WEBVTT 00:00:00.000 --> 00:00:03.299 Welcome back to the Deep Dive. Today we are undertaking 00:00:03.299 --> 00:00:08.019 a really intense exploration into what is arguably 00:00:08.019 --> 00:00:11.490 the most complex politically charged And just 00:00:11.490 --> 00:00:14.429 foundational program in the American social safety 00:00:14.429 --> 00:00:17.070 net. We're talking about Medicare. It's this 00:00:17.070 --> 00:00:20.170 massive federal health insurance program. Absolutely. 00:00:20.329 --> 00:00:23.629 It covers over 65 million individuals. The majority, 00:00:23.649 --> 00:00:25.609 of course, are seniors. But it also includes 00:00:25.609 --> 00:00:27.850 younger people who are living with very specific, 00:00:27.989 --> 00:00:30.230 very severe disabilities. It is, you know, the 00:00:30.230 --> 00:00:32.630 bedrock of health care for the elderly in this 00:00:32.630 --> 00:00:34.929 country. And when you look at the sheer scale 00:00:34.929 --> 00:00:36.869 of it, you start to understand why every I mean, 00:00:36.869 --> 00:00:39.329 every political debate eventually circles back 00:00:39.329 --> 00:00:41.159 to it. The numbers are just staggering. They 00:00:41.159 --> 00:00:43.200 really are. We're talking about an entity that 00:00:43.200 --> 00:00:46.179 commanded, what, over $900 billion in total spending 00:00:46.179 --> 00:00:49.140 in 2022. But like you said, it's anything but 00:00:49.140 --> 00:00:52.679 simple. It operates across four distinct, sometimes 00:00:52.679 --> 00:00:55.880 contradictory parts A, B, C, and D. And each 00:00:55.880 --> 00:00:58.380 one has its own funding mechanisms, its own rules 00:00:58.380 --> 00:01:01.359 for providers, and frankly, its own set of solvency 00:01:01.359 --> 00:01:04.219 challenges. So our mission today is a very specific 00:01:04.219 --> 00:01:06.810 one for you, the listener. We really want to 00:01:06.810 --> 00:01:09.409 cut through all that alphabet soup and provide 00:01:09.409 --> 00:01:12.590 a truly clear, structured understanding of Medicare. 00:01:12.849 --> 00:01:16.069 We need to uncover its history, and it has some 00:01:16.069 --> 00:01:17.890 surprising social impacts you might not know 00:01:17.890 --> 00:01:21.349 about, and then break down exactly how this multi 00:01:21.349 --> 00:01:24.379 -trillion dollar commitment is funded. And critically, 00:01:24.640 --> 00:01:28.400 explore the major financial and policy challenges 00:01:28.400 --> 00:01:30.519 that are being debated in Washington right now. 00:01:30.640 --> 00:01:32.700 Exactly, because those challenges, they directly 00:01:32.700 --> 00:01:35.500 affect everyone who pays into or lies on the 00:01:35.500 --> 00:01:37.319 system. And I think we have to set the stage 00:01:37.319 --> 00:01:38.920 with the financial reality right up front. This 00:01:38.920 --> 00:01:41.840 is not like your private 401k or, you know, a 00:01:41.840 --> 00:01:44.400 typical insurance premium you pay every month. 00:01:44.620 --> 00:01:48.000 No. Medicare is, at its core, social insurance. 00:01:48.099 --> 00:01:50.459 The connection between what an individual pays 00:01:50.459 --> 00:01:53.250 in and what they get back is, well, it's non 00:01:53.250 --> 00:01:55.069 -reciprocal. That's the key distinction, isn't 00:01:55.069 --> 00:01:57.010 it? It's not just a retirement savings account 00:01:57.010 --> 00:01:59.269 you're drawing from. It is not. Consider this 00:01:59.269 --> 00:02:02.010 analysis from 2013. It studied households that 00:02:02.010 --> 00:02:04.390 were retiring right around that period. And the 00:02:04.390 --> 00:02:06.290 data showed that on average, those households 00:02:06.290 --> 00:02:10.389 paid only between 13 % and 41 % of the total 00:02:10.389 --> 00:02:12.289 dollar benefits they are expected to receive 00:02:12.289 --> 00:02:14.330 from Medicare over their lifetime. Wait, hold 00:02:14.330 --> 00:02:17.009 on. So even the most generous contributors, the 00:02:17.009 --> 00:02:19.990 ones at that 41 % mark, they still only covered 00:02:19.990 --> 00:02:22.330 less than half of their expected benefits. Correct. 00:02:22.719 --> 00:02:25.360 Which means the majority, that substantial 59 00:02:25.360 --> 00:02:29.219 % to 87 % gap, is being financed by the dedicated 00:02:29.219 --> 00:02:32.219 payroll taxes of younger, currently working generations. 00:02:32.479 --> 00:02:34.900 Wow. That generational commitment, the fact that 00:02:34.900 --> 00:02:36.680 younger people are financing the benefits for 00:02:36.680 --> 00:02:39.599 today's retirees, that is what makes the long 00:02:39.599 --> 00:02:41.759 -term solvency of the Part O trust funds such 00:02:41.759 --> 00:02:44.639 a high -stakes political and, you could say, 00:02:44.639 --> 00:02:47.020 moral issue. That reframes the entire discussion 00:02:47.020 --> 00:02:49.590 immediately. It's a massive wealth transfer from 00:02:49.590 --> 00:02:52.210 the current workforce to current retirees, all 00:02:52.210 --> 00:02:54.530 driven by a national commitment made decades 00:02:54.530 --> 00:02:57.569 ago. OK, let's unpack that commitment, starting 00:02:57.569 --> 00:02:59.810 with the historical context. So Medicare was 00:02:59.810 --> 00:03:02.870 enacted in 1965, but the forces that drove its 00:03:02.870 --> 00:03:05.789 creation had been building for years. What was 00:03:05.789 --> 00:03:07.689 the state of health care for older Americans 00:03:07.689 --> 00:03:11.370 in, say, the early 1960s? The situation was becoming 00:03:11.370 --> 00:03:15.469 a... Economically untenable. Before 1965, if 00:03:15.469 --> 00:03:18.189 you were over 65, your risk profile was high, 00:03:18.330 --> 00:03:21.270 your income was often fixed and low, and the 00:03:21.270 --> 00:03:23.590 private market was simply failing you. So insurance 00:03:23.590 --> 00:03:26.610 was hard to get. Very hard. Only about 60 percent 00:03:26.610 --> 00:03:29.449 of people over the age of 65 had any health insurance 00:03:29.449 --> 00:03:32.229 coverage at all. That's significantly lower than 00:03:32.229 --> 00:03:34.810 the nearly 75 percent coverage rate that the 00:03:34.810 --> 00:03:36.870 younger population enjoyed at the time. And even 00:03:36.870 --> 00:03:38.610 if they could get insurance, I imagine it was 00:03:38.610 --> 00:03:40.810 prohibitively expensive. Absolutely. Older adults 00:03:40.810 --> 00:03:42.750 were paying more than three times as much for 00:03:42.750 --> 00:03:45.289 coverage compared to younger people. For so many, 00:03:45.370 --> 00:03:47.810 a single major illness meant complete financial 00:03:47.810 --> 00:03:50.229 ruin. The classic case of market failure, then. 00:03:50.539 --> 00:03:53.080 It's the foundational justification for social 00:03:53.080 --> 00:03:55.900 insurance. The private market could not efficiently 00:03:55.900 --> 00:03:59.300 or equitably provide necessary coverage to this 00:03:59.300 --> 00:04:02.460 large, vulnerable group. So when did the idea 00:04:02.460 --> 00:04:04.599 really transition from just a policy concept 00:04:04.599 --> 00:04:08.409 to a serious legislative goal? The concept had 00:04:08.409 --> 00:04:11.330 been around for decades, really, but it gained 00:04:11.330 --> 00:04:14.330 formal sort of modern traction during the 1961 00:04:14.330 --> 00:04:17.129 White House Conference on Aging. Throughout the 00:04:17.129 --> 00:04:20.009 early 1960s, attempts to pass a bill were repeatedly 00:04:20.009 --> 00:04:22.569 stalled. Why was that? A lot of it was strong 00:04:22.569 --> 00:04:24.589 opposition from the American Medical Association 00:04:24.589 --> 00:04:27.290 and conservative members of Congress who were 00:04:27.290 --> 00:04:29.930 very worried about socialized medicine. So it 00:04:29.930 --> 00:04:32.449 was a battle over government involvement versus 00:04:32.449 --> 00:04:34.870 private control of health care. Entirely. But 00:04:34.870 --> 00:04:37.930 the political landscape shifted in 1963. A bill 00:04:37.930 --> 00:04:40.089 that included the Medicare concept finally passed 00:04:40.089 --> 00:04:42.470 the Senate. And that was a huge symbolic breakthrough. 00:04:42.629 --> 00:04:44.810 Why so huge? Because it marked the very first 00:04:44.810 --> 00:04:47.649 time one chamber of Congress had officially approved 00:04:47.649 --> 00:04:50.110 the principle of federal responsibility for the 00:04:50.110 --> 00:04:52.569 health coverage of the elderly. Once President 00:04:52.569 --> 00:04:54.970 Johnson secured a big Democratic majority in 00:04:54.970 --> 00:04:58.329 1964, the legislative path was finally cleared. 