be
useful in helping Lisa help seniors navigate Medicare's low-
income assistance program, what would be the most useful data?
Ms. Summer. Evaluate people's potential eligibility and try
to determine----
Senator Smith. Exactly.
Ms. Summer [continuing]. How to reach them?
Senator Smith. Yes.
Ms. Summer. Well, as I said before, if we didn't have a
resource test, then information on the income level of people
in various parts of the State would be very helpful in
identifying those who are potentially eligible for the benefit.
In addition, it is very important not only to know the number
of people you are trying to reach, but who those people are.
So, questions about the types of materials, whether they
are appropriate linguistically or culturally, are very
important to consider.
Senator Smith. Do you agree with that, Lisa?
Ms. Emerson. Yes, I do. I would like to just mention the
efforts being made by SSA and CMS and the SHIP programs by
doing a campaign, an LIS outreach campaign for 2008 that is
getting kicked off right now. There is information on CMS's Web
site about that.
Ms. Summer. Although I would like to add that the site
provides materials in English and Spanish and perhaps should be
expanded a bit to cover other languages.
Senator Smith. Such as, in Oregon, perhaps Russian?
Ms. Emerson. Absolutely.
Senator Smith. What other languages?
Ms. Emerson. Asian languages, Russian, Spanish, yes.
Senator Smith. Judy, like Barbara, I was horrified to hear
of your retirement difficulties. Your 401(k) is yours. How did
it fall into the bankruptcy of your employer?
Ms. Korynasz. Illegally.
Senator Smith. That is unrelated to this topic, but I am
just horrified by such a thing.
Ms. Korynasz. Unfortunately, one of the owner's wives, she
was the one who administered our 401(k). She owned her own
business, which was an insurance business.
Senator Smith. Is anybody in jail?
Ms. Korynasz. Well--you know, yes. The Federal Government
came after them for back taxes for a lot of things.
Senator Smith. This is outrageous.
Ms. Korynasz. They received punishment. That is true. They
lost a lot. She lost her business. She lost everything. But
unfortunately, the people that worked for them lost all that
they had in their retirement. There was just nothing there.
Senator Smith. I am so sorry to hear that. That obviously
complicates all the additional difficulties you are having with
Medicare, and that takes us to the purpose of this hearing, I
understand you have had some difficulty with 1-800-MEDICARE. I
have been all over CMS for some time to try to reduce wait
times and increase accuracy in information, and I wonder if you
can discuss some of the problems you experienced?
Ms. Korynasz. When I tried to reach them, I kept wondering,
well, why does this number ring through and then clicks off?
So, I actually had asked--when I got in touch with the SHIBA
volunteer, I asked if he would know why you couldn't get
through. He said, ``Well, I think it is the high volume of
calls. They simply can't handle them.''
Then I read a little piece in The Oregonian that stated
that they simply did not have the staff to answer all of the
calls. So when they were overloaded, it just simply cut them
off. Not that the staff cut you off, the system did because
they couldn't answer the calls.
Senator Smith. Kind of like the Senate phone system when we
are dealing with immigration or something. It melts down.
[Laughter.]
But it points out the need, and I think the pressure that I
and I know many of my colleagues are putting on CMS to deal
with this issue. It makes me wonder why the budget requests CMS
needs in order to manage this problem was not addressed. This
truly is one of the really crying needs out there.
Right now, on the Senate Finance Committee, there has been
a real effort to deal with the issue of what is called the
``doc fix'' around here. It doesn't do you a lot of good to
have Medicare if no physicians will take Medicare patients.
This is why we have to avoid what are scheduled cuts to them.
My own view is that in taking care of the doctors, which is
essential not just for providers, but patients, we do need to
address these low-income issues as well. I am going to be in a
meeting a little bit later of Finance Committee members, and I
wonder what you would tell them? Should we just take care of
the docs, or should we also address these issues?
Ms. Korynasz. I think it is important to take care of the
doctors because we ran into that. I mean, my doctor in Medford,
when we moved up to Hillsboro area, recommended a doctor for me
that she knew personally. When I made contact with that
doctor's office, they said, ``Oh, gee, we are really sorry, but
we don't take Medicare patients. We simply can't handle any
more than we already have.''
