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Sun Feb 3, 2013, 08:45 AM

Kaiser report details Medicare options

Kaiser report details Medicare options

by Joan McCarter

The Kaiser Family Foundation has released a massive report on options for stabilizing Medicare, based on a year's review of the literature and interviews and input from dozens of health care experts. They came up with 150 cost cutting possibilities in the 206 page report in five sections: "Medicare eligibility, beneficiary costs, and program financing; Medicare payments to providers and plans; delivery system reform and options that focus on Medicare beneficiaries with high needs; the basic structure of the Medicare program; and Medicare program administration and governance."

The program's costs do have to be reduced and stabilized to make it sustainable. While Medicare costs are growing at slower rate than private insurance costs, they're still rising.


But the options for getting there, as this report shows, are many and varied. The 150 recommendations aren't all-inclusive, for instance, lowering the age of eligibility to open the program up to a younger, healthier premium-paying population wasn't considered. But there's a ton of good stuff here nonetheless, to be mined over the coming weeks as Medicare reform plans are floated.

Here, though, is the key takeaway that should inform the basis of the Medicare solution discussion.


Medicare cost sharing is relatively high and, unlike most private health insurance policies, Medicare does not place an annual limit on the costs that people with Medicare pay out of their own pockets. Many Medicare beneficiaries have supplemental coverage to help pay for these costs, but with half of beneficiaries having an annual income of $22,500 or less in 2012, out-of-pocket spending represents a considerable financial burden for many people with Medicare.Cost sharing and premiums for Part B and Part D have consumed a larger share of average Social Security benefits over time, rising from 7 percent of the average monthly benefit in 1980 to 26 percent in 2010 (Exhibit I.3). Medicare beneficiaries spend roughly 15 percent of their household budgets on health expenses, including premiums, three times the share that younger households spend on health care costs. Finally, Medicare does not cover costly services that seniors and people with disabilities are likely to need, most notably, long-term services and supports and dental services.

Putting the burden of saving Medicare on the beneficiaries, already paying a significant portion of their incomes on health care, isn't a solution for saving this program, for keeping it's promise to America's seniors and disabled. That basic premise should be the starting point for reforms.


Any option that puts more burden on seniors, current and future, who are not in the top two percent (and the report is loaded with them) is a non-starter.

Here are some of the pain-inducing options:

Raise the Medicare eligibility age from 65 to 67 ($113 billion over 10 years)

Increase the deductible incrementally by $75 for new beneficiaries only ($2.3 billion over
10 years)

Increase the deductible by $75 for all beneficiaries (Not available)

Increase the Part B or Part D premium ($241 billion over 10 years)

Policy Options to Sustain Medicare for the Future

It's likely that a lot of these options are going to surface in talking points.

It's bizarre that lowering the eligibility age was left out. I'm not even talking about Medicare for all, but simply lowering the age to 55 as a start.

This would be a win-win for both early retirees and Medicare.

The Affordable Care Act's Early Retiree Reinsurance Program

Rising health care costs have made it difficult for employers and unions to provide quality, affordable health coverage for workers and retirees while also remaining competitive in the global marketplace. The percentage of large firms providing workers with retiree health coverage dropped from 66 percent in 1988 to 29 percent in 2009.1. Many Americans who retire before they are eligible for Medicare without employer-sponsored health coverage see their life savings disappear because of medical bills and exorbitant rates in the individual health insurance market. Health insurance premiums for older Americans are over four times more expensive than those for young adults,2, and the deductible these enrollees pay is, on average, almost four times that in a typical employer-sponsored insurance plan.3

- more -


Funding for the propram, set at $5 billion, ran out, but legislation to expanded it was introduced last Congress.

S.1088 - Retiree Health Coverage Protection Act

Maybe one of the co-sponsors could re-introduce it. Better yet, introduce a bill lowering the Medicare eligibility age to 55.

High Health Care Costs Bankrupt One In Four American Seniors

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Sun Feb 3, 2013, 09:24 AM

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