00:04:58.509 --> 00:05:01.949 And on July 30th, 1965, the Social Security amendments 00:05:01.949 --> 00:05:04.370 were signed into law. And that gives us that 00:05:04.370 --> 00:05:07.470 iconic historical anecdote that really cements 00:05:07.470 --> 00:05:10.529 the program's intended legacy. Indeed. President 00:05:10.529 --> 00:05:13.769 Lyndon B. Johnson, he signs the legislation in 00:05:13.769 --> 00:05:16.350 Independence, Missouri, which was the home of 00:05:16.350 --> 00:05:19.129 former President Harry S. Truman, who had championed 00:05:19.129 --> 00:05:21.829 this idea for years. And Truman and his wife, 00:05:21.930 --> 00:05:24.129 Bess, were immediately enrolled as the first 00:05:24.129 --> 00:05:26.430 official recipients of Medicare. It was this 00:05:26.430 --> 00:05:28.870 powerful signal that this was about dignity and 00:05:28.870 --> 00:05:31.110 honoring previous generations. But I found this 00:05:31.110 --> 00:05:33.199 next point in the sources. particularly fascinating. 00:05:33.459 --> 00:05:36.000 It shows the immediate, powerful, and you could 00:05:36.000 --> 00:05:38.139 say unintended social leverage of the program. 00:05:38.459 --> 00:05:40.899 Medicare became an instant driver of civil rights. 00:05:41.310 --> 00:05:43.889 It's an incredible, often forgotten chapter in 00:05:43.889 --> 00:05:47.149 Medicare's history. It was enacted in 1965, right? 00:05:47.230 --> 00:05:50.550 By 1966, Medicare started making payments to 00:05:50.550 --> 00:05:53.269 health care providers, hospitals, nursing homes, 00:05:53.550 --> 00:05:56.430 physician practices. But those payments were 00:05:56.430 --> 00:05:59.430 contingent upon those institutions desegregating. 00:05:59.550 --> 00:06:02.310 Any health care provider receiving federal funds, 00:06:02.449 --> 00:06:04.769 which Medicare provided, had to comply with the 00:06:04.769 --> 00:06:08.250 1964 Civil Rights Act. So the government basically 00:06:08.250 --> 00:06:11.370 used the financial muscle of this massive new 00:06:11.370 --> 00:06:15.209 spending program to enforce racial equality in 00:06:15.209 --> 00:06:18.209 medical settings nationwide. That's a staggering 00:06:18.209 --> 00:06:21.069 example of policy leverage. Absolutely. It forced 00:06:21.069 --> 00:06:23.509 immediate integration across the entire health 00:06:23.509 --> 00:06:25.589 care landscape. That's something the Civil Rights 00:06:25.589 --> 00:06:27.509 Act enforcement alone might have taken years 00:06:27.509 --> 00:06:29.689 and years to achieve. It really proves that Medicare 00:06:29.689 --> 00:06:31.750 wasn't just a health reform. It was a profound 00:06:31.750 --> 00:06:34.389 social and economic lever. So the program was 00:06:34.389 --> 00:06:36.930 born, but it didn't just say staff. What were 00:06:36.930 --> 00:06:38.970 some of the early expansions that solidified 00:06:38.970 --> 00:06:41.360 its role as this broad safety net? The evolution 00:06:41.360 --> 00:06:44.000 began almost immediately, starting with specific 00:06:44.000 --> 00:06:47.680 service coverage. By 1972, expansions included 00:06:47.680 --> 00:06:50.660 physical therapy, speech pathology, and later 00:06:50.660 --> 00:06:53.319 chiropractic services. Then hospice benefits 00:06:53.319 --> 00:06:56.500 were introduced in 1982. And crucially, eligibility 00:06:56.500 --> 00:07:00.319 expanded beyond just the age 65 threshold. Yes, 00:07:00.319 --> 00:07:02.160 and this is where we see the program start to 00:07:02.160 --> 00:07:04.699 address specific high -cost diseases, regardless 00:07:04.699 --> 00:07:07.360 of the patient's age. Okay, so who else became 00:07:07.360 --> 00:07:09.839 eligible? Individuals with permanent disabilities 00:07:09.839 --> 00:07:12.240 receiving Social Security Disability Insurance 00:07:12.240 --> 00:07:15.879 or SSDI, they become automatically eligible for 00:07:15.879 --> 00:07:18.680 Parts A and B after a 24 -month waiting period. 00:07:19.120 --> 00:07:20.660 And what about for really severe conditions? 00:07:20.980 --> 00:07:23.339 Well, for those facing severe chronic conditions 00:07:23.339 --> 00:07:26.439 like end -stage renal disease, ESRD, which requires 00:07:26.439 --> 00:07:29.360 dialysis or a transplant, they gained early eligibility. 00:07:29.740 --> 00:07:32.480 And for patients diagnosed with amyotrophic lateral 00:07:32.480 --> 00:07:35.519 sclerosis, or ALS, they're granted immediate 00:07:35.519 --> 00:07:37.620 eligibility. Enrollment begins the month their 00:07:37.620 --> 00:07:40.019 disability benefits start, so it completely bypasses 00:07:40.019 --> 00:07:42.839 that typical waiting period. That 24 -month waiting 00:07:42.839 --> 00:07:46.959 period for standard SSDI beneficiaries is an 00:07:46.959 --> 00:07:49.360 important detail. But the immediate enrollment 00:07:49.360 --> 00:07:52.819 for conditions like ALS really underscores the 00:07:52.819 --> 00:07:55.879 program's role in providing catastrophic coverage 00:07:55.879 --> 00:07:58.740 quickly when it's most needed. So this program 00:07:58.740 --> 00:08:01.459 is massive. It's complex. It's constantly evolving. 00:08:01.779 --> 00:08:04.279 Who actually steers this trillion -dollar ship? 00:08:04.459 --> 00:08:07.040 The main body is the Centers for Medicare and 00:08:07.040 --> 00:08:09.300 Medicaid Services, or CMS. It's part of the Department 00:08:09.300 --> 00:08:11.620 of Health and Human Services, HHS. And what's 00:08:11.620 --> 00:08:14.560 their job? CMS sets the rules, manages the finances, 00:08:14.980 --> 00:08:17.339 regulates the private plans. We'll talk about 00:08:17.339 --> 00:08:19.279 Part C and D and monitors quality. They're the 00:08:19.279 --> 00:08:21.160 architects. But they don't handle enrollment 00:08:21.160 --> 00:08:23.480 or premiums for the most part, right? That falls 00:08:23.480 --> 00:08:25.779 to a different agency. Correct. The Social Security 00:08:25.779 --> 00:08:28.779 Administration, the SSA, plays a very distinct 00:08:28.779 --> 00:08:31.480 and critical operational role. They determine 00:08:31.480 --> 00:08:34.159 eligibility, particularly for those turning 65 00:08:34.159 --> 00:08:37.539 or receiving SSDI. They also handle the collection 00:08:37.539 --> 00:08:39.759 of most premiums and manage the payment subsidies 00:08:39.759 --> 00:08:42.120 for low -income beneficiaries in Parts C and 00:08:42.120 --> 00:08:44.960 D. It's a significant administrative separation 00:08:44.960 --> 00:08:47.580 that, frankly, often confuses beneficiaries. 00:08:48.259 --> 00:08:50.940 So it sounds like CMS is the architect and the 00:08:50.940 --> 00:08:54.000 rulemaker. And the SSA is the gatekeeper and 00:08:54.000 --> 00:08:56.700 the bill collector. And who's the final check 00:08:56.700 --> 00:08:59.159 on the financial health of the system? That rests 00:08:59.159 --> 00:09:01.639 with the Medicare Board of Trustees. Their job 00:09:01.639 --> 00:09:03.840 is to report annually on the financial status 00:09:03.840 --> 00:09:06.299 of the dedicated trust funds. And that report 00:09:06.299 --> 00:09:08.539 is based on what? The backbone of that report 00:09:08.539 --> 00:09:12.000 comes from the chief actuary of the CMS. This 00:09:12.000 --> 00:09:15.279 actuary provides a crucial nonpolitical opinion 00:09:15.279 --> 00:09:17.759 and projection regarding the expected revenues 00:09:17.759 --> 00:09:20.639 and expenditures. And that is what gives us the 00:09:20.639 --> 00:09:23.679 famous insolvency dates we hear debated every 00:09:23.679 --> 00:09:26.679 single year. Let's quickly just confirm the eligibility 00:09:26.679 --> 00:09:28.820 essentials, because this is where the rubber 00:09:28.820 --> 00:09:31.460 meets the road for future enrollees. The fundamental 00:09:31.460 --> 00:09:34.200 requirements are pretty simple. You must be a 00:09:34.200 --> 00:09:36.419 U .S. citizen or a permanent resident who has 00:09:36.419 --> 00:09:38.440 lived in the country for at least five continuous 00:09:38.440 --> 00:09:41.720 years. Generally, you must be 65 or older. And 00:09:41.720 --> 00:09:43.820 what about the work requirement? Crucially, if 00:09:43.820 --> 00:09:47.080 you or your spouse worked and paid Medicare payroll 00:09:47.080 --> 00:09:49.580 taxes for 40 or more quarters, that's 10 years, 00:09:49.779 --> 00:09:53.419 you qualify for premium -free Part A. Ah, so 00:09:53.419 --> 00:09:55.240 that's where the premium -free part comes from. 00:09:55.629 --> 00:09:57.669 Exactly. If you meet that threshold and you're 00:09:57.669 --> 00:10:00.509 receiving Social Security, enrollment in Parts 00:10:00.509 --> 00:10:04.129 A and B is automatic when you turn 65. And the 00:10:04.129 --> 00:10:07.129 distinction about Part B is that unlike Part 00:10:07.129 --> 00:10:10.090 A, you can proactively opt out of it if you have 00:10:10.090 --> 00:10:12.639 credible coverage elsewhere. through a large 00:10:12.639 --> 00:10:15.820 employer. Yes, that is vital. Part B has a premium. 