Then when we tried to find a new doctor recently, we ran
into the same problem. The doctor that we would liked to have
had said, ``Oh, we simply can't take any more Medicare
patients. We have reached our quota on what we can handle.'' We
had to hunt around to find a doctor that was willing to take on
new Medicare patients.
Ms. Payne. Senator Smith, can I elaborate on that?
Senator Smith. Yes, please, Joyce.
Ms. Payne. It seems to me that although the doctors are
very--the physicians are very important to this, that it
shouldn't have to be an either/or decision. We have to deal
with the central issue of the cost of health in this country.
We have to deal with creating the kind of system that will be
high quality for low-income individuals and for physicians.
So I think we have enough resources, we have enough
options. We can look at IT. We can look at evidence-based
research. We can look at trying to get drugs into the
marketplace, and we have enough solutions. I don't think we
have to decide whether it is the physicians or low- income.
Senator Smith. I agree with you completely, and that is
going to be my position in the Committee later today.
Joyce, we are caught between what we need to do, what we
want to do, and what the budget rules require under the PAYGO
requirement. You know, PAYGO is a great campaign slogan. ``Pay
as you go.''
The truth is, though, that that assumes a static budget and
that every dollar spent is equal in terms of its economic
impact, its human impact. Every tax dollar, every tax category
is equal to every spending dollar. The truth is we don't have a
static budget. We have a very dynamic one, and I wonder what
would you counsel my friends on the Democratic side, frankly,
who insist on this being in there? We are at loggerheads.
There aren't many other budget cuts to be made in Medicare
or in other spending programs that they want to make or that I
believe are advisable to make. There aren't the votes on the
Republican side to raise taxes. So what do we do?
Ms. Payne. Well, certainly I am not the budget expert on
this, but it seems to me that we need to live up to the code
you have, that beautiful code on the wall about ``E Pluribus
Unum,'' out of many is one. Because one is Judy's family. One
is--there are Judy families all over the country. We hear from
them every day.
So it seems to me that however this is worked out, it needs
to be worked out in the best interest of families like Judy's
who have paid into the system, who have made the kind of
sacrifices to live a good life, a decent life in retirement,
and we should be providing incentives.
When you look at defined benefits fading away and you look
at the issue that she just raised in terms of her 401, there
are people who are really hurting. They desperately need these
services. So, we need to think in terms of out of many is one
not only for the Senate, but for the country.
Senator Smith. Well, what happened in the last session of
this Congress is that it was waived, and I suspect that that is
what will happen again this Congress, that it will be waived
because, I agree with you, these are not either/or issues.
Although we need to take care of the docs, as Judy advises we
also need to take care of the low-income issues.
I have asked enough questions. I will turn, before I go to
a second round, to Senator Whitehouse.
Senator Whitehouse. Thank you. Once again, I appreciate the
Ranking Member having chaired this hearing and giving us the
opportunity to hear from these wonderful witnesses.
All I was going to do was to say how much I appreciated
your testimony, particularly Ms. Korynasz's personal testimony
and Ms. Emerson's, the attachment that told the stories of all
the different folks on your SHIBA program and what their lives
were like and what they were going through. It is so easy for
us to forget that here, when the tassle-shoed lobbyists show up
from the pharmaceutical industry and try to have their way,
that it really harms folks who don't have a voice all across
this country.
I thought those were really wonderful stories in your
testimony. I appreciate that you assembled them and brought
them to us. So that was all I was going to say.
Then, Ms. Payne said what she said about the need for a
forum, and I just have to pounce on that because I couldn't
agree with it more. I think it is absolutely critical.
We have heard the testimony in the Budget Committee about
the $35 trillion in healthcare entitlement costs that is coming
at us. Unless somebody figures out how to repeal the passage of
time or repeal the aging of humans or make it more likely that
older humans cost less for medical care than younger humans,
then this is an inevitable, unavoidable fact that is bearing
down on us with what our wonderful chairman Kent Conrad has
called a tsunami of cost.
If we dawdle around here in Congress and don't do something
about it until the wolf is really at the door, then the only
tools left in our toolbox are going to be the fiscal tools that
can be deployed to solve a problem like this, and there are
only three of them.
One is raising taxes. Anybody who knows what American
businesses pay for healthcare already and what competitive
posture that puts us in vis-`-vis the rest of the world knows
that that is a pretty tough sale to make, that American
business needs to pay more in taxes for this healthcare system.
