SALMAN KHAN: I’m here with Dr.
Laurence Baker from Stanford Medical School, and we’re
going to talk about what? DR. LAURENCE BAKER:
How about Medicare? SALMAN KHAN: Medicare. I think we knew that was
going to happen, because we had this picture here already. So what is this a picture of? DR. LAURENCE BAKER: I think
that’s a picture of LBJ signing the Medicare
Act in 1965. This is the time that
we passed Medicare. SALMAN KHAN: Lyndon
Baines Johnson, LBJ. This is Truman right over here. DR. LAURENCE BAKER: I think so. SALMAN KHAN: Maybe he was there
because I think he was probably old enough by that
point to be a recipient. DR. LAURENCE BAKER: Yeah. 65 and over. SALMAN KHAN: So, I
think we all have a general idea of what Medicare
is, that it’s kind of a health care program, or insurance
program for people who are retired. But then, it starts to
get fuzzy after that. There are all these details
that confuse most of us. DR. LAURENCE BAKER: Yeah,
so we talked about Medicare in a bunch of different ways. Medicare is a program. It’s a US government program
run by the federal government. SALMAN KHAN: So it is run
by the federal government? DR. LAURENCE BAKER: Yep. SALMAN KHAN: And sometimes,
it’s thrown in with Medicaid. How are they different,
just at a very high level. DR. LAURENCE BAKER:
Oh, so Medicaid is another different
insurance program run by the federal government
in coordination with state governments. Medicaid is a federal
and state program. Medicare is a federal program. Medicare is for folks who
are 65 years old and older and people with disabilities. Principally those two groups. Medicaid is a program
that’s aimed at lower income populations, and so– SALMAN KHAN: OK. So this older people
and disabilities. This is low income,
kind of a poverty issue. DR. LAURENCE BAKER: Yes. Mostly. SALMAN KHAN: I’m
gonna write that down. Low income. And this is primarily retirees? DR. LAURENCE BAKER: Yeah. The vast majority
of people in there are folks who are there
because they are over 65. SALMAN KHAN: OK. And we’re just going
to focus on Medicare. And Medicare is
federal government. Medicaid is the federal
and the state government are on Medicaid, because they
always sound very similar. DR. LAURENCE BAKER:
They sound very similar. Yeah, I know. They’re easily confused,
certainly at the name level. Really different programs. They operate
completely separately. In a few cases, there are people
who get access to both of them, but they pay differently. They run differently. They’re– SALMAN KHAN: But
at federal level, they are still run by
the same organization, the Centers for
Medicaid and Medicare. Or Medicaid– DR. LAURENCE BAKER: Yeah. The Department of Health
and Human Services has a subpart called the Centers
for Medicare and Medicaid Services. SALMAN KHAN: –executive branch. DR. LAURENCE BAKER: Yeah. SALMAN KHAN: The
executive branch of our government, obviously. And then you have the
Secretary of Health– DR. LAURENCE BAKER:
Health and Human Services. SALMAN KHAN: So, Health
and Human Services. And then within
that, you have CMS. DR. LAURENCE BAKER:
You have CMS. SALMAN KHAN: Which
is the Centers for– and you were saying earlier,
it should have two M’s in it. DR. LAURENCE BAKER: Yeah. It’s the Centers for Medicare
and Medicaid Services. So I think it’s just
shorter to have one M. But really, there’s
two in there. SALMAN KHAN: [INAUDIBLE]
instead of calling it CMMS. OK. They administer at the
federal level, both Medicare and Medicaid. But just to reiterate,
Medicare is really mainly a federal thing,
while Medicaid is both. DR. LAURENCE BAKER:
Yeah, Medicare– SALMAN KHAN: And
they’re run separately, so you have Medicare here. Medicare. And then you Medicaid here. DR. LAURENCE BAKER: Yeah. SALMAN KHAN: I see. All right. All right. So let’s dive deep
into Medicare. So I guess, what is it? DR. LAURENCE BAKER: So Medicare
is an insurance program. It provides insurance
coverage for people who are eligible for it. So if you’re age 67
and over, or if you have a permanent disability,
a couple other small groups. If you have Lou Gehrig’s
disease, or end stage renal disease, kidney
failure, then you can get access to
Medicare too, but those are small populations. So if you’re in those groups,