00:10:16.000 --> 00:10:17.759 So if you have other comprehensive coverage, 00:10:18.000 --> 00:10:20.879 you must decline Part B to avoid paying unnecessary 00:10:20.879 --> 00:10:24.039 premiums. So the key takeaway from this foundational 00:10:24.039 --> 00:10:27.980 history is that Medicare is not charity or simple 00:10:27.980 --> 00:10:30.980 welfare. It's fundamentally social insurance. 00:10:31.200 --> 00:10:33.279 Right. It's designed to ensure protection for 00:10:33.279 --> 00:10:35.299 the elderly, regardless of their current income 00:10:35.299 --> 00:10:38.279 or prior health history. And it's backed by decades 00:10:38.279 --> 00:10:41.769 of mandatory lifetime contributions. collective 00:10:41.769 --> 00:10:44.389 pooling of risk and resources designed to handle 00:10:44.389 --> 00:10:46.509 a market problem that private insurance simply 00:10:46.509 --> 00:10:48.590 could not solve efficiently. All right, let's 00:10:48.590 --> 00:10:50.070 navigate the alphabet. We're going to start with 00:10:50.070 --> 00:10:52.970 Original Medicare. Parts A and B. This is the 00:10:52.970 --> 00:10:55.350 core government benefit. Part A, hospital insurance, 00:10:55.529 --> 00:10:57.470 sounds straightforward, but its cost structure 00:10:57.470 --> 00:11:00.649 is anything but. Not at all. What exactly does 00:11:00.649 --> 00:11:03.789 Part A cover and how is this benefit period structured? 00:11:04.269 --> 00:11:07.269 So Part A covers inpatient hospital care, necessary, 00:11:07.629 --> 00:11:09.470 and I really want to stress the word necessary, 00:11:09.710 --> 00:11:13.259 brief, stays in a skilled nursing facility or 00:11:13.259 --> 00:11:16.500 SNF and hospice care. Okay. The structure is 00:11:16.500 --> 00:11:18.980 based on the benefit period, which is very counterintuitive. 00:11:19.259 --> 00:11:21.919 A benefit period begins the day you are admitted 00:11:21.919 --> 00:11:25.139 as an inpatient and it ends only after you have 00:11:25.139 --> 00:11:27.000 been out of the hospital and out of a skilled 00:11:27.000 --> 00:11:30.100 nursing facility for 60 consecutive days. Okay. 00:11:30.159 --> 00:11:31.840 So if I'm discharged from the hospital, I go 00:11:31.840 --> 00:11:33.840 home for two weeks and then I get readmitted 00:11:33.840 --> 00:11:36.860 for the same or a related condition. Am I still 00:11:36.860 --> 00:11:39.360 in the same benefit period? Correct. You are. 00:11:39.480 --> 00:11:41.440 And that means... you do not have to pay the 00:11:41.440 --> 00:11:44.740 big part A deductible again. However, if you 00:11:44.740 --> 00:11:47.580 are out of the system for 61 days or more, the 00:11:47.580 --> 00:11:50.100 benefit period resets and you would be liable 00:11:50.100 --> 00:11:52.340 for a brand new deductible upon readmission. 00:11:52.559 --> 00:11:54.440 Let's talk about that liability. What are the 00:11:54.440 --> 00:11:56.940 out -of -pocket costs for a beneficiary for a 00:11:56.940 --> 00:12:00.200 single benefit period, let's say using 2024 numbers? 00:12:00.909 --> 00:12:02.929 The costs are set up to protect against short 00:12:02.929 --> 00:12:05.470 stays but really punish long ones. You face a 00:12:05.470 --> 00:12:10.269 $1 ,632 deductible for days 1 through 60 of the 00:12:10.269 --> 00:12:12.429 inpatient stay. So that one payment covers the 00:12:12.429 --> 00:12:14.710 first two months. Right. Then the cost sharing 00:12:14.710 --> 00:12:18.429 begins. It's a $408 copay per day for days 61 00:12:18.429 --> 00:12:21.450 through 90. Per day. And if you exhaust those 00:12:21.450 --> 00:12:23.610 90 days, you move to your lifetime reserve days, 00:12:23.789 --> 00:12:26.509 which total 60 days across your entire life. 00:12:26.590 --> 00:12:30.269 And those have an even higher copay, $816. per 00:12:30.269 --> 00:12:32.929 day. That is a staggering liability if you face 00:12:32.929 --> 00:12:36.330 a prolonged, complex hospitalization. And I assume 00:12:36.330 --> 00:12:38.710 if you exhaust your lifetime reserve days, the 00:12:38.710 --> 00:12:40.990 cost sharing hits 100 percent out of pocket for 00:12:40.990 --> 00:12:43.250 any further inpatient care. It creates a major 00:12:43.250 --> 00:12:45.389 financial vulnerability. And that's a key reason 00:12:45.389 --> 00:12:47.830 why supplemental insurance is so popular. But 00:12:47.830 --> 00:12:49.950 the real complexity of Part A is best demonstrated 00:12:49.950 --> 00:12:52.809 by the infamous two midnight rule. OK, I've heard 00:12:52.809 --> 00:12:54.830 of this. What is this rule and why does it cause 00:12:54.830 --> 00:12:57.169 so much anxiety for hospitals and patients alike? 00:12:57.610 --> 00:12:59.830 This is where the distinction between Part A 00:12:59.830 --> 00:13:03.029 and Part B becomes so critical. The two midnight 00:13:03.029 --> 00:13:06.370 rule, which was implemented by CMS, states that 00:13:06.370 --> 00:13:09.129 Part A, so the inpatient payment, is generally 00:13:09.129 --> 00:13:11.870 appropriate only if the attending physician expects 00:13:11.870 --> 00:13:14.929 the patient's care will require them to cross 00:13:14.929 --> 00:13:17.049 two midnights in the hospital. The physician 00:13:17.049 --> 00:13:19.590 expects it to. Yes. If the physician expects 00:13:19.590 --> 00:13:22.110 a stay of less than two midnights, the patient 00:13:22.110 --> 00:13:24.429 should technically be classified as an outpatient, 00:13:24.529 --> 00:13:26.769 even if they're in a hospital bed. So the court. 00:13:26.889 --> 00:13:29.070 issue is that the payment determination is based 00:13:29.070 --> 00:13:31.929 on the expectation of the physician at the time 00:13:31.929 --> 00:13:34.230 of admission, not the actual duration of the 00:13:34.230 --> 00:13:37.250 stay. Exactly. If the expectation is less than 00:13:37.250 --> 00:13:39.789 two midnights, the hospital gets reimbursed under 00:13:39.789 --> 00:13:42.590 Part B for outpatient services, even if the patient 00:13:42.590 --> 00:13:44.850 is occupying a hospital bed and receiving intensive 00:13:44.850 --> 00:13:46.990 care. Why does that matter so much to the patient? 00:13:47.490 --> 00:13:50.250 Because their financial liability changes dramatically, 00:13:50.490 --> 00:13:53.309 I assume, but also because it messes with a patient's 00:13:53.309 --> 00:13:56.049 ability to qualify for follow -up care. You've 00:13:56.049 --> 00:13:58.870 hit on the two key points. For the patient, being 00:13:58.870 --> 00:14:01.090 an outpatient often means greater cost sharing 00:14:01.090 --> 00:14:03.190 because they're paying co -pays for individual 00:14:03.190 --> 00:14:05.950 services under Part B rather than that single 00:14:05.950 --> 00:14:08.730 deductible under Part A. But the greater trauma 00:14:08.730 --> 00:14:12.009 is the skilled nursing facility or SNF eligibility. 00:14:12.730 --> 00:14:16.769 Part A coverage for an SNF stay requires a preceding 00:14:16.769 --> 00:14:19.809 minimum three -day inpatient stay, meaning three 00:14:19.809 --> 00:14:22.690 midnights. So walk me through this. If a patient 00:14:22.690 --> 00:14:25.169 is admitted on a Friday, stays Saturday, but 00:14:25.169 --> 00:14:28.049 is discharged Sunday afternoon, that's less than 00:14:28.049 --> 00:14:30.129 three midnights, they might have been classified 00:14:30.129 --> 00:14:32.269 as an outpatient the whole time. They might have 00:14:32.269 --> 00:14:35.110 been. And if so, they lose the ability to qualify 00:14:35.110 --> 00:14:38.169 for crucial subsidized rehabilitation in an SNF. 00:14:38.190 --> 00:14:40.409 Even if they need it. Even if their doctor says 00:14:40.409 --> 00:14:42.830 they absolutely need that rehab, Part A won't 00:14:42.830 --> 00:14:44.389 pay for it because they never officially had 00:14:44.389 --> 00:14:46.769 a qualifying inpatient stay. So a patient could 00:14:46.769 --> 00:14:49.269 have been in the hospital for 48 hours, critically 00:14:49.269 --> 00:14:52.240 ill. receiving the same care as someone deemed 00:14:52.240 --> 00:14:54.759 impatient, but their admission status under this 00:14:54.759 --> 00:14:57.620 rule denies them access to the subsequent SNF 00:14:57.620 --> 00:15:00.840 benefit. Precisely. It's a very counterintuitive 00:15:00.840 --> 00:15:03.860 bureaucratic mechanism. It's designed to limit 00:15:03.860 --> 00:15:07.600 high -cost Part A short stays and ensure that 00:15:07.600 --> 00:15:10.840 Part A is reserved for truly acute, lengthy hospital 00:15:10.840 --> 00:15:14.720 care. But it has these major downstream consequences 00:15:14.720 --> 00:15:16.919 for patients. That is an excellent breakdown 00:15:16.919 --> 00:15:21.120 of a deeply complex issue. OK, let's shift gears 00:15:21.120 --> 00:15:23.759 to Part B, medical insurance. This is the coverage 00:15:23.759 --> 00:15:27.220 most people use most often. Doctors testing outpatient 00:15:27.220 --> 00:15:29.720 procedures. Part B is your routine outpatient 00:15:29.720 --> 00:15:32.240 coverage. It covers physician services, including 00:15:32.240 --> 00:15:35.000 surgeons and specialists, diagnostic tests, durable 00:15:35.000 --> 00:15:37.399 medical equipment or DME like oxygen tanks or 00:15:37.399 --> 00:15:39.820 wheelchairs and ambulance services. Right. And 00:15:39.820 --> 00:15:42.279 crucially, unlike Part A, which focuses on acute 00:15:42.279 --> 00:15:45.399 care, Part B covers 100 percent of many preventive 00:15:45.399 --> 00:15:48.120 services like annual wellness visits, flu shots 00:15:48.120 --> 00:15:50.690 and mammograms. as long as you use an in -network 00:15:50.690 --> 00:15:52.970 provider. Now, the cost structure here is simpler, 00:15:53.110 --> 00:15:55.070 but it's what creates the biggest financial risk 00:15:55.070 --> 00:15:57.769 for beneficiaries. It does. The standard monthly 00:15:57.769 --> 00:16:00.590 premium for Part B is projected at about $185 00:16:00.590 --> 00:16:03.389 for 2025, though wealthier beneficiaries pay 00:16:03.389 --> 00:16:05.789 more, which we'll discuss later with IRMAA. After 00:16:05.789 --> 00:16:08.190 you meet a relatively small annual deductible 00:16:08.190 --> 00:16:12.669 estimated to be $257 in 2025, the critical 80 00:16:12.669 --> 00:16:15.610 -20 split takes effect. Medicare covers 80 % 00:16:15.610 --> 00:16:18.110 of the approved cost, and the patient is responsible 00:16:18.110 --> 00:16:21.299 for the remaining 20%. And that 20 % co - Coinsurance 00:16:21.299 --> 00:16:24.059 is the defining feature and the massive risk 00:16:24.059 --> 00:16:26.740 because Original Medicare has no out -of -pocket 00:16:26.740 --> 00:16:29.299 limit. None. So if you have a $500 ,000 cancer 00:16:29.299 --> 00:16:31.580 treatment that's paid for under Part B, your 00:16:31.580 --> 00:16:35.159 20 % liability is $100 ,000. That is the gaping 00:16:35.159 --> 00:16:37.559 hole in Original Medicare. It's why virtually 00:16:37.559 --> 00:16:40.519 no financially prudent beneficiary relies solely 00:16:40.519 --> 00:16:43.419 on Parts A and B. They immediately seek supplemental 00:16:43.419 --> 00:16:46.139 coverage, which leads us perfectly to Part C 00:16:46.139 --> 00:16:48.460 and D. Let's move to Part C Medicare Advantage. 00:16:48.639 --> 00:16:50.840 This is the private sector's alternative. How 00:16:50.840 --> 00:16:53.720 exactly does Part C function? Part C is a form 00:16:53.720 --> 00:16:55.929 of managed care. Private insurance companies, 00:16:56.090 --> 00:16:58.509 which are approved and regulated by CMS, they 00:16:58.509 --> 00:17:00.409 contract with the government to provide all the 00:17:00.409 --> 00:17:03.690 benefits of Parts A and often Part D in one bundled 00:17:03.690 --> 00:17:06.970 package. The MAPD plan. Exactly, an MAPD plan. 00:17:07.109 --> 00:17:09.490 And they receive a fixed payment per enrollee 00:17:09.490 --> 00:17:12.190 from the government to do this. So they are required 00:17:12.190 --> 00:17:15.269 to meet or exceed the coverage standards of Original 00:17:15.269 --> 00:17:17.470 Medicare, but they get to redesign the benefit 00:17:17.470 --> 00:17:20.289 structure. Precisely. They might charge a $25 00:17:20.289 --> 00:17:22.890 copay for a primary care visit instead of that 00:17:22.890 --> 00:17:25.980 20 % coinsurance. They also typically offer extra 00:17:25.980 --> 00:17:28.079 benefits that Original Medicare doesn't, like 00:17:28.079 --> 00:17:30.940 routine dental, vision, hearing, or even gym 00:17:30.940 --> 00:17:32.779 memberships. That's a dang sign. The downside 00:17:32.779 --> 00:17:35.720 is network restrictions. About 75 % of these 00:17:35.720 --> 00:17:38.460 plans are HMOs or PPOs, which require you to 00:17:38.460 --> 00:17:41.019 use specific doctors and hospitals. But the most 00:17:41.019 --> 00:17:43.000 crucial financial benefit, the one that really 00:17:43.000 --> 00:17:45.900 drives enrollment, is the mandatory OOP limit. 00:17:46.119 --> 00:17:48.599 Absolutely essential. Because Original Medicare 00:17:48.599 --> 00:17:52.079 Parts A and B leaves that catastrophic risk wide 00:17:52.079 --> 00:18:10.369 open, Part C plans So part C is a tradeoff. You 00:18:10.369 --> 00:18:12.210 get a financial safety net and some extra benefits, 00:18:12.349 --> 00:18:14.529 but you give up freedom of choice regarding your 00:18:14.529 --> 00:18:16.690 providers and networks. That is the simplest 00:18:16.690 --> 00:18:19.230 way to explain the fundamental difference. The 00:18:19.230 --> 00:18:21.730 choice really hinges on whether you value unlimited 00:18:21.730 --> 00:18:25.309 provider access, which is AB plus a Medigap plan, 00:18:25.490 --> 00:18:28.890 or limited financial risk, which is Part C. Okay, 00:18:28.990 --> 00:18:32.259 finally, Part D. The prescription drug benefit. 00:18:32.460 --> 00:18:35.940 This was a huge addition and acted in 2003 and 00:18:35.940 --> 00:18:38.920 went into effect in 2006. Part D covers self 00:18:38.920 --> 00:18:41.240 -administered prescription drugs, both generic 00:18:41.240 --> 00:18:44.180 and brand name. It's available to anyone enrolled 00:18:44.180 --> 00:18:46.779 in Part A or B. And it's all run through private 00:18:46.779 --> 00:18:49.799 companies. Entirely. Part D is administered entirely 00:18:49.799 --> 00:18:52.059 through private insurance sponsors, which are 00:18:52.059 --> 00:18:54.680 regulated by CMS. They contract with pharmacy 00:18:54.680 --> 00:18:58.099 benefit managers, or PBMs, to manage their formularies 00:18:58.099 --> 00:19:00.440 and negotiate prices with manufacturers. and 00:19:00.440 --> 00:19:03.200 pharmacies. This decentralized private negotiation 00:19:03.200 --> 00:19:06.519 structure is often touted as why Part D has been 00:19:06.519 --> 00:19:09.259 financially more successful than initially projected, 00:19:09.380 --> 00:19:11.839 right? Yes. The competitive model encourages 00:19:11.839 --> 00:19:14.200 plans to negotiate aggressively, which is why 00:19:14.200 --> 00:19:16.099 critics often point out that the cost of Part 00:19:16.099 --> 00:19:18.019 D has run well under the original projections. 00:19:18.480 --> 00:19:20.759 But this private system means that plans have 00:19:20.759 --> 00:19:23.240 formularies lists of covered drugs that can vary 00:19:23.240 --> 00:19:26.740 widely from plan to plan. And what rules govern 00:19:26.740 --> 00:19:28.400 those formularies? What do they have to cover? 00:19:50.740 --> 00:19:56.339 And we have to talk about the notorious donut 00:19:56.339 --> 00:19:58.779 hole. What exactly was it and how is it closed? 00:19:58.799 --> 00:20:01.700 The donut hole, or the coverage gap, it existed 00:20:01.700 --> 00:20:04.140 between the initial coverage limit and the catastrophic 00:20:04.140 --> 00:20:07.160 threshold. Once a beneficiary and their plan 00:20:07.160 --> 00:20:09.819 had spent a certain amount on drugs, the beneficiary 00:20:09.819 --> 00:20:12.220 would suddenly be responsible for a much higher 00:20:12.220 --> 00:20:15.880 percentage of costs, sometimes 100%. Then they'd 00:20:15.880 --> 00:20:17.880 stay there until they hit the catastrophic threshold, 00:20:18.200 --> 00:20:20.380 after which the plan paid almost everything. 00:20:20.559 --> 00:20:22.839 It was designed as a cost control measure, but 00:20:22.839 --> 00:20:25.220 it created immense hardship. And the Affordable 00:20:25.220 --> 00:20:27.680 Care Act stepped in to mitigate this sharply. 00:20:27.839 --> 00:20:30.880 It did. The ACA gradually phased out the donut 00:20:30.880 --> 00:20:34.859 hole by 2020. The mechanism was subtle. It lowered 00:20:34.859 --> 00:20:37.319 the beneficiaries required copay within the gap 00:20:37.319 --> 00:20:40.420 to 25%. Ah, so it made the cost sharing in the 00:20:40.420 --> 00:20:42.619 gap. equal to the cost sharing in the initial 00:20:42.619 --> 00:20:45.480 coverage phase. Exactly. It effectively smoothed 00:20:45.480 --> 00:20:47.900 the transition, providing immense relief to the 00:20:47.900 --> 00:20:50.680 roughly 5 % of beneficiaries who have very high 00:20:50.680 --> 00:20:54.119 drug costs. Okay. So part two summarized. A and 00:20:54.119 --> 00:20:56.619 B is the core government coverage, but with major 00:20:56.619 --> 00:20:59.980 cost sharing gaps. C is private managed care 00:20:59.980 --> 00:21:03.660 that provides a mandatory OOP limit. D is private 00:21:03.660 --> 00:21:06.000 regulated prescription drug coverage. That's 00:21:06.000 --> 00:21:07.660 a great summary. Let's transition now to the 00:21:07.660 --> 00:21:09.640 financing puzzle. This is where the demographic 00:21:09.640 --> 00:21:12.079 pressures and the political battles truly converge. 