The second is to throw folks off of healthcare. In a
country that has 50 million people already uninsured, which is
a national disgrace, compared to other developed countries, the
idea that we would throw more off is pretty awful.
The third is you cut provider payments, which is what
Senator Smith was asking about. We are already at the limit
with provider payments.
We had this battle in Rhode Island a decade ago when our
workers compensation system fell apart, and the industry folks
all came in and said, well, this is easy. You take your
doctors. You pay them 15 percent less. You chalk up those
savings. We will take it.
Common sense, thankfully, prevailed, and instead we went to
a medical advisory board for workers compensation. They
established protocols of care, and some discipline was put into
it. The people from the specialty groups came in and decided,
OK, for this, here is the program. They were pretty broad,
solid programs. They weren't forcing doctors to make inch-by-
inch decisions.
But it really controlled the cost in the workers
compensation medical care in Rhode Island after that, and we
didn't have to cut because we knew that would be a foolish
thing to do. Penny wise for the moment, pound foolish in the
long run.
That day is inevitable, and that day is coming soon. Those
three alternatives that we have to address that day are
sickening ones, frankly. The only way we are going to get ahead
of this is if we start doing exactly what you said right now.
We have to build a national health information technology
infrastructure that doctors can connect to. To expect them to
build it all by themselves is as dumb as expecting everybody to
build their own roads to work.
There is a national infrastructure issue here, and we have
to see it that way, and we have to build that national
infrastructure. Then everybody can connect their machines. But
there are issues of privacy. There are issues of coordination,
what goes into an electronic health record and so forth, how
the health information exchange works that need to be worked
out on a national level.
We also need to focus a lot on quality of care improvement
and prevention. We way under invest in those things in areas
where we know it will save money. The Rand Corporation says it
could be as much as $346 billion a year from a health
information technology system that supports these quality
improvements.
There is $2 billion a year in Pennsylvania alone that gets
burned from hospital-acquired infections that are completely
unnecessary. We kill 100,000 Americans every year from medical
errors that don't need to happen.
There is a huge savings associated with properly targeted
quality and prevention investments, and we are not pursuing it.
We are not pursuing it because of the economics of the system.
So we have to change the way it is reimbursed so that those
problems get solved.
But between those three things--a national health
information technology infrastructure, reform in the area of
quality improvement and prevention, and a better reimbursement
system--we can drive enormous costs out of the system. I mean,
it is burning up 16 percent of our gross domestic product. In
the next closest country health care is only 11 percent of
their gross domestic product.
The average for the European Union is only 8 percent of
their gross domestic product, and those countries have better
health outcomes than we do. We are paying twice as much to have
worse health outcomes. We are the highest- paying country in
the world, and when you look at the outcomes, we are somewhere
between 25th and 40th. We rank with countries like Croatia and
Cuba. I mean, it is embarrassing.
We have to get after that because we either have to do that
now or face those horrible fiscal adjustments a decade from
now. It is really vital, and I know it has taken us off point,
but I think it is such an important point. I am so glad that
you raised it.
I hope that AARP will pick up its stick and go around this
building and knock everybody upside the head until they get it
because if we don't do that now, time is short.
Ms. Payne. We are working on getting a bigger stick.
Senator Whitehouse. Good. Good. [Laughter.]
Senator Smith. It is going to grow because, as Senator
Whitehouse points out, the baby boom generation is here, and so
the ranks of the AARP will grow.
I wonder, does AARP have a position--I know how it feels
about the donut hole that captures lots of low- and middle-
income people, such as Judy's family, is that the wrong place
for the donut hole? Medicare Part D is means tested already,
but not very much. Should it be means tested?
Ms. Payne. Well, we are certainly working on that. We
obviously want any asset test to be eliminated. We recognize
that there are some problems with the donut hole, and we are
certainly working with a number of staffers and trying to
resolve some of those issues. It is a major problem, and we
certainly recognize that.
Senator Smith. Well, we would look forward to your counsel
on that because those of us who may or may not be here, whoever
is here is going to have to wrestle with these very, very stark
and terrible choices.
Senator Whitehouse. Mr. Chairman, I would suggest that we
have no farther to look for the solution to the donut hole
problem, the senior trap problem--I hate calling it the donut
hole, it really sounds like it is something good--is to the
Veterans Administration, which has the authority to negotiate
with the pharmaceutical industry over the price of
prescriptions.