you’re eligible for Medicare. Medicare will provide
you with insurance that will cover hospital bills,
doctor bills, some prescription drugs. It’ll cover lots
of medical care– SALMAN KHAN: You know,
I hear these things– this is the part that I think
gets confusing for everyone. Is that you start hearing Part
A, Part B, Part C, Part, D. I don’t even if those
are all the parts. What are those referring to? And are they exactly
insurance, or are they something slightly different? DR. LAURENCE BAKER: OK, so
Medicare has these four parts. Part A, Part B,
Part C, and Part D. And it can get a
little confusing, but we can break it up
into some different pieces. So the biggest one, in terms
of the number of people who are in it, is what sometimes
we call traditional Medicare. And that’s what historically
is Part A and Part B. And you kind of want to
take those two together, because they make a package. And we call that maybe
traditional Medicare. Sometimes people
call it original Medicare, standard Medicare. But when they
passed the program, when they first
did it, Part A was meant to cover
hospital expenditures, and Part B was aimed
at doctor costs, costs for seeing physicians. Of course, those things
go so closely together that nowadays, Part A and
Part B are kind of a pair. So you really rarely would find
someone who only wanted Part A, or only wanted Part B. SALMAN KHAN: Right. Sometimes, you hear the doctor
processes it as outpatient. DR. LAURENCE BAKER:
It’s [INAUDIBLE]. SALMAN KHAN: Hospitals,
sometimes you hear the word inpatient,
means you’re living there while they’re treating you. Outpatient, you go visit them
for an hour or two and leave. And that’s where you hear those. DR. LAURENCE BAKER: Yeah. So that’s a way of breaking
up the kinds of services that medicine provides. Medicare actually gets a little
bit– it’s mix and match. So really, Medicare
Part A expenditures when a hospital bills Medicare
for use of the hospital, use of a room, use of the
services at the hospital. Anytime a doctor bills Medicare,
even if they saw the patient in the hospital, they’re going
to be a Part B expenditure. SALMAN KHAN: I see. I see. So it isn’t strictly
inpatient, outpatient. It really is much more along the
lines of hospital and doctor. DR. LAURENCE BAKER: Yep. SALMAN KHAN: OK. So I’ll maybe put this in
some type of [INAUDIBLE] way or something. It’s not necessarily
outpatient, inpatient. That’s maybe one way of– DR. LAURENCE BAKER: Yes,
it is useful to think about that,
outpatient, inpatient. SALMAN KHAN: And will it
cover everything that happens? Including drugs? DR. LAURENCE BAKER: OK. So drugs is one key issue. To the main question, the
first thing I guess I’d say is that traditional Medicare
is pretty comprehensive. It covers most of the things
that people would normally encounter in their needs
throughout the year. SALMAN KHAN: Right. Does it cover everything? DR. LAURENCE BAKER: Prescription
drugs is one big exception. SALMAN KHAN: It does not
cover– so Parts A and Part B do not cover
prescription drugs. So when Lyndon Johnson
was signing this, if Truman had to get
prescribed some drug, and if he was a Medicare
recipient, in 1965, he would have had to
pay that out of pocket. DR. LAURENCE BAKER: Yeah. So I guess one
caveat I’ll note is that if you get prescription
drugs that are administered to you while you’re
in the hospital– SALMAN KHAN: I see. DR. LAURENCE BAKER: –you’re
staying in the hospital, they give you drugs, that’s
going to be generally covered under Part A. It’s
when you’re outpatient, and you’re going home, and
somebody sends you to pharmacy to pick up a– SALMAN KHAN: I see. Medicare in its original
form would not cover that. DR. LAURENCE BAKER:
They would not cover the outpatient
prescription drugs. So that became a
problem for some folks, and that has generated changes
to the Medicare program. SALMAN KHAN: Right. Since then, there is a
part now that cover that. DR. LAURENCE BAKER: Yes. So that’s the Part D program
as a Medicare extension. I don’t know how far
you want to get– SALMAN KHAN: We can– I’ll
write that right here. Well just, D for drugs. DR. LAURENCE BAKER: Yeah. The whole story of
prescription drugs and Medicare has a lot to it. People would buy
additional policies if they had A and B.