00:21:12.339 --> 00:21:14.940 We established that Part A, the hospital insurance, 00:21:15.319 --> 00:21:17.500 is funded fundamentally differently than B and 00:21:17.500 --> 00:21:20.299 D. Let's delve into the mechanics of that Part 00:21:20.299 --> 00:21:23.200 A payroll tax. So Part A is primarily funded 00:21:23.200 --> 00:21:25.980 by the hospital insurance, or HI, trust fund. 00:21:26.259 --> 00:21:29.460 Its revenue comes from a dedicated 2 .9 % payroll 00:21:29.460 --> 00:21:31.880 tax on all earned income. And that's split between 00:21:31.880 --> 00:21:34.720 the employer and employee. It is, split evenly, 00:21:35.059 --> 00:21:39.279 1 .45 % each. A crucial point is that since 1994, 00:21:39.660 --> 00:21:41.819 there has been no compensation limit on this 00:21:41.819 --> 00:21:44.920 tax. Unlike Social Security taxes, you pay 2 00:21:44.920 --> 00:21:48.319 .9 % on every single dollar you earn. And there's 00:21:48.319 --> 00:21:49.900 an additional surcharge for high earners, right? 00:21:49.980 --> 00:21:53.339 Yes. Since 2013, the rate increases to 3 .8 % 00:21:53.339 --> 00:21:56.039 for earned income, exceeding $200 ,000 for an 00:21:56.039 --> 00:21:59.099 individual or $250 ,000 for a married couple 00:21:59.099 --> 00:22:01.720 filing jointly. But that additional revenue doesn't 00:22:01.720 --> 00:22:03.799 go to Medicare. Where does it go? It goes toward 00:22:03.799 --> 00:22:06.400 funding Affordable Care Act subsidies. Interesting. 00:22:06.440 --> 00:22:09.900 So Part A relies on dedicated tax revenue, which 00:22:09.900 --> 00:22:12.599 is great for predictability, but it is... acutely 00:22:12.599 --> 00:22:15.119 sensitive to that ratio of workers to beneficiaries. 00:22:15.480 --> 00:22:18.200 Where do parts B and D get their money? They're 00:22:18.200 --> 00:22:20.720 much more susceptible to general economic fluctuation 00:22:20.720 --> 00:22:23.160 and congressional appropriation. So they're funded 00:22:23.160 --> 00:22:25.319 primarily by general fund revenue from the U 00:22:25.319 --> 00:22:27.099 .S. Treasury, think income taxes and corporate 00:22:27.099 --> 00:22:29.839 taxes, and then supplemented heavily by beneficiary 00:22:29.839 --> 00:22:31.720 premiums. And this brings us right back to the 00:22:31.720 --> 00:22:33.559 demographics that are crushing the H .I. Trust 00:22:33.559 --> 00:22:35.839 Fund. Yeah. The baby boomers are retiring en 00:22:35.839 --> 00:22:38.400 masse. They are, and the numbers are just unforgiving. 00:22:38.559 --> 00:22:41.420 By 2030, the entire baby boomer generation will 00:22:41.420 --> 00:22:44.539 be 65 or older. Enrollment is projected to exceed 00:22:44.539 --> 00:22:47.180 80 million people. And the crunch comes from 00:22:47.180 --> 00:22:49.400 the worker -to -enrollee ratio. That's the key 00:22:49.400 --> 00:22:51.420 metric. It's the number of people paying into 00:22:51.420 --> 00:22:54.240 the system versus those receiving benefits. And 00:22:54.240 --> 00:22:57.140 that ratio is projected to drop from 3 .7 workers 00:22:57.140 --> 00:23:00.680 per enrollee to just 2 .4. That is a staggering 00:23:00.680 --> 00:23:03.700 35 % decline in the support ratio in a single 00:23:03.700 --> 00:23:06.279 decade. It means the burden on those remaining 00:23:06.279 --> 00:23:08.539 2 .4 workers to support current beneficiaries 00:23:08.539 --> 00:23:11.700 is just immense. That's why the solvency clock 00:23:11.700 --> 00:23:14.180 is constantly ticking. It explains the political 00:23:14.180 --> 00:23:16.920 urgency perfectly. And speaking of burden, we 00:23:16.920 --> 00:23:19.940 have to discuss IRMAA, the mechanism by which 00:23:19.940 --> 00:23:21.700 the cost -sharing burden falls disproportionately 00:23:21.700 --> 00:23:24.420 on wealthier beneficiaries. The income -related 00:23:24.420 --> 00:23:27.400 monthly adjustment amount. Exactly. IRMAA is 00:23:27.400 --> 00:23:29.480 essentially a premium surcharge that's applied 00:23:29.480 --> 00:23:32.359 to both Part B and Part D. It kicks in when a 00:23:32.359 --> 00:23:35.339 beneficiary's income exceeds $85 ,000 for an 00:23:35.339 --> 00:23:38.200 individual or $170 ,000 for a couple. And what 00:23:38.200 --> 00:23:40.339 does it do? Depending on how far above those 00:23:40.339 --> 00:23:42.740 thresholds they are. These beneficiaries are 00:23:42.740 --> 00:23:45.460 forced to pay a Part B premium that can be 30 00:23:45.460 --> 00:23:48.880 % to 70 % higher than the standard rate. And 00:23:48.880 --> 00:23:50.740 it's important for listeners to know this calculation 00:23:50.740 --> 00:23:53.200 isn't based on your current income. It's based 00:23:53.200 --> 00:23:55.000 on the tax returns you filed two years prior. 00:23:55.180 --> 00:23:58.279 It's a lagging indicator. It is. A recent retiree 00:23:58.279 --> 00:24:00.220 who had a high income two years ago but has a 00:24:00.220 --> 00:24:03.460 low income today might still be subject to IRMAA 00:24:03.460 --> 00:24:05.640 until their current tax status catches up in 00:24:05.640 --> 00:24:08.119 the system. Okay, now for the part that I find 00:24:08.119 --> 00:24:11.000 most fascinating and technical. The provider 00:24:11.000 --> 00:24:13.779 payment systems. Yeah. How does Medicare, as 00:24:13.779 --> 00:24:16.799 this massive single payer, decide what a hospital 00:24:16.799 --> 00:24:19.039 or a doctor gets paid? Let's start with Part 00:24:19.039 --> 00:24:21.400 A, hospital reimbursement, and the DRG system. 00:24:21.660 --> 00:24:24.039 Part A uses what are called diagnosis -related 00:24:24.039 --> 00:24:26.700 groups, or DRGs. This is a form of prospective 00:24:26.700 --> 00:24:29.180 payment. Instead of reimbursing the hospital 00:24:29.180 --> 00:24:32.259 for every single itemized cost, every pill, every 00:24:32.259 --> 00:24:34.759 bandage, every hour of nursing, Medicare pays 00:24:34.759 --> 00:24:36.940 a single fixed amount based on the patient's 00:24:36.940 --> 00:24:39.319 diagnosis and severity. So if a patient has a 00:24:39.319 --> 00:24:42.039 severe case of pneumonia, which is a specific 00:24:42.039 --> 00:24:45.539 DRG, the hospital gets X dollars, regardless 00:24:45.539 --> 00:24:48.000 of whether the care cost them X minus 10 or X 00:24:48.000 --> 00:24:50.059 plus 10. That's the core incentive structure. 00:24:50.259 --> 00:24:52.759 It forces hospitals to be efficient. If they 00:24:52.759 --> 00:24:54.920 can treat the patient safely for less than the 00:24:54.920 --> 00:24:56.779 DRG payment, they get to pocket the difference. 00:24:57.059 --> 00:24:59.700 If they're inefficient, they lose money. It shifts 00:24:59.700 --> 00:25:01.460 the financial risk from the government to the 00:25:01.460 --> 00:25:03.559 provider. But risk shifting creates incentives 00:25:03.559 --> 00:25:07.119 for manipulation, most notably upcoding. Indeed. 00:25:07.680 --> 00:25:09.799 Upcoding is the practice where hospitals might 00:25:09.799 --> 00:25:11.900 inflate the severity of a patient's diagnosis 00:25:11.900 --> 00:25:15.180 just to qualify for a higher -paying DRG. It's 00:25:15.180 --> 00:25:17.740 a constant regulatory battle for CMS to ensure 00:25:17.740 --> 00:25:20.420 that hospitals are paid accurately based on true 00:25:20.420 --> 00:25:23.279 patient need, not based on attempts to maximize 00:25:23.279 --> 00:25:25.740 reimbursement. Okay, now let's move to Part B, 00:25:25.880 --> 00:25:28.480 physician payment. This system, the Resource 00:25:28.480 --> 00:25:31.980 -Based Relative Value Scale, or RBRVS, is where 00:25:31.980 --> 00:25:33.759 the story gets really interesting because the 00:25:33.759 --> 00:25:36.819 rates are set, in part, by a non -governmental 00:25:36.819 --> 00:25:39.779 entity. RBRVS is the mechanism that determines 00:25:39.779 --> 00:25:42.279 the price for the roughly 7 ,000 services that 00:25:42.279 --> 00:25:45.200 physicians perform. It attempts to price services 00:25:45.200 --> 00:25:48.019 based on the resources required. So physician 00:25:48.019 --> 00:25:50.759 work, practice expense, and malpractice insurance. 