When you put the prices they get compared to the prices CMS
pays for Part D side by side, the savings add up to enough to
close the coverage gap.
Ms. Payne. Those are the two priorities we have, the fact
that we want to eliminate the asset test and certainly give the
Secretary the authority to negotiate.
Senator Whitehouse. Authority to negotiate. Why would we
privilege an industry from being negotiated with?
Ms. Payne. Absolutely.
Senator Whitehouse. It is an extraordinary privilege. It is
a ridiculous privilege, in my view.
Ms. Payne. We certainly have enough models to follow that.
Senator Whitehouse. Yes, you have to look no further than
the VA, which does a wonderful job.
Thank you, Mr. Chairman.
Senator Smith. Thank you, Senator Whitehouse.
I just have a couple more questions for you, Barbara, and
you know we have talked about LIS and the asset test. What
would happen if it were increased $5,000, $10,000, or $20,000?
Ms. Bovbjerg. Well, actually, I looked at what would happen
if your proposal to raise the asset threshold, almost double it
roughly, that is in your bill, what would happen there? Based
on the data that we got from Social Security, it looked like
about half of the people who were denied on the basis of asset
levels alone would be brought into the program.
Social Security has estimated that that is about 25,000
people. It is about 6 percent of the applicants. It could be
more because we know there are people who would otherwise be
eligible who don't apply because either they know or they think
they know that their asset threshold is too high. So it could
be a considerable number of people.
Senator Smith. You mentioned in your testimony that you
expect a report from Social Security and the IRS in a month?
Ms. Bovbjerg. Next month, in June.
Senator Smith. What do you think they are going to say?
Ms. Bovbjerg. It is hard to say. When we did this work a
year ago, Social Security felt very strongly that they could
really use these data to help them narrow the potential
eligibles and really focus on the people who were more probably
eligible than the whole 19 million.
IRS feels equally strongly that it is not going to help. We
didn't have access to the data either, so we couldn't tell. But
they have worked together to develop a methodology, and Social
Security is working with some scrambled data that IRS gave
them. They have passed some things back and forth.
It is just hard to say what will happen, but then we will
know next month. If SSA could use those data to improve their
targeting, we will know that. I just think that would be a
really important point if we are to tell IRS that they should
provide tax information to Social Security.
Senator Smith. Well, thank you so very much, each of you.
If any of you have a closing thought or comment you want to
make, we are going to have a vote momentarily on the floor. So
any thoughts come to mind that you think we need to have in the
Senate record, we would certainly welcome those right now.
Ms. Bovbjerg. I would like to say something about the
eligible people, that if you raise the asset limit or remove
it, you will certainly have more eligible people. But we will
still have this problem of not getting them to apply and not
contacting them. I think that there is merit in some of the
ideas about Social Security working more closely with
community-based organizations. I know that they do that now,
but perhaps make strengthening those ties would be really
important.
Perhaps there are some other things we could look at with
the way that Social Security communicates with individuals--the
notices, the letters--that might make a difference as well.
Ms. Summer. I would add to that that certainly in your bill
and other pending legislation, there are some relatively small
administrative changes that can be made. One of the things that
we have learned is that sometimes people don't apply for the
benefit because they are afraid that if that benefit is counted
as income, they will lose other means-tested benefits.
That is problematic for a number of people who otherwise
are eligible for the subsidy. We have actually a precedent for
that when the drug card was being used, that was not counted as
income for people.
So, relatively small changes like that, administrative
streamlining, I think sometimes get lost in the conversations
about the bigger healthcare system and what we need to do to
have everyone have access, which I think no one would argue
with. Those are really daunting problems, but some of these
small fixes really deserve attention.
Senator Smith. Lisa.
Ms. Emerson. I would just like to comment that I hear this
a lot that from people that I work with is that nothing
replaces that one-on-one noninvasive or nonthreatening help
that a neutral counselor can give an individual to walk them
through the evaluation and application process. That is what we
are trying to do with SHIBA, but we don't know who these people
are specifically.
That is the challenge. We get the data of where they are
concentrated in the counties, but we don't know their address.
We don't know their name. So, it is kind of a shooting in the
dark process, but we are doing our best.
Senator Smith. Great. Are you in Pendleton, too?
Ms. Emerson. In Pendleton, we are working to get a formal
partnership developed there, but we have informal relations
with the aging community-based organizations there.
