Sen. Ron Wyden and 14 Democratic co-sponsors plan to introduce legislation Thursday to cap consumers\u2019 potential out-of-pocket costs in traditional Medicare, resurfacing a long-running debate over why the program doesn\u2019t limit beneficiary spending.<\/p>\n
Even the bill\u2019s backers say securing passage this year is a long shot. But the effort is one more opportunity for Democrats to highlight voters\u2019 frustration about healthcare costs leading into the November election.<\/p>\n
Polls show Americans are very concerned about affordability, with a recent Gallup survey<\/a> finding fewer than half of Americans say they can consistently afford healthcare.<\/p>\n Wyden\u2019s bill would focus on what many consider a critical pocketbook issue in traditional Medicare: There\u2019s no limit on what a beneficiary could pay in cost sharing.<\/p>\n \u201cEveryone else in the health insurance neighborhood has one \u2014 employer coverage, the Affordable Care Act, all of them have a cap,\u201d the Oregon Democrat told KFF Health News. \u201cThere\u2019s no good, common-sense reason why the flagship health program doesn\u2019t have the same protection.\u201d<\/p>\n Critics of a cap, meanwhile, are likely to pounce on the cost to the federal budget, which could be significant.<\/p>\n Wyden, already making the battle lines clear, added, \u201cI suspect it will come up on the floor of the Senate that Democrats want to give a fair shake to people on traditional Medicare and Republicans want to help billionaires.\u201d<\/p>\n Policy, Political Dynamics at Work<\/strong><\/p>\n The underlying issue is the 20% share of Medicare costs that enrollees<\/a> have to pay for medical services after they\u2019ve met any deductibles. Without a ceiling or upper limit, an expensive condition such as cancer or a long hospital stay could result in beneficiaries paying thousands of dollars in costs.<\/p>\n That concern leads about 43% of people<\/a> enrolled in traditional Medicare to purchase separate insurance, often called Medigap. (Others get such coverage through job-based retiree plans.)<\/p>\n Medigap insurance plans have seen rapid premium increases<\/a> and can cost thousands of dollars a year, especially for couples. That price tag can be unaffordable for some beneficiaries, who may instead turn to private-sector Medicare Advantage plans offered by commercial insurers, or go without.<\/p>\n The Wyden proposal would set a $5,000 cap in traditional Medicare. Any amounts paid by a Medigap plan or a retiree health plan toward beneficiaries\u2019 care would count toward that cap. It also includes other provisions to help older people with lower incomes, including eliminating an asset test to qualify for special programs that help reduce costs.<\/p>\n Medicare would pick up any amounts over that $5,000 limit, which is lower than the one Congress set for the rival Advantage plans \u2014 currently $9,250<\/a>, although insurers can set smaller amounts.<\/p>\n Setting a cap in the traditional program, proponents argue, would help level the playing field between traditional Medicare and Advantage plans, which often cost consumers far less than traditional Medicare with a Medigap supplement. Premiums for these policies would probably be lower, they say, because the insurers\u2019 financial exposure would be limited.<\/p>\n The Medicare Advantage program has historically had strong support from Republicans, who like its private-sector aspect and note that it can potentially do more to control costs, such as by using specific networks of doctors and hospitals, or requiring preapproval for some services, which the traditional program cannot do.<\/p>\n The plans also offer enrollees additional benefits, such as eyeglasses, hearing aids, and prescription drug coverage, and have now attracted more than half of all Medicare enrollees<\/a>.<\/p>\n Along with that growth, however, has also come increased scrutiny over concerns about denials of patient services and the challenges some consumers face if they want to switch back<\/a> to the traditional program. Recently, some health systems have dropped out of Medicare Advantage contracts<\/a>, citing concerns about tardy payments or prior authorization requirements, while insurers are also scaling back<\/a> where they offer Advantage coverage.