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On Apr 4, 2013, at 2:46 PM, Matthew Shepard <[email protected]> wrote: > > > CMA Alert > Print or share this Alert > > > > Info by Topic Articles & Alerts Litigation Take Action Donate > Newsroom About > > > Medicare Benefit Redesign: Proposals to Restructure Could Hurt More than Help > > The Medicare program can be confusing for those trying to navigate the > differences between Parts A, B, C, and D. Since the program's inception in > 1965, changes made to the program have made it a more complex system for > beneficiaries, particularly with the introduction of private insurance plans > to the Medicare program. Medicare beneficiaries can also face significant > out-of-pocket costs for premiums, deductibles, coinsurance and copayments. > Simplifying the program, including how the benefits are structured, could, in > theory, reduce this confusion and ease beneficiaries' financial burdens > depending on how the restructuring is modeled. > > However, over the last few years, there have been several proposals that seek > to alter Medicare's benefit structure, under the guise of streamlining or > simplifying the program. Upon closer inspection, however, these proposals > would actually harm the majority of beneficiaries. Many of these proposals > have similar elements, including creating a single, combined deductible for > Parts A and B, a uniform coinsurance rate of 20% for all covered services, an > out-of-pocket cap on beneficiary expenses (which does not currently exist in > Traditional Medicare) and various other piecemeal changes, including > introducing home health copayments. Often these proposals to redesign > Medicare's benefits are coupled with proposals to restrict Medigap > "first-dollar coverage", in other words, policies that provide coverage for > Medicare deductibles and co-payments. > > Redesigning the Medicare benefit structure is receiving increased attention > in Congress and by the President.[1] As noted by the New York Times, the > goal of bipartisan proposals to restructure Parts A and B "is to discourage > people from seeking unneeded treatment, shrink health spending and offset the > costs of a cap on beneficiaries' total out-of-pocket costs."[2] Often lost > in discussions about benefit redesign proposals, though, is how they would > actually impact Medicare beneficiaries. > > Current Redesign Proposals Would Save Federal Dollars by Increasing > Beneficiary Costs and Discouraging Access to Care > > While details are lacking in most proposals to redesign the Medicare > program's benefit structure, the broad outlines of proposals currently under > discussion would increase costs for most people with Medicare, and do so most > significantly for those who can least afford it.[3] Under these proposals, > the burden of health care costs would be redistributed onto the most > vulnerable, including those with low- and moderate-incomes and those with > persistent and chronic health needs.[4] > > For example, a Kaiser Family Foundation report analyzed the impact of a > benefit redesign proposal modeled on one offered by the Bowles-Simpson > deficit reduction committee and found that 71% of beneficiaries in > Traditional Medicare would have higher out-of-pocket spending – even with a > spending cap. Only 5% would have lower out-of-pocket spending. Roughly five > million beneficiaries would experience cost increases of more than $250 > annually, with a total average increase of $660 per year.[5] Similarly, the > Medicare Payment Advisory Commission's (MedPAC's) analysis of its own > redesign proposal reveals that combining the deductibles for Parts A and B > would increase costs in a given year for the majority of beneficiaries who > use only physician and outpatient services.[6] > > The additional upfront cost of a higher deductible for Part B services, as > well as any higher ongoing costs, such as new and/or higher coinsurance > amounts, will make needed care unaffordable for many beneficiaries – > particularly those who live on limited incomes, but incomes that are just too > high to qualify for low-income subsidy programs. Because care will be less > affordable, increased cost-sharing will also, in turn, limit access to > necessary health care services. > > Many redesign proposals are based on the premise that increased cost-sharing > will reduce "overuse" of health care services and encourage individuals to > make better decisions about their health care services because they have more > "skin in the game." However, shifting additional costs onto Medicare > beneficiaries will deter people from obtaining medically necessary care, thus > increasing long-term costs. As concluded by the National Association of > Insurance Commissioners (NAIC) following a review of potential changes to > Medigap plans, research demonstrates that increased cost-sharing for health > care services leads individuals to forgo needed health care services in the > short-term. This, in turn, is shown to result in worsening health, the need > for more intensive care and higher costs to the Medicare program in the > long-term.[7] > > Sensible Benefit Redesign Must Not Shift Additional Costs onto Beneficiaries > > Most Medicare beneficiaries have low- or moderate- incomes, and cannot afford > to pay more for their health care.[8] In 2012, for example, half of all > Medicare beneficiaries had annual incomes below $22,500. Women on Medicare > fare worse, with an average annual income of less than $15,000. Medicare > households, in general, devote a substantially larger share of their income > to medical expenses than do average households; 15% vs. 5% respectively. In > short, most Medicare beneficiaries cannot absorb more costs without facing > significant hardship. > > Any discussion regarding redesigning Medicare's benefit structure, even one > that is projected to be budget neutral for beneficiaries, must include > proposals to strengthen programs for those with low-incomes. Current > protections for low-income individuals are inadequate, as full Part A, B and > D subsidy protection is provided only for those with incomes up to 100% of > the federal poverty level. In order to assist more people who truly cannot > afford to pay for necessary health care services, the income thresholds for > full subsidy protection should be increased and asset tests should be > eliminated. > > Conclusion > > Taking a measured, thoughtful look at Medicare's benefit structure and how it > could be improved would be a welcome exercise. As long as this discussion > occurs within the context of deficit reduction, though, any changes to the > Medicare program will be done specifically to save federal dollars, not to > truly improve the program for those it serves. > > For more information contact policy attorney David Lipschutz > ([email protected]) in the Center for Medicare Advocacy's > Washington, DC office at (202) 293-5760. > > [1] See, e.g., "Talk of Medicare Changes Could Open Way To Budget Pact" by > Jackie Calmes and Robert Pear, New York Times, (3/29/13), available at: > http://www.nytimes.com/2013/03/29/us/politics/common-ground- > in-washington-for-medicare-changes.html?pagewanted=all > [2] "Talk of Medicare Changes Could Open Way To Budget Pact" by Jackie Calmes > and Robert Pear, New York Times, (3/29/13), available at: >