00:25:51.059 --> 00:25:54.019 These are all converted into relative value units, 00:25:54.220 --> 00:25:57.480 or RVUs. The core controversy isn't the formula 00:25:57.480 --> 00:26:00.680 itself, but who dictates the value of those RVUs? 00:26:00.859 --> 00:26:03.559 Precisely. The initial values and the regular 00:26:03.559 --> 00:26:06.160 updates to these RVUs are largely determined 00:26:06.160 --> 00:26:08.859 by the Specialty Society Relative Value Scale 00:26:08.859 --> 00:26:12.539 Update Committee, the RUC. The RUC. And this 00:26:12.539 --> 00:26:14.619 is not a federal committee. It is a private advisory 00:26:14.619 --> 00:26:21.890 panel composed of 29 physicians. So you're saying 00:26:21.890 --> 00:26:24.269 a private panel of doctors who are often specialists 00:26:24.269 --> 00:26:26.650 is advising the government on how much money 00:26:26.650 --> 00:26:29.029 doctors nationwide should be paid under the largest 00:26:29.029 --> 00:26:30.950 single health insurance program in the world. 00:26:31.009 --> 00:26:32.950 That's exactly what I'm saying. Why does CMS 00:26:32.950 --> 00:26:35.730 rely so heavily on this private body? It's a 00:26:35.730 --> 00:26:38.309 stunning governance arrangement. The data shows 00:26:38.309 --> 00:26:41.390 that CMS adopts the RUC's recommendations about 00:26:41.390 --> 00:26:46.029 87 % of the time. The reason is, well, it's multifaceted. 00:26:46.529 --> 00:26:49.569 Firstly, the RUC provides detailed clinical expertise 00:26:49.569 --> 00:26:52.750 and cost data that CMS just does not have the 00:26:52.750 --> 00:26:55.210 internal resources to compile for 7 ,000 different 00:26:55.210 --> 00:26:57.289 services. Okay, that makes some sense. But secondly, 00:26:57.490 --> 00:26:59.869 and perhaps more importantly, reforming physician 00:26:59.869 --> 00:27:02.710 payment is politically explosive. By relying 00:27:02.710 --> 00:27:05.410 on a body that's made up of physicians, CMS gains 00:27:05.410 --> 00:27:07.529 a degree of clinical legitimacy and political 00:27:07.529 --> 00:27:10.009 cover. It helps them avoid a direct confrontation 00:27:10.009 --> 00:27:12.390 with the entire medical community. So we have 00:27:12.390 --> 00:27:14.289 a system where payment rates are being heavily 00:27:14.289 --> 00:27:16.569 influenced by the very industry being regulated. 00:27:16.950 --> 00:27:19.029 And that influence tends to favor specialists 00:27:19.029 --> 00:27:21.849 who sit on the panel over, say, primary care 00:27:21.849 --> 00:27:23.829 physicians, whose services are generally valued 00:27:23.829 --> 00:27:26.890 lower by the RUC methodology. That is the longstanding 00:27:26.890 --> 00:27:29.849 criticism of the RUC, that its structure inherently 00:27:29.849 --> 00:27:33.210 institutionalizes higher reimbursement for specialty 00:27:33.210 --> 00:27:36.069 procedures over routine primary care. And this 00:27:36.069 --> 00:27:38.230 impacts the entire supply and distribution of 00:27:38.230 --> 00:27:40.750 the physician workforce in the U .S., since Medicare 00:27:40.750 --> 00:27:42.970 rates often set the benchmark for private insurance 00:27:42.970 --> 00:27:45.930 as well. This structure leads us directly to 00:27:45.930 --> 00:27:48.269 the legacy of the Sustainable Growth Rate, or 00:27:48.269 --> 00:27:51.289 SGR. Tell us about that formula and the political 00:27:51.289 --> 00:27:55.809 chaos it created. The SGR was a disastrous mechanism. 00:27:56.069 --> 00:27:58.710 It was intended to control Part B spending growth 00:27:58.710 --> 00:28:01.930 by linking it to economic growth. If actual spending 00:28:01.930 --> 00:28:04.410 exceeded the SGR target, which it always did, 00:28:04.569 --> 00:28:07.009 the formula mandated steep, sometimes catastrophic, 00:28:07.309 --> 00:28:10.410 cuts to the RBRVS conversion factor. Meaning 00:28:10.410 --> 00:28:12.849 a huge pay cut for every doctor accepting Medicare. 00:28:13.009 --> 00:28:14.970 A huge pay cut, which of course would have caused 00:28:14.970 --> 00:28:17.410 a mass exodus of doctors from the Medicare system. 00:28:17.710 --> 00:28:20.869 The cuts were often projected to be 20%, 30%, 00:28:20.869 --> 00:28:23.400 or even higher. This led to what became known 00:28:23.400 --> 00:28:26.480 as the annual doc fix. Every single year, sometimes 00:28:26.480 --> 00:28:29.180 multiple times a year, Congress was forced to 00:28:29.180 --> 00:28:32.039 pass emergency temporary legislation to override 00:28:32.039 --> 00:28:34.720 the mandated cuts just to keep the system functional. 00:28:34.900 --> 00:28:37.720 It created massive unpredictability and turned 00:28:37.720 --> 00:28:40.599 physician payment into a yearly high stakes political 00:28:40.599 --> 00:28:43.640 drama. It was a perfect encapsulation of political 00:28:43.640 --> 00:28:46.420 instability. The system was legislated to be 00:28:46.420 --> 00:28:48.779 fiscally conservative, but politically it was 00:28:48.779 --> 00:28:52.730 completely unsustainable. Finally, in 2015, Congress 00:28:52.730 --> 00:28:55.390 repealed the SGR and replaced it with MACA -ARI, 00:28:55.589 --> 00:28:57.490 which shifted payment toward quality metrics, 00:28:57.809 --> 00:29:00.750 attempting to stabilize physician pay. But the 00:29:00.750 --> 00:29:03.170 SGR story perfectly illustrates the challenge 00:29:03.170 --> 00:29:05.470 of controlling costs when those controls conflict 00:29:05.470 --> 00:29:07.509 with the political need to maintain provider 00:29:07.509 --> 00:29:10.289 access. We must now address the immediate future. 00:29:10.839 --> 00:29:13.279 The solvency of the part of trust fund and the 00:29:13.279 --> 00:29:15.420 major policy reforms being debated right now. 00:29:15.599 --> 00:29:17.380 Let's start with the big one. Let's confront 00:29:17.380 --> 00:29:19.480 the $50 trillion number first because it's so 00:29:19.480 --> 00:29:21.579 staggering it almost loses all meaning. It's 00:29:21.579 --> 00:29:24.519 a number that requires a lot of context. The 00:29:24.519 --> 00:29:27.339 total unfunded obligation for Medicare over an 00:29:27.339 --> 00:29:29.720 infinite time frame is currently estimated at 00:29:29.720 --> 00:29:33.220 over $50 trillion. This represents the gap between 00:29:33.220 --> 00:29:35.720 projected tax revenues and the expected spending 00:29:35.720 --> 00:29:38.000 required to pay full benefits under current law. 00:29:38.599 --> 00:29:40.900 That is nearly twice the size of the entire US 00:29:40.900 --> 00:29:43.799 national debt. It implies that paying the currently 00:29:43.799 --> 00:29:46.460 promised benefits is mathematically unsustainable 00:29:46.460 --> 00:29:49.700 without massive, massive changes. It does. And 00:29:49.700 --> 00:29:52.319 the more immediate issue is the Part A HI Trust 00:29:52.319 --> 00:29:54.400 Fund insolvency, which is currently projected 00:29:54.400 --> 00:29:57.960 for around 2026. Now, insolvency does not mean 00:29:57.960 --> 00:30:00.140 the program shuts down. Correct. It means that 00:30:00.140 --> 00:30:02.200 the dedicated payroll tax revenue will only be 00:30:02.200 --> 00:30:04.319 sufficient to cover about 85 percent of Part 00:30:04.319 --> 00:30:06.900 A costs thereafter. So if Congress does absolutely 00:30:06.900 --> 00:30:09.720 nothing, Part A payments to hospitals and SNFs 00:30:09.720 --> 00:30:12.180 would immediately be cut by 15 percent. That 00:30:12.180 --> 00:30:13.980 would be catastrophic for the health care system. 00:30:14.099 --> 00:30:16.480 It would be. And this is the political reality. 00:30:17.119 --> 00:30:20.500 The actuarial estimates assume that full benefits 00:30:20.500 --> 00:30:22.799 will be paid, but they also acknowledge that 00:30:22.799 --> 00:30:24.859 the long -term projections rely on the critical 00:30:24.859 --> 00:30:27.460 assumption that Congress will repeatedly step 00:30:27.460 --> 00:30:30.240 in to prevent the deep cuts mandated by current 00:30:30.240 --> 00:30:33.460 law, like those scheduled physician payment freezes 00:30:33.460 --> 00:30:36.440 after 2025. It's a system designed to require 00:30:36.440 --> 00:30:38.700 political intervention just to remain stable. 