<\/p>\n The bill has not yet been analyzed by the Congressional Budget Office, so there is no official estimate of increased costs to taxpayers for Medicare. Still, it would raise those costs \u2014 at a time when other health programs are being cut, the Medicare trust fund is scheduled to start falling short<\/a> of funding in 2033, and the nation\u2019s debt is growing<\/a>.<\/p>\n That is likely to draw sharp rebukes from fiscal hawks and other conservatives who question whether billions in tax dollars should be used to pick up costs that would otherwise be paid by enrollees or by the supplemental insurance plans many purchase to do so. They are likely to note that beneficiaries could also choose to join private sector Advantage plans, which eliminate the need for supplementary insurance coverage such as Medigap.<\/p>\n Key Questions: Who Benefits? Who Pays?<\/strong><\/p>\n A cap\u2019s cost to taxpayers, while not officially scored yet, is likely to be significant, although adding one could also save individual consumers money. A recent study from Brown University gives some clues.<\/p>\n A $5,000 cap could save enrollees an average of about $1,200 a year<\/a>, the study says, both in direct savings and reductions in their Medigap supplemental premiums. Just over 11% of traditional Medicare beneficiaries, about 3.2 million, would directly benefit from such a cap if it was implemented in 2028, said the study, which did not receive outside funding.<\/p>\n Over the next 10 years, it estimates, just over 52% of all traditional beneficiaries would exceed the $5,000 cap at least once.<\/p>\n Still, lead author Andrew Ryan, a professor at Brown\u2019s School of Public Health, said analysts estimated such a cap \u201ccould cost over $50 billion annually, which is a lot of money\u201d to add to the federal balance sheet.<\/p>\n Critics are likely to focus on the cap\u2019s expense and the number of people who might benefit.<\/p>\n \u201cHow many people are hitting a level of cost they can\u2019t afford on Medicare? \u201casked Jackson Hammond, a senior policy analyst with the Paragon Health Institute, a conservative think tank influential with the GOP.<\/p>\n Any cap \u201cis generally going to increase expenses for the program without adding a lot of benefits to enrollees,\u201d said Hammond, who spoke with KFF Health News before the legislation was introduced.<\/p>\n Supporters, though, have a different view.<\/p>\n Certainly, with \u201cany policy that\u2019s going to cost money, there will be an argument over where the money is coming from,\u201d said Brian Keyser, a research associate at the liberal Center for American Progress who also spoke with KFF Health News before the Wyden measure was introduced.<\/p>\n Keyser co-authored a Medicare paper<\/a> that suggested lawmakers could pay for changes in traditional Medicare, such as an out-of-pocket cap, if they reduced the amount the government pays Medicare Advantage insurers, pointing to government estimates that Advantage would <\/a>cost the government $76 billion more this year than if the same number of people were in the traditional program.<\/p>\n Finding a way to add a cap \u201cis right and fair because without it, people who become seriously ill can spend their life savings on cost-sharing Medicare,\u201d Keyser said.<\/p>\n Such an idea, however, has been in discussion<\/a> on and off for years. Knowing that, the bill\u2019s backers acknowledge that passage is unlikely \u2014 but they say they\u2019re playing the long game for now.<\/p>\n \u201cWe\u2019re going to push for it in the next Congress, when we believe we will be in the majority,\u201d Wyden said.<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/em><\/p>\n This <a target=”_blank” href=”https:\/\/kffhealthnews.org\/medicare\/medicare-costs-out-of-pocket-cap-democrats-senate-wyden-midterms\/”>article<\/a><\/a>; first appeared on <a target=”_blank” href=”https:\/\/kffhealthnews.org”>KFF<\/a> Health News<\/a> and is republished here under a <a target=”_blank” href=”https:\/\/creativecommons.org\/licenses\/by-nc-nd\/4.0\/”>Creative<\/a> Commons Attribution-NonCommercial-NoDerivatives 4.0 International License<\/a>.<img src=”https:\/\/kffhealthnews.org\/wp-content\/uploads\/sites\/8\/2023\/04\/kffhealthnews-icon.png?w=150"<\/a>; style=”width:1em;height:1em;margin-left:10px;”><\/p>\n
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