Ms. Korynasz. May I interject something?
Senator Smith. Sure, Judy.
Ms. Korynasz. The thing that I found the most frustrating
when I was trying to get this information was the hours that
you have to spend talking to people who do not have the answer
to the problem and will give you what they think is the answer,
and you wind up with 10 different answers, none of which agree,
and you don't know where to go after that to get the actual
answer you need.
Senator Smith. The right answer.
Ms. Korynasz. That is why I really believe that the SHIBA
organization has been the most helpful to us because of all of
the people that I talked to, and that include people in
Medicare when I finally could talk to anyone, they had the most
information, the most helpful information, and the most
accurate information.
That is what is important, I think, is not just that
somebody tells you something. It needs to be accurate.
Senator Smith. Right.
Ms. Payne. Mr. Chairman, I would simply reiterate what
Laura just said, the administrative coordination is very--the
streamlining of the process is very important, and the Internal
Revenue working with the Social Security Administration, we
think that could be a substantial benefit to identifying
eligible recipients and also getting the word out and outreach
activities.
Senator Smith. Well, you have all been just wonderful. You
have been a great panel. It has been a great contribution to
the record here in the U.S. Senate. Your time is not in vain.
There are things happening that we are trying to push in the
direction I think all of you are suggesting, and we will just
go to work now.
With that, we are adjourned with a heartfelt thanks.
[Whereupon, at 11:46 a.m., the hearing was adjourned.]
A P P E N D I X
----------
Prepared Statement of Senator Robert P. Casey, Jr.
Mr. Chairman, thank you for scheduling this important
hearing on improving Medicare for our most vulnerable seniors.
We meet today to discuss what can be done to enroll all
eligible people in the low income assistance programs in
Medicare, specifically the low income subsidy in the Medicare
Part D prescription drug program, and beyond that ways we can
improve the program to help these individuals.
When Congress and President Johnson created the Medicare
program over forty years ago they guaranteed every citizen over
the age of 65 the right to health insurance. This right is now
a fixture in the American health care system and as medicine
has changed and advanced in the ensuing years the program has
changed as well. One of the largest changes was the addition of
the optional prescription drug benefit that was included in the
2003 Medicare Modernization Act. This new benefit acknowledged
the role prescription drugs now play in maintaining the health
of everyone, but especially the elderly.
One important component of the optional Medicare
prescription drug benefit is the low-income subsidy. This is a
vital part of the program and without it some seniors would
still have to choose between taking medications they need to
live and putting food on the table. This subsidy offers low-
income seniors additional assistance in paying for prescription
drugs. Specifically, couples earning less than $21,000 and
having assets worth less than $23,970 are eligible for this
benefit. At the beginning of this year, 12.5 million Medicare
Part D beneficiaries were eligible for this subsidy, but of
those 2.6 million were not enrolled. Two of the main reasons
given for this are that beneficiaries do not know how to apply
for this benefit, or that they do not know they are eligible
for it. I look forward to discussing ways we can work to change
that.
The asset limit presents a difficult issue for many
seniors. Even though their annual income is within the
guidelines, they are considered too ``wealthy'' to be eligible
for this program because they have managed to save a relatively
small amount for their retirement. Asset limits exist in many
government programs geared towards low-income individuals.
While it is important to ensure that these benefits go to those
who truly need them, we must also ensure our senior citizens
are not punished because they managed to save a small nest egg.
In my own state of Pennsylvania, in January of this year
almost 400,000 beneficiaries were enrolled in the low-income
subsidy program. Clearly many of our constituents are using
this benefit and it is helping them get the medications they
need. Now we must look beyond them and see how we can reach out
to others who are struggling to pay the cost of their
prescription drug medications.
Mr. Chairman, I thank you again for organizing this hearing
and drawing our attention to this most important matter. We
must continue to examine and develop ways we can help our most
vulnerable citizens. This is our duty as public servants and
especially as members of this committee. I look forward to
hearing the testimony of the witnesses and exploring these
ideas further. Thank you.
------
Statement of Richard Grimes, President and CEO, Assisted Living
Federation of America
Ranking Member Smith, Chairman Kohl, and members of the
Committee, thank you for allowing me to submit this written
testimony.
