Under one option reviewed by the Congressional Budget Office, Medicare beneficiaries would be responsible for higher co-pays but be protected against huge medical bills in the event of a catastrophic illness. It would also restrict existing supplemental insurance policies that seniors use alongside their Medicare benefits, making beneficiaries think twice before seeking medical treatment (and lowering costs).
Changing the way seniors pay for Medicare is one of the few guaranteed ways to rein in federal health care spending.
Under the current system, Medicare patients will pay an estimated $1,148 deductible for each hospitalization in 2011, plus daily copayments for longer stays and skilled nursing. They are also responsible for 20 percent of additional costs plus a deductible for outpatient services, which the CBO estimates will be $142 by 2011.
Under one option, cost sharing would be simplified: There would be a single $525 deductible for inpatient and outpatient services, a 20 percent coinsurance rate on any expenses above the deductible and a $5,250 cap on the amount patients could be liable for in a year. This plan would not only protect the elderly against catastrophic medical bills but also shift some of the economic burden for more pedestrian care back to seniors. Forced to cover more of their medical bills, the CBO expects Medicare beneficiaries would wait an extra day to get that sore throat checked out.
Still, this shift wouldn't affect the 25 percent of seniors who purchase "medigap" coverage -- supplemental insurance policies that cover Medicare co-payments and cost-sharing obligations. Seniors with medigap policies, insulated from co-payments, use far more medical services. Restricting medigap policies, CBO reports, would further discourage visits to the doctor.
The Congressional Budget Office has explored these options for decades, said Paul Ginsburg, who worked at the CBO from 1978 to 1984. The savings, he added, are sure to run into the tens of billions.
"That's real, because it's not just budget savings," said Ginsburg, now president of the Center for Studying Health System Change, a nonpartisan policy research organization.
In years past, the political will to restrict medigap insurance and force them to be more prudent has been missing in action, he added, thanks to an alliance between insurers and the AARP. Medicare Part D already prohibits supplemental insurance for prescription drugs in an effort to keep costs down.
The CBO estimates that making seniors chip in more for Medicare coverage and restricting medigap policies in tandem would save $73 billion by 2019.
No plan currently incorporates these proposals.
• Congressional Budget Office Report (Options 81, 82 and 83)
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