Lieberman-Coburn Medicare Proposal Would Raise Costs for People with Medicare
The budget battle over
Medicare continued this week
with the introduction of a new
proposal from Senator
Joseph Lieberman and
Senator Tom Coburn. While some elements of the proposal are benign, such as strengthening protections in Medicare and Medicaid against fraud, waste, and abuse, the proposal saves the government money largely by increasing what people with Medicare pay out of pocket for medical care. For example, the proposal increases Medicare consumers’ Part B premium levels from 25 percent of Part B financing in 2010 to a minimum of 35 percent in 2019. People with Medicare already spend on average two-thirds of their health care budget on premiums, so these premium increases would have a significant financial impact on the population.
The proposal also includes a major restructuring of the Medicare benefit that would limit costs to the government but increase costs for the majority of Medicare consumers. Specifically, the proposal creates a combined Part A and Part B deductible of $550, a universal 20 percent copay for all services under Medicare, and an out-of-pocket limit of $7,500. In addition, it would institute a Medigap deductible and limit future coverage protection offered by Medigap plans. Thus, many would have to pay $550 out of pocket before receiving Medicare coverage and would be responsible for copays for services like home health, for which none have existed in the past. Even with increased out-of-pocket costs, most people with Medicare would never reach an out-of-pocket limit set so high. Lastly, the purpose of eliminating or limiting Medigap coverage is to drive down utilization by Medicare consumers, who are in a poor position to determine which services are medically necessary. The Medicare Rights Center supports the creation of an out-of-pocket limit, but only if such a limit would result in more affordable coverage for most Medicare consumers—something this proposal does not do.
There are, however, proposals that would reduce government spending without shifting costs to the Medicare population. This month, Senator Jay Rockefeller and Representative Henry Waxman introduced the Medicare Drug Savings Act of 2011 (S. 1206/H.R. 2190). Similar to the rebates that existed before the implementation of Part D by the Medicare Modernization Act (MMA), the proposed legislation would require drug manufacturers to pay a rebate to the government for drugs provided to dual-eligible beneficiaries and would further extend such rebates to people with Medicare enrolled in the low-income subsidy (LIS) program. The Congressional Budget Office (CBO) estimates that this proposal would save an estimated $112 billion over 10 years. Most importantly, this legislation does not achieve savings to Medicare by increasing costs to people with Medicare, who already spend about 15 percent of their total household incomes on health care.
Read Medicare Rights Center President Joe Baker’s statement on the Lieberman-Coburn proposal.
Read the Medicare Rights Center’s letter of support for the Medicare Drug Savings Act.
ACA Update: People with Medicare Save on Prescription Drugs, Preventive Care
During the first five months of 2011, people with Medicare saved $260 million on prescription drugs through the drug discount program enacted by the Affordable Care Act (ACA), according the Centers for Medicare & Medicaid Services (CMS). This year, people with Medicare who enter the Medicare prescription drug coverage gap, also known as the doughnut hole, receive a 50 percent discount on brand-name drugs and a 7 percent discount on generic drugs. The discounts have had the greatest impact on people who suffer from serious medical conditions. Almost 14 percent of the discounts applied so far this year are for cancer drugs, 8 percent are for drugs used to control high blood pressure and cholesterol, and over 7 percent are for diabetes-related drugs. Before the passage of the ACA, people with Medicare who entered the coverage gap were required to pay the full cost of their prescriptions out of pocket until they reached a catastrophic limit. The ACA progressively closes the coverage gap by increasing the discount applied to brand-name and generic drugs purchased in the coverage gap until 2020, when cost-sharing for the prescriptions reaches the standard 25 percent.
Read CMS’s press release.
Learn more about the closure of the doughnut hole.
Learn more about the doughnut hole in 2011.
In other ACA-related news, the Department of Health and Human Services (HHS) and CMS have launched a new campaign to educate people with Medicare about the availability of preventive benefits. The ACA eliminated cost-sharing for many preventive services, including mammograms and diabetes screenings. The law also created a new Annual Wellness Visit, which is intended to promote the use of preventive benefits by providing an annual opportunity for doctors and patients to discuss care plans and schedule necessary screenings. Although people with Medicare face fewer cost barriers this year to many preventive services, these services are generally still underutilized. A CMS study found that in 2008 roughly 70 percent of people with Medicare had at least one chronic condition, and experts believe the use of prevention can improve early detection rates and prevent worsening of these conditions. According to CMS, such efforts are especially relevant to minority populations and are a key component to addressing health disparities in the United States. Research demonstrates that minorities have higher rates of heart disease and diabetes, and preventive screenings could help assess risk before acute illnesses take hold.
Learn more about Medicare’s education campaign.
Your monthly Medicare Part B and Part D premiums will be higher if your income is above a certain amount. You’ll pay more if the income you reported on your IRS tax return two years ago was above $85,000 per year ($170,000 for couples). The income that counts is the adjusted gross income you reported plus other forms of tax-exempt income. How much more you will pay depends on how high your income is.
Learn more about Part B premiums for people with high incomes.
For Part D coverage, you will continue to pay your regular premium to your Part D plan. The additional premium will automatically be deducted from your Social Security check. If the additional premium is more than your Social Security check, Medicare will bill you.
Learn more about Part D premiums for people with high incomes.
Find answers to your Medicare questions at