In 2003, Congress enacted one of the most substantive
changes to Medicare in recent memory, the Medicare
Modernization Act (MMA). The prescription drug benefit (Part D)
contained within the MMA has been well documented in providing
access and affordability of prescription medicines to America's
seniors. However, while Part D has brought control over their
own health care into many seniors' owns hands, Part D needs one
significant change that will benefit over 100,000 seniors.
Prior to the MMA, all dually eligible individuals (those
eligible for both Medicare and Medicaid) were exempt from co-
payment for prescription drugs, regardless of the setting in
which they chose to receive their care.
Recognizing the vulnerability of very low-income people
living in long-term care settings such as nursing homes, and
following the precedent set by previous low-income prescription
drug assistance programs, the U.S. Congress exempted dually
eligible individuals living in nursing homes from any co-
payment for Part D prescription drugs.
Unfortunately, the MMA did not eliminate co-payments for
dual eligible residents of assisted living, even though the
residents of assisted living communities are usually ``nursing-
home eligible'' by definition and have similar needs for
medications. That is, while the individual living in a nursing
home is exempt from co-payments for Part D prescription drugs,
the individual living in an assisted living community is forced
to pay the same co-payments for the same Part D prescription
drugs.
Like nursing home residents on Medicaid, the over 100,000
assisted living residents (dual eligible) have very limited
financial resources. Their personal needs allowances average
$60 a month. For many of these assisted living residents, the
amount of their Part D co-payments exceeds their monthly
personal needs allowances.
Residents in nursing homes and assisted living use a
similar number of prescriptions--approximately 8-10, according
to recent studies. Even Part D co-payments of $1-$5 per
prescription can present financial hardships for dual eligible
assisted living residents, and, as we have heard from
communities across the country, could impede people from
receiving needed medications.
More and more, seniors are looking to assisted living as
their preferred senior housing option. Time and again, we hear
from seniors who are concerned about being forced to receive
their long term care in an institutional setting such as a
nursing home. As it stands, the MMA is effectively punishing
those dual eligible seniors who have chosen assisted living--a
community based alternative to nursing homes.
Congressional staff from both sides of the aisle have
indicated to us that the inconsistency in the MMA described
above occurred for no other reason than simple oversight on the
part of proponents of this meaningful legislation.
The stated focus of this hearing was to discuss ways to
improve Medicare for our most vulnerable Americans.
Mr. Chairman and members of the Subcommittee: It is not
often that we have an opportunity to go back and correct an
oversight. In the upcoming Medicare package, however, you have
an opportunity to do just that. Over 100,000 dual eligible
seniors in assisted living would be grateful for your swift
action to provide this relief with a simple statutory change
that corrects this oversight.
Thank you again for this opportunity.
------
Statement for the Record from Alliance for Retired Americans
The Alliance for Retired Americans commends the Senate
Aging Committee for holding a hearing on seniors at risk and
how to improve Medicare for those who are most vulnerable.
Founded in 2001, the Alliance is a grassroots organization
representing more than 3 million retirees and seniors
nationwide. Headquartered in Washington, D.C., the Alliance's
mission is to advance public policy that protects the health
and economic security of older Americans by teaching seniors
how to make a difference through activism.
The Alliance thanks the committee for a history of
commitment to addressing the issues faced by low-income seniors
struggling to survive. For example, the well-intended Low-
Income Subsidy (LIS) program in the Medicare Modernization Act
(MMA) of 2003 was designed to address the fact that some
seniors need extra assistance to participate in the Medicare
Drug program. Notwithstanding this dire need, it is worrying to
learn that in the five years since its passage, the LIS program
and other Medicare low-income programs remain underutilized and
encumbered by the process and administration of these benefits.
On behalf of our members nationwide, the Alliance for
Retired Americans believes that the Senate must act now to
simplify and align low-income assistance programs in Medicare
such as Medicare Savings Programs (MSPs) and the Medicare Part
D LIS. It is imperative that Congress compels appropriate
agencies and interested parties to greatly enhance their
outreach and participation to the population of seniors
currently eligible to participate. Incidentally not
``expanding'' the program, but realizing its initial intended
success. Additionally, legislative action must be taken to stop
penalizing seniors for maintaining modest savings. Asset limit
tests--which have not been updated in the last 20 years--should
be redrawn to reflect current cost of living standards.