00:30:38.880 --> 00:30:40.980 That's a perfect way to put it. But before we 00:30:40.980 --> 00:30:43.079 jump into the reform proposals, let's quickly 00:30:43.079 --> 00:30:45.200 reassure the listener about Medicare's efficiency 00:30:45.200 --> 00:30:48.200 relative to the private sector, because this 00:30:48.200 --> 00:30:50.700 is important. This often surprises people who 00:30:50.700 --> 00:30:53.559 only focus on the solvency crisis. Despite the 00:30:53.559 --> 00:30:56.339 $50 trillion challenge, Medicare has been significantly 00:30:56.339 --> 00:30:58.740 more successful at controlling per capita spending 00:30:58.740 --> 00:31:01.519 growth than private insurance has. By how much? 00:31:01.680 --> 00:31:03.759 Medicare's projected growth rate is around 2 00:31:03.759 --> 00:31:07.019 .5 % annually, while private insurance is projected 00:31:07.019 --> 00:31:11.000 at 4 .8 % annually. Medicare's massive size provides 00:31:11.000 --> 00:31:13.460 substantial economies of scale and negotiating 00:31:13.460 --> 00:31:16.680 power. So it's not inefficient. It's a high -cost 00:31:16.680 --> 00:31:20.019 program challenged by demographics. Yeah. But 00:31:20.019 --> 00:31:23.039 the system does face profound internal inefficiencies 00:31:23.039 --> 00:31:26.079 when dealing with the most vulnerable, the dual 00:31:26.079 --> 00:31:28.579 eligible. The dual eligible dilemma is perhaps 00:31:28.579 --> 00:31:31.160 the largest administrative failure point in U 00:31:31.160 --> 00:31:34.160 .S. health care. These are the nine million low 00:31:34.160 --> 00:31:36.519 income individuals who qualify for both Medicare 00:31:36.519 --> 00:31:39.460 because of age or disability and Medicaid because 00:31:39.460 --> 00:31:41.900 of low income. OK. This population is tremendously 00:31:41.900 --> 00:31:44.740 sick. Over half have five or more chronic conditions 00:31:44.740 --> 00:31:47.920 and they account for a disproportionate 36 percent 00:31:47.920 --> 00:31:51.299 of Medicare's total costs. And the core inefficiency 00:31:51.299 --> 00:31:53.740 is that the two systems are administered separately 00:31:53.740 --> 00:31:56.859 and often work against each other. Exactly. Since 00:31:56.859 --> 00:31:59.200 Medicare covers the medical services and Medicaid 00:31:59.200 --> 00:32:01.319 generally covers long -term care and supplemental 00:32:01.319 --> 00:32:03.980 costs, both programs have financial incentives 00:32:03.980 --> 00:32:06.700 to shift costs onto the other. Give me an example. 00:32:07.069 --> 00:32:09.529 OK, Medicare might send a complex patient home 00:32:09.529 --> 00:32:11.910 from the hospital early to save on Part A costs, 00:32:12.130 --> 00:32:14.490 knowing that the patient will likely end up back 00:32:14.490 --> 00:32:17.029 in the ER a week later, with Medicaid footing 00:32:17.029 --> 00:32:19.309 the bill for home services that could have prevented 00:32:19.309 --> 00:32:21.730 the readmission in the first place. The care 00:32:21.730 --> 00:32:24.509 becomes uncoordinated and fragmented. The proposed 00:32:24.509 --> 00:32:26.950 solution is radically improved coordination, 00:32:27.390 --> 00:32:31.089 treating the person holistically. What are the 00:32:31.089 --> 00:32:33.690 potential savings there? The potential savings 00:32:33.690 --> 00:32:36.700 are huge. Experts project that coordinating care 00:32:36.700 --> 00:32:39.819 for dual eligibles could eliminate $125 billion 00:32:39.819 --> 00:32:44.380 to over $200 billion in unnecessary hospitalizations 00:32:44.380 --> 00:32:47.019 and emergency visits. It's about connecting these 00:32:47.019 --> 00:32:49.519 patients with proactive primary care, better 00:32:49.519 --> 00:32:51.960 medication management, and necessary social services 00:32:51.960 --> 00:32:54.559 like housing assistance. And this is one area 00:32:54.559 --> 00:32:56.819 where both sides of the political aisle usually 00:32:56.819 --> 00:32:58.980 agree on the necessity of reform. For the most 00:32:58.980 --> 00:33:00.859 part, yes. Let's turn to some of the legislative 00:33:00.859 --> 00:33:02.819 battles, starting with the long -running debate 00:33:02.819 --> 00:33:06.220 over drug price negotiation. Why has Medicare 00:33:06.220 --> 00:33:08.720 always been barred from negotiating drug prices 00:33:08.720 --> 00:33:11.859 centrally, unlike, say, the VHA? Part D was designed 00:33:11.859 --> 00:33:14.960 to use decentralized private negotiation. Each 00:33:14.960 --> 00:33:17.619 of the hundreds of private Part D plans negotiates 00:33:17.619 --> 00:33:20.980 its own prices through their PBMs. Proponents 00:33:20.980 --> 00:33:23.099 argue that this competitive market model would 00:33:23.099 --> 00:33:25.859 drive costs down effectively. And as we noted, 00:33:26.019 --> 00:33:28.839 Part D has performed better than expected financially. 00:33:29.279 --> 00:33:31.259 But the comparison to the Veterans Health Administration 00:33:31.259 --> 00:33:37.329 is powerful. The VHA, which provides care directly, 00:33:37.589 --> 00:33:39.829 has the power to negotiate centrally for its 00:33:39.829 --> 00:33:42.529 entire patient population. And multiple studies 00:33:42.529 --> 00:33:44.789 have shown that the VHA pays substantially less 00:33:44.789 --> 00:33:47.910 for identical drugs than Part D plans do. And 00:33:47.910 --> 00:33:50.049 this led to the Inflation Reduction Act of 2022. 00:33:50.730 --> 00:33:53.589 It did. That act finally granted Medicare limited 00:33:53.589 --> 00:33:56.670 negotiation power. How limited is it? Very. It's 00:33:56.670 --> 00:33:59.069 not the VHA model. Medicare will start negotiating 00:33:59.069 --> 00:34:01.529 prices only for a limited number of the highest 00:34:01.529 --> 00:34:04.589 cost drugs, starting with just 10 drugs in 2026 00:34:04.589 --> 00:34:07.190 and increasing over time. And it only applies 00:34:07.190 --> 00:34:09.170 to drugs that have been on the market for a specified 00:34:09.170 --> 00:34:11.530 long period without any generic competition. 00:34:12.070 --> 00:34:14.809 It's a step, but it's not the centralized negotiation 00:34:14.809 --> 00:34:17.869 system many advocates had sought. Moving to structural 00:34:17.869 --> 00:34:21.239 reform, let's discuss premium support. This is 00:34:21.239 --> 00:34:24.079 a fundamental philosophical shift. Premium support 00:34:24.079 --> 00:34:26.800 proposes transforming Medicare from a defined 00:34:26.800 --> 00:34:29.199 benefit program, where the government guarantees 00:34:29.199 --> 00:34:31.780 specific services, to a defined contribution 00:34:31.780 --> 00:34:33.940 program. Okay, what does that mean in practice? 00:34:34.300 --> 00:34:36.940 The government would provide a fixed voucher 00:34:36.940 --> 00:34:39.500 or premium support payment, and beneficiaries 00:34:39.500 --> 00:34:42.199 would use that money to choose among competing 00:34:42.199 --> 00:34:45.579 private health plans. It's similar to Part C, 00:34:45.659 --> 00:34:47.679 but it would become the default model for everyone. 00:34:47.920 --> 00:34:50.059 What's the major argument in favor of this? The 00:34:50.059 --> 00:34:52.639 central idea is that robust competition between 00:34:52.639 --> 00:34:55.179 private plans driven by the consumer selecting 00:34:55.179 --> 00:34:58.199 the best value would drive down overall costs 00:34:58.199 --> 00:35:00.460 and force greater efficiency across the entire 00:35:00.460 --> 00:35:03.659 system. It injects market principles into Medicare. 00:35:03.840 --> 00:35:06.079 And the major concern raised by critics. Risk 00:35:06.079 --> 00:35:09.170 selection. Critics worry that insurers will innovate 00:35:09.170 --> 00:35:12.210 ways to attract the healthiest, lowest cost patients, 00:35:12.389 --> 00:35:14.750 a practice known as cherry picking, and avoid 00:35:14.750 --> 00:35:17.010 or discourage the enrollment of sicker, more 00:35:17.010 --> 00:35:19.869 costly beneficiaries. This would leave the most 00:35:19.869 --> 00:35:23.250 vulnerable, high cost patients concentrated in 00:35:23.250 --> 00:35:25.210 the remaining public fee for service option, 00:35:25.449 --> 00:35:27.929 potentially making it fiscally unsustainable 00:35:27.929 --> 00:35:30.269 and resulting in sicker patients receiving worse 00:35:30.269 --> 00:35:32.889 care. Let's consider the debate over the eligibility 00:35:32.889 --> 00:35:36.730 age. We see proposals to both raise it and lower 00:35:36.730 --> 00:35:41.349 it. If we raise the age from 65 to 67, aligning 00:35:41.349 --> 00:35:43.710 it with the full Social Security retirement age, 00:35:43.869 --> 00:35:46.630 what are the financial tradeoffs? The immediate 00:35:46.630 --> 00:35:49.250 appeal is federal savings. The Congressional 00:35:49.250 --> 00:35:51.289 Budget Office projected that raising the age 00:35:51.289 --> 00:35:54.170 would save the federal government about $113 00:35:54.170 --> 00:35:57.389 billion over 10 years. That looks like a big 00:35:57.389 --> 00:35:59.989 win for solvency. But the Kaiser Family Foundation 00:35:59.989 --> 00:36:02.469 pointed out that this isn't free money. It's 00:36:02.469 --> 00:36:04.909 just shifting costs. That's the critical insight. 00:36:05.190 --> 00:36:08.530 Raising the age forces 65 and 66 year olds onto 00:36:08.530 --> 00:36:10.710 the private market. This often results in higher 00:36:10.710 --> 00:36:12.710 premiums for them, and it raises the overall 00:36:12.710 --> 00:36:15.650 premium pool for younger people. Kaiser estimated 00:36:15.650 --> 00:36:17.690 that the proposal would increase total social 00:36:17.690 --> 00:36:20.090 costs, so the combined outlays for the government, 00:36:20.309 --> 00:36:23.030 employers, states, and individuals, by more than 00:36:23.030 --> 00:36:25.150 twice the savings gained by the federal government. 