The Politics of Seeking Common Ground on Medicare Changes

The New York Times reported that President Obama and Republicans are searching for common ground on how to combine “Medicare’s coverage for hospitals and doctor services (which) would create a single deductible that could increase out-of-pocket costs for many future beneficiaries, but also could pay for a cap on their total expenses and reduce the need to buy Medigap supplementary insurance.”  Interestingly, “Representative Eric Cantor of Virginia, the No. 2 House Republican, proposed much the same in a speech in February. ‘We should begin by ending the arbitrary division between Part A, the hospital program, and Part B, the doctor services…We can create reasonable and predictable levels of out-of-pocket expenses without forcing seniors to rely on Medigap plans.  While Mr. Cantor’s proposal got little attention at the time, its echo by Mr. Obama hints at a new route toward compromise…Mr. Obama’s openness to Medicare changes seemed to be news to many Republicans, even though he first proposed detailed ideas in 2011…The president and his party will not support even his Medicare proposals unless Republicans agree to raise taxes on the wealthy and some corporations. Without that trade-off, common ground on Medicare will remain unplowed.”

Reportedly, “Representative Kevin Brady, Republican of Texas and chairman of a health subcommittee, said…Can you imagine a world in which someone has to buy hospital and nursing home coverage from one insurance company, physician office coverage from another insurance company, prescription drug coverage from yet another company, and likely supplemental coverage from a fourth insurance company?’ Mr. Brady asked. ‘This is exactly how the current Medicare benefit is designed.”

The article continues, stating that “Many health-policy economists have called for creating a single, unified deductible. The current two deductibles reflect separate legislative tracks that came together in the creation of Medicare in 1965. The deductible for Part A hospital care is relatively high ($1,184 this year), while that for Part B doctor care is relatively low ($147).”

“Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission, a group of nonpartisan experts that advises Congress, said a combined deductible could increase costs for those who use only doctor and outpatient services — a majority of beneficiaries in any year. It could reduce costs, he said, for the roughly 20 percent who require hospitalization.  Proponents, including some in the administration, acknowledge the political risks of increasing most beneficiaries’ costs, even in exchange for capping their total costs, as in cases of catastrophic illness.”

Interestingly, “Mr. Obama would apply any changes only to people becoming eligible for Medicare after 2016.” And, actually, “the changes the president has proposed do not go as far as a single deductible and a cap on catastrophic costs. Instead, Mr. Obama has called for increasing the Part B deductible, which has risen much less than medical costs. He also proposed that beneficiaries pay something for home health care, which is among Medicare’s fastest-growing and most fraud-prone expenses; people just released from the hospital would be exempted. Third, Mr. Obama proposed a 15 percent surcharge on Medigap plans that cover all or nearly all of a beneficiary’s initial annual expenses. Economists say that such coverage leaves beneficiaries insensitive to costs, increasing Medicare’s spending and the premiums beneficiaries pay.”

What do you think about combining the deductibles for Parts A and B?

What do you think about the President’s proposals?

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