It is our hope that today's hearing will finally result in
action appropriate to initiatives highlighted in your previous
legislative attempts and reflect our simple, yet fundamental,
recommendations for addressing the needs of this vulnerable
high-risk population of America's seniors. There is an
opportunity for these improvements to be included in pending
Medicare legislation currently being drafted in the Senate.
These improvements are long overdue, and as this Congress
considers ways to address concerns in the healthcare industry
generally, we are encouraged that this committee has taken this
opportunity to highlight principle ways to make healthcare more
affordable to the most vulnerable populations through Medicare
beneficiary improvements. In light of the pending Medicare
legislation, the timing of this discussion is ideal, and we
hope that it affects the final legislative product introduced
in the Senate including Medicare improvements.
Economic Challenges are Double Jeopardy for Seniors
The need to improve low-income programs (such as LIS and
MSP) for at-risk seniors must be considered in the context of
current national economic trends that make life extremely
challenging for seniors on low fixed incomes. These seniors
feel the pressure of rising health care costs. As the price of
gas and food rises in tandem, many seniors face a daily choice
between whether they can afford to eat, take their prescription
drugs, run their electricity, or drive to visit their doctor.
Hard choices such as these are between elements essential to
one's survival, and it is shameful to consider any federal
program a success that has not been able to mitigate this
situation for its citizens.
Program Participation
As you know, more than 12 million people are thought to be
eligible for help with paying Medicare cost-sharing, especially
Part B premiums through the Medicare Savings Programs (MSP) and
Part D premiums, deductibles and co-payments through Part D's
Low-Income Subsidy (LIS). The Part D Low Income Subsidy (LIS),
providing low-income seniors with ``extra'' assistance in
covering their prescription drug costs, was added to the 2003
MMA in order to attract additional Senators' support of the
bill. However, while the intent was noble, we know that more
than 2.5 million people--about two-thirds of those eligible but
not auto-enrolled--are not getting the Part D low-income
subsidy. These participation rates are too low, and with minor
attention and coordination more eligible seniors could receive
life saving drugs and benefits.
Improvements
Now is the time to make needed improvements to these
programs, making sure that those seniors currently eligible,
and those with low incomes whose eligibility is disqualified
because they have managed to save a small nest egg, can get the
help they urgently need. One of the principal challenges of
participation in these programs is the current asset test
limits. These limits have not been updated in 20 years. It is
unfortunate to even have to mention that the program needs to
be updated to reflect today's cost of living. It is unrealistic
to apply economic standards of eligibility on values that are
over two decades old. The asset test limits for both MSP and
LIS programs needs to be raised to $17,000 for an individual,
$34,000 for a couple.
Secondly, the application process seniors must navigate is
intimidating and complicated. We hope that as Congress
considers a small number of low-cost recommended improvements
to simplify and align Medicare low-income assistance programs,
eligible seniors will be able to participate in the programs
more efficiently. This can de done by, for example, allowing
beneficiaries to apply for LIS and enroll in a plan at any time
without penalty like they can in MSP programs; or by not
including in-kind support and maintenance (ISM) from the LIS
eligibility determination. Therefore, actual seniors applying
to participate in these programs can be discouraged by the
application process due to the daunting questions, forms, and
timeline that ultimately even penalizes seniors that have saved
modestly. Finally, it is critical that Congress require
agencies to coordinate with each other in more streamlined and
efficient way. Federal agencies need to work together. The
Social Security Administration (SSA) and the Centers for
Medicare and Medicaid Services (CMS) should be compelled to
coordinate and together enroll needy seniors into Medicare
assistance programs. For example, since SSA already is
collecting income and asset information for the LIS
application, it would be relatively easy to screen for MSP
eligibility at the same time and forward the results to the
states.
Additional funding is also needed to increase outreach and
enrollment initiatives. Outreach to those currently eligible to
increase their participation is essential, and special
attention should be given to cultural and language barriers.
This coordination and targeting is central to improving
outreach and enrollment.
Conclusion
The Senate has demonstrated an interest in making
improvements to the Medicare program on behalf of at-risk
seniors. Currently we are at a watershed moment in health care
reform, and it is critical that we enact improvements to
Medicare at this time. It is critical to award eligible seniors
with the benefits designed for them in order to keep seniors
healthy, independent, and in their own homes longer. The
impending Medicare legislation needs to include long overdue
improvements to the low-income programs for seniors.