00:36:25.329 --> 00:36:28.070 So you save the government money, but you burden 00:36:28.070 --> 00:36:30.789 the overall economy and individuals more heavily. 00:36:30.889 --> 00:36:33.809 Precisely. Now let's discuss Medigap restrictions, 00:36:34.210 --> 00:36:37.190 a proposed solution to the moral hazard problem. 00:36:37.519 --> 00:36:39.900 This proposal targets the idea that when a patient 00:36:39.900 --> 00:36:42.820 is fully insulated from cost, which happens when 00:36:42.820 --> 00:36:45.239 a Medigap plan covers that 20 % coinsurance, 00:36:45.380 --> 00:36:48.340 they have no incentive to question or limit seeking 00:36:48.340 --> 00:36:51.719 unnecessary costly treatments. It's called first 00:36:51.719 --> 00:36:55.079 dollar coverage. So policy makers propose introducing 00:36:55.079 --> 00:36:57.920 limits or surcharges to force patients to have 00:36:57.920 --> 00:37:00.650 some skin in the game. Precisely. They want to 00:37:00.650 --> 00:37:02.909 discourage moral hazard. The most aggressive 00:37:02.909 --> 00:37:05.590 proposals suggested limiting Medigap from covering 00:37:05.590 --> 00:37:07.650 the first several hundred dollars in coinsurance 00:37:07.650 --> 00:37:10.030 and restricting coverage above that. This could 00:37:10.030 --> 00:37:12.110 potentially save tens of billions of dollars 00:37:12.110 --> 00:37:14.949 over a decade by reducing what's deemed frivolous 00:37:14.949 --> 00:37:18.210 use. What is the significant policy risk of increasing 00:37:18.210 --> 00:37:21.019 cost sharing for the elderly? The fear is that 00:37:21.019 --> 00:37:22.920 increased cost sharing would disproportionately 00:37:22.920 --> 00:37:25.860 affect patients with low health literacy or those 00:37:25.860 --> 00:37:28.960 living on the margins. Instead of just discouraging 00:37:28.960 --> 00:37:31.519 unnecessary care, it might cause patients to 00:37:31.519 --> 00:37:34.639 delay or forego entirely necessary, potentially 00:37:34.639 --> 00:37:37.639 life -saving care like cancer screenings or essential 00:37:37.639 --> 00:37:40.079 diagnostic workups. Which would lead to far more 00:37:40.079 --> 00:37:42.480 expensive hospitalizations later on. Exactly. 00:37:42.500 --> 00:37:45.170 It's a constant dilemma. ensuring efficiency 00:37:45.170 --> 00:37:48.510 without sacrificing access. Finally, the push 00:37:48.510 --> 00:37:51.210 for expansion into non -acute care, specifically 00:37:51.210 --> 00:37:54.030 vision, dental, and hearing services. This was 00:37:54.030 --> 00:37:56.170 a major focus of recent legislative efforts. 00:37:56.409 --> 00:37:58.449 The Build Back Better legislation successfully 00:37:58.449 --> 00:38:00.889 added hearing services, which began to roll out 00:38:00.889 --> 00:38:03.650 in 2023, subject to the Part B deductible and 00:38:03.650 --> 00:38:06.789 that 20 % coinsurance. However, the comprehensive 00:38:06.789 --> 00:38:09.030 dental and vision components were stripped out. 00:38:09.400 --> 00:38:12.500 Yet the data on unmet needs, particularly for 00:38:12.500 --> 00:38:15.639 vision, is overwhelming. It is. Data from the 00:38:15.639 --> 00:38:18.119 Urban Institute showed that Medicare enrollees 00:38:18.119 --> 00:38:20.880 spend more out of pocket on routine vision services, 00:38:21.179 --> 00:38:24.840 $8 .4 billion, than they do even on routine hearing 00:38:24.840 --> 00:38:28.280 services, which was $5 .7 billion. This is a 00:38:28.280 --> 00:38:30.900 massive out of pocket expense that the system 00:38:30.900 --> 00:38:33.099 fails to cover. And the inequality is stark. 00:38:33.340 --> 00:38:36.519 Absolutely. The data clearly shows a severe income 00:38:36.519 --> 00:38:39.619 gradient. Lower income beneficiaries, particularly 00:38:39.619 --> 00:38:42.980 non -Hispanic Black and Hispanic enrollees, spend 00:38:42.980 --> 00:38:45.579 dramatic less on vision services than high income 00:38:45.579 --> 00:38:48.320 beneficiaries do. This suggests that the current 00:38:48.320 --> 00:38:50.920 coverage gap results in severe unmet needs among 00:38:50.920 --> 00:38:53.940 those who can least afford the care. This expansion 00:38:53.940 --> 00:38:55.679 debate really summarizes the modern challenge 00:38:55.679 --> 00:38:57.929 of Medicare, doesn't it? Is the program just 00:38:57.929 --> 00:38:59.809 about covering acute, life -threatening crises 00:38:59.809 --> 00:39:02.309 like in Parts A and B? Or should it encompass 00:39:02.309 --> 00:39:04.750 the routine care necessary to maintain a high 00:39:04.750 --> 00:39:07.349 quality of life, like dental and vision? That 00:39:07.349 --> 00:39:09.150 question will define the political debate for 00:39:09.150 --> 00:39:11.369 the next decade. Hashtag, hashtag, outro, pet. 00:39:11.449 --> 00:39:13.690 This deep dive has confirmed that Medicare is 00:39:13.690 --> 00:39:16.449 far more than just an insurance plan. It is a 00:39:16.449 --> 00:39:19.369 powerful economic and social driver. It sets 00:39:19.369 --> 00:39:22.110 benchmarks for U .S. health care delivery. And 00:39:22.110 --> 00:39:24.730 notably, it manages its per capita cost growth 00:39:24.730 --> 00:39:26.630 much more effectively than the private insurance 00:39:26.630 --> 00:39:29.090 market does. And despite its relative efficiency, 00:39:29.409 --> 00:39:31.670 it is perpetually caught between the inexorable 00:39:31.670 --> 00:39:34.769 pressure of demographics leading to the part 00:39:34.769 --> 00:39:37.929 a solvency crisis and the immense political pressure 00:39:37.929 --> 00:39:40.289 to both maintain current benefits and expand 00:39:40.289 --> 00:39:43.289 coverage. Right. All while relying on these highly 00:39:43.289 --> 00:39:45.750 technical, often private sector. or influenced 00:39:45.750 --> 00:39:48.989 payment mechanisms like DRGs and the RUC just 00:39:48.989 --> 00:39:51.289 to keep providers engaged. For you, the learner, 00:39:51.469 --> 00:39:54.869 the key takeaways must be cemented. First, understand 00:39:54.869 --> 00:39:57.070 the fundamental huge difference between original 00:39:57.070 --> 00:39:59.849 Medicare Parts A and B with its high coinsurance 00:39:59.849 --> 00:40:02.329 and lack of an out -of -pocket limit versus Medicare 00:40:02.329 --> 00:40:04.769 Advantage Part C, which trades network freedom 00:40:04.769 --> 00:40:07.469 for a guaranteed financial cap. Second, remember 00:40:07.469 --> 00:40:09.969 that original Medicare does not cover long term 00:40:09.969 --> 00:40:12.530 custodial care, which is a crucial omission for 00:40:12.530 --> 00:40:16.250 planning purposes. And third, recognize the extraordinary 00:40:16.250 --> 00:40:19.530 influence that the private specialized RUC panel 00:40:19.530 --> 00:40:22.530 holds over how doctors are compensated nationwide. 00:40:23.050 --> 00:40:25.610 And let's end where we began with that fundamental 00:40:25.610 --> 00:40:28.130 instability. We noted that the Medicare trustees 00:40:28.130 --> 00:40:31.210 long term financial health projections are predicated 00:40:31.210 --> 00:40:34.409 on a critical built in assumption, which is that 00:40:34.409 --> 00:40:36.750 Congress will repeatedly. step in to prevent 00:40:36.750 --> 00:40:39.969 the deep automatic benefit cuts and payment freezes 00:40:39.969 --> 00:40:43.219 that are mandated by current law. So if the long 00:40:43.219 --> 00:40:45.199 -term solvency of Medicare is only sustained 00:40:45.199 --> 00:40:47.940 by this guaranteed mandatory political intervention 00:40:47.940 --> 00:40:50.780 year after year, then what does that imply about 00:40:50.780 --> 00:40:53.420 the stability and the, well, the political honesty 00:40:53.420 --> 00:40:55.059 of the program as it's currently structured? 00:40:55.260 --> 00:40:57.380 Right. It suggests the system is designed to 00:40:57.380 --> 00:41:00.059 fail financially unless politicians prioritize 00:41:00.059 --> 00:41:03.199 the doc fix over fiscal law, making the promise 00:41:03.199 --> 00:41:05.980 to current taxpayers contingent on constant legislative 00:41:05.980 --> 00:41:08.480 maneuvering. It's a challenge that future generations 00:41:08.480 --> 00:41:11.019 must confront head on because that political 00:41:11.019 --> 00:41:13.679 promise is... is precisely what they are paying 00:41:13.679 --> 00:41:16.360 into today. Something to consider as you digest 00:41:16.360 --> 00:41:19.300 this colossal, fascinating program. Until next 00:41:19.300 --> 00:41:19.519 time.