They’d buy themselves a private supplement that
might cover drugs sometimes. But now, with the
new Part D plan, maybe people would
buy that instead. And there’s other stuff. SALMAN KHAN: There’s
probably a C right there. DR. LAURENCE BAKER:
There’s a C that’s coming. SALMAN KHAN: We can get
to that in a second. But so, A and B, traditional. A, hospitals. B, doctors. And what percent would–
with my health insurance, there’s a copay every
time I visit the a doctor. It’s $20. How does it work with
traditional Medicare, with Parts A and Part B? DR. LAURENCE BAKER: So if you
just have Part A and Part B, then on the Part B
side, doctors are covered 80% of the
Medicare allowable charges. So Medicare has a
fee schedule that governs what doctors can
be paid for services. And Medicare will cover 80% of
that, and the patient pays 20%. SALMAN KHAN: I see. DR. LAURENCE BAKER:
For Part A, it gets a little more complicated,
but there’s a co-payment that you have to make. If you go to the
hospital, Medicare is going to have a
copayment of a fixed amount, several hundred
dollars, coming up. SALMAN KHAN: OK. It’s just not as
simple as 80-20. DR. LAURENCE BAKER: No. Not as simple as 80-20. You’re going to pay a
copayment there too. So they’re not bad coverage. But there’s certainly
some costs you can run up. And if you’re pretty
sick, you might really have a bill that’s
left [INAUDIBLE]. SALMAN KHAN: And there’s
extreme flexibility here. You can see any doctor you want,
go to any hospital you want. DR. LAURENCE BAKER: Yeah. Medicare Part A and Part B
is, to one way of thinking, one of the last bastions of
health care as it exists, or health insurance as it
existed in America in 1965, ’70, ’75, when there were really
minimal restrictions on what doctors you could see, what
hospitals you could use. Doctors get lots of discretion
here about the services they’re going to provide, and
there’s not a lot of oversight that you might see in today’s
HMOs, or other kinds of– SALMAN KHAN: Right. But there are still–
maybe I’m wrong here– there still are doctors that
won’t take Medicare patients? DR. LAURENCE BAKER:
So, doctors can elect to be Medicare
doctors or not. And some doctors,
I think, decide they have enough business
or enough patients from other places. And Medicare’s a plan
that’s got its rules, and you have to
follow the rules. And some people
think that Medicare doesn’t pay as well as
other options they have. So there are a few. Most of the doctors,
the vast majority of doctors in the country,
will work with Medicare. SALMAN KHAN: And
you’re saying, it is kind of the super
flexible thing. If you do have an illness, you
can go see multiple doctors, get second opinions. You could go to the specialist
on the other side the country. So it is pretty good that way. Although you have to pay 20%
of at least the doctor’s visit, so it’s a pretty– so what
happens if I’m a retiree? I don’t have a lot of money. I have a major bill. Say I have a surgery
that’s $50,000. I know that’s more of a
hospital inpatient thing. Are there other
options so that they don’t have to pay
that out of pocket? DR. LAURENCE BAKER: Yeah. So there’s a bunch
of things that go into trying to figure out
what the cost to getting this are, and how you
might get covered for some of these
other services. The main thing that would be
the answer to the question is, there are
supplemental policies. So if you’re a
retiree, and you’ve gotten Part A, because
you’re eligible for that, and you’ve Medicare
tax, and you’ve got Part B, for
which you do have to pay a little bit of money
every month– subsidized, but still a premium
you have to pay– you might decide in
addition to that to pay for a supplemental
insurance policy, which you’d buy from a private place. The AARP is one place
that sells these. There are other
folks that sell them. You pay an extra
premium for that. That’s an additional
insurance plan that you have. And that might agree, or you
might have a method there to have them cover
that 20% co-pay, the additional hospitals. And those plans, there’s
some different varieties of those that cover more or
less generously, and of course, charge a higher or
a lower premium for. SALMAN KHAN: I see. That makes complete sense. And do people have to pay any
premium to be in Medicare? DR. LAURENCE BAKER: To get
A and B both, you have to A, you generally don’t. If you pay your Medicare tax for
10 years, you work for 10 years here, and you pay your Medicare
tax, you get Part A for free. But Part B charges a premium. So you do have to
pay a small monthly– SALMAN KHAN: And it’s what? It’s like on the order
of like, $100 a month? DR. LAURENCE BAKER:
Yeah, generally. It’s gone up a little bit over
time, or something like that. SALMAN KHAN: So
it’s not too much. Maybe $100 or a little bit more
per month, which is nothing. I mean, if you’re
65 or over, and you try to get a private
policy, you’re probably looking at something
like a thousand dollars a month. DR. LAURENCE BAKER: Yes. So I guess two ways
of thinking about it. One, this is heavily subsidized. Compared to what a
person 75 years old or 80 would pay for an actual
private insurance policy would be much,
much higher than that. There are people who
look at that $100 a month in fixed income and
Social Security and things, and you say that’s an issue. And so one of the things
that’s just in the news the last few weeks is the fact
that this number, the number went up a bit. Social Security payments
went up a little bit. But less, actually,
than the Medicare. So people are saying– SALMAN KHAN: I see. So there’s a net decrease. I see. I see. DR. LAURENCE BAKER:
–if you’re buying both. So there’s some
people who will still be worried about
that, even though it is heavily subsidized, and
looks like a great deal. SALMAN KHAN: I see. And then finally,
so we have no A, B. And then we have
a little bit of D. We know it’s all
about covering drugs. What does C do? [INAUDIBLE] exist? DR. LAURENCE BAKER: Yes. C exists. C has been around for
20 or 30 years now. C is a separate choice. So when you turn
65, let’s say, you can make this choice a little
bit differently sometimes too. But when you turn
65, you might decide to take part A and part B, maybe
by a traditional supplement. Maybe you add the first
Part D drug plan on and make yourself package. Or you can elect Part C, and
Part C is an alternative. Under Part C, what happens is
the CMS, federal government, has contracted with some HMOs. Kaiser, Blue Cross,
other places. Sometimes, they’ve
contracted with a few PPOs. They’ve tried other
kinds of plans too. Mostly it’s HMOs. So you have a choice then. You can join Kaiser, and have
Kaiser be your Medicare plan. You can join the Blue Cross one. Depending on where
you are, you’ll have different choices of
different private plans that have contracted. And you can do that. The federal government will
then pay a bunch of your premium to them. SALMAN KHAN: I see. DR. LAURENCE BAKER: So you’ll
get covered by the private plan with the federal government
covering your costs. They might ask you to pay
some additional premium. You’re going to have to pay
your Part B equivalent already. So you’ve got to
pay that amount. But then, you might have
to pay a little bit extra. And then, you’ll get access
to what services that has. And for some people,
that’s attractive. Because though the co-payments
and deductibles will be lower– you’ll often have more
like the $10 copay– you might have access to
some prescription drug coverage automatically
built in there. Sometimes those cover some
vision and other things, which might be nice. SALMAN KHAN: So
this one or plans. I could get this, while
it’s 80% coverage– well, I can’t make that rule,
because hospitals, it could be different. But you get this kind
of flexible thing. But you have a pretty
significant co-pay, the 20% patient. I could get supplemental
insurance for me to cover some of that
right over there. Or I can do Part C. Is
there a name for Part C? DR. LAURENCE BAKER:
Part C these days is called Medicare Advantage. So the plans in
Part C are called Medicare Advantage plans. SALMAN KHAN: Which is
really just Medicare subsidizing me to get
private insurance. DR. LAURENCE BAKER: Right. From some plans that have agreed
to work with Medicare patients. SALMAN KHAN: And there’s
various checking up on them. So they agree to
basically cover everything that A and B would
cover, so you’re not going to get
skimped on too much. SALMAN KHAN: And what
do most people do? Do they go A and B? The traditional route? Or do they go the C route? DR. LAURENCE BAKER: So
historically, the vast majority of people have
gone A and B route. It changes. It kind of goes up
and down over time, depending on various factors. But over a historical
average, it would be something like 80%,
85%, 90% in A, and maybe 20%, 15%, 10% in B and C,
depending on which year you’re looking at
over the last 15 year. SALMAN KHAN: Right. And we could probably do a
whole series of videos on it. So when did D come about? It wasn’t part of the original– DR. LAURENCE BAKER: D was
not part of the original. D comes about in the early
2000s under George Bush. George W. Bush. SALMAN KHAN: This is
what we heard about. I think it was like, 2003. I think I it was– DR. LAURENCE BAKER: I think
that’s probably about right. And the issue there was
there’s a lot of folks who were having trouble getting
their outpatient drugs covered. So this is a plan, this is
another part of Medicare. You can elect to buy this. You normally would think
about this if you got A and B, and you wanted to get
outpatient drugs covered, you’d think about a D plan. Part D is run by the federal
government, kind of the way that C is. They subsidize, and
they pay a premium to the private plans
that cover drugs. Or at least they
organize the market, and the person then pays
also some premium to get– SALMAN KHAN: I see. So a private– DR. LAURENCE BAKER:
So it’s private. SALMAN KHAN: A
private entity will handle the actual
reimbursements for the drugs, but Medicare will pay them. DR. LAURENCE BAKER: Yeah. So the way to think
about it is, just a bunch of private
entities with funds flows coming in, partly from the
person, partly from Medicare, to buy these. SALMAN KHAN: OK. And who do you
pay your money to? You pay it to Medicare? You pay it to these– DR. LAURENCE BAKER: Uh. SALMAN KHAN:
Actually– it works out the same way one
way or the other. This is optional. A retiree or someone
over 65 would pay money to essentially get a
drug plan subsidized. DR. LAURENCE BAKER: Yes. SALMAN KHAN: OK. Cool. Cool. Well, no, this is super. DR. LAURENCE BAKER:
Well, actually, we’re trying to think about subsidies. But there’s some interesting– [INTERPOSING VOICES] SALMAN KHAN: Oh, I guess to be
able to participate in a drug plan. DR. LAURENCE BAKER: I
mean, they are subsidized. And the federal is taking
a bunch of money in. But how exactly the economics
of these plans works out has been an interesting
discussion over the last couple over year. SALMAN KHAN: Right. Right. No, we could make
a ton of videos. No, this is super helpful. Because, I think,
frankly, I didn’t know about the differences right
here before about 15 minutes ago. All right. Well, thanks a bunch.