Benefit Bulletin: February/March 2017

Benefit Bulletin: February/March 2017

What a New Congress Means For Medicare

TSCL is closely following proposals that would overhaul Medicare as a part of the plans to repeal the 2010 Affordable Care Act.  House Speaker Paul Ryan (WI) has put forward a plan to modernize Medicare by phasing out Medicare as we now know it. Ryan’s plan would make the program more reliant on private insurance plans, and provide beneficiaries with a subsidy or “premium support” with which to purchase coverage.

Speaker Ryan argues that, “Medicare is going broke.”  His plan would set up Medicare exchanges where people could shop for coverage and would receive a fixed amount to put towards the purchase of their private health insurance.  The payment would be linked to the price of a specific plan, and determined by an individual’s income, with low-income people getting a bigger subsidy, which would increase if people were sicker.  Like Obamacare plans, when plans cost more than the subsidy, people would pay the difference in premiums out of their own pocket, even when it’s hundreds of dollars more.

According to an analysis of two premium support proposals by the Congressional Budget Office in 2013, transitioning to that system would shift a greater burden of costs to beneficiaries.  The CBO estimated that affected beneficiaries would pay about 30% higher Medicare premiums for Part A and Part B benefits than under the current law.

And that estimate did not include the impact that such an overhaul would have on Medicare deductibles, co-pays or co-insurance.  We can get an idea of how deductibles and co-pays might respond from the plans currently sold on the federal health exchange to uninsured people under the age of 65.  According to the Kaiser Family Foundation, deductibles — the amount that must be paid before coverage starts — for federal health exchange plans in 2016 averaged more than $3,000 per person for “silver” plans, meaning many people with such high deductibles are getting little to no usable coverage for the high premiums they pay.

Medicare expert and author of Get What’s Yours for Medicare: Maximizing Your Coverage; Minimizing Your Cost (Simon & Schuster) Philip Moeller recently explained in an interview with The Fiscal Times that premium support is “… a way of capping the government’s spending in these programs.  It’s not necessarily to me associated with any kind of improvement in the delivery of health care,” Moeller said.  “It’s simply a cost structure to contain what we pay for health care.” 

TSCL agrees.

The far bigger problem for Medicare is finding a way to restrain rising healthcare costs, without restricting access to care, or cutting benefits.  TSCL is strongly opposed to privatizing Medicare, and other proposals that shift steep new costs to beneficiaries which could hamper access to medically necessary care.