Medicare revamp could hit 'modest users': study

A restructured Medicare benefit design with a new limit on beneficiary cost-sharing could produce savings and help some, but also could impose additional costs on a majority of program beneficiaries who are relatively healthy and “modest users” of medical care, says a new study from the Henry J. Kaiser Family Foundation.

The analysis, Restructuring Medicare's Benefit Design: Implications for Beneficiaries and Spending (PDF), comes a week before the Joint Select Committee on Deficit Reduction's deadline for a proposal to cut $1.5 trillion in federal spending. “Several recent deficit-reduction proposals suggest replacing the current Medicare benefit design with a combined deductible for Parts A and B and a uniform coinsurance on virtually all Medicare-covered services, coupled with a new limit on beneficiaries out-of-pocket spending,” the report noted.

According to the study, restructuring the program in a way that would have a single deductible of $550 for both parts A and B, 20% coinsurance on most services, and a $5,500 annual limit on cost sharing in 2013 would result in nearly three-fourths, or about 71%, of the 41 million beneficiaries in the fee-for-service Medicare program having higher out-of-pocket spending—including premiums and cost-sharing for Medicare-covered services—under the new design. Meanwhile, about 5% would have lower out-of-pocket spending, and about 24% would have either a nominal or no change in spending.

The findings also showed that among the 29 million beneficiaries expected to see spending increases, the average increase would be about $180 in 2013, which includes both increases in premiums for part B and supplemental coverage and cost-sharing for Medicare-covered services. “Those who would face spending increase generally include beneficiaries in better health who tend to use physician but not hospital services,” the study found.