BIn 2025, people on Medicare who take expensive drugs will experience significant financial relief: they won’t have to pay more than $2,000 a year for all of their medications.
But the 35 million people enrolled in the traditional Medicare program still won’t get the same relief anytime soon for their inpatient, outpatient, home health and nursing care, leaving them exposed to potentially unlimited costs. they fall seriously ill and have no supplementary coverage.
“A lot of people don’t know that traditional health insurance doesn’t limit catastrophic spending because most insurance does,” said Cristina Boccuti, director of health policy at research firm West Health. “People don’t realize that until they sign up for Medicare.”
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The issue is particularly relevant as annual Medicare enrollment is underway and will end Dec. 7. pocket limits that insurers offer, according to a new Commonwealth Fund survey.
Adding a maximum outlay to the primary Medicare program would cost taxpayers money, as will drug costs. A large majority of Medicare patients wouldn’t hit that cap either — about 88% don’t spend $5,000 out of pocket in a year, according to recent estimates from the Urban Institute. But Medicare policy experts say there is momentum to establish this kind of cap for all services, in part to level the playing field with Medicare Advantage, and more importantly, to give peace of mind to millions. elderly and disabled people if their health takes a turn. .
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“There’s the really intangible sense of financial security that people get from having a spending cap even though they won’t hit the cap, and that’s an important thing to not overlook,” said Gretchen Jacobson, vice president of Medicare at the Commonwealth Fund.
Almost all commercial health plans have an annual spending maximum, which means the insurance company or employer covers the entire tab for medical care after someone has paid the designated maximum amount. . Medicare had a cap more than 30 years ago, but it was short-lived. Congress passed legislation in 1988 to cap Medicare deductibles and copayments for hospital and physician care. Lawmakers repealed the law less than a year later after facing backlash from the public.
Many seniors did not understand what was included in the new law, according to a poll at the time. However, they knew this meant higher taxes for them. There was a maximum tax liability, so no adult would pay more than $800 in additional annual taxes – but for the wealthy and well-insured it was a step too far, even if it meant some protection funding for the poorest and sickest patients.
“Many older people did not like the idea of paying additional taxes to fund the new coverage,” researchers wrote in Health Affairs in 1990. “Resentment seemed to be highest among people who were already on comprehensive health insurance coverage with a former employer. Not only did they bear the brunt of funding, but the benefits of the new legislation added little to their existing coverage.
Congress hasn’t substantially addressed the issue since then, so the coverage gap still exists. Many people with traditional health insurance bridge that gap with a few main options: retiree coverage if offered by their employer, concurrently qualifying for Medicaid, or purchasing Medigap plans, which limit quotes. -shares and deductibles but can come with expensive monthly premiums.
It should be noted that people who first choose a Medicare Advantage plan but later decide to opt for traditional Medicare might be excluded from the Medigap market, depending on where they live, because Medigap plans may deny coverage based on pre-existing conditions.
But as the Commonwealth Fund survey and federal enrollment data show, millions of people who have no feasible or affordable options for additional coverage have turned to Medicare Advantage, which by law , must limit reimbursable expenses. Patients who choose these plans forgo the traditional nationwide network of doctors, hospitals, and other Medicare providers in exchange for this security coverage. For this year, the average maximum payout in Medicare Advantage plans is about $5,000, and it cannot exceed $7,550 for in-network care, according to the Kaiser Family Foundation.
“For better or worse, Medicare Advantage has been a way for the government to increase benefits to Medicare beneficiaries without the need for legislative changes by Congress,” said Susan Dentzer, CEO of America’s Physicians Groups, an industry-funded group that supports Medicare Advantage.
Creating a cap for all Medicare services similar to Medicare Advantage would cost billions of dollars, as taxpayers would cover the lion’s share of these catastrophic events instead of patients. A calculator created by West Health estimates that a $5,000 limit would increase Medicare spending by $10 billion in 2023.
However, some proposals suggest that adding a Medicare spending cap could save the government and taxpayers money — when paired with other changes that divert spending away from Medicare. A $7,000 maximum combined with a policy that prohibits Medigap plans from covering certain amounts of a person’s deductible and coinsurance could save the government more than $14 billion a year by 2028, according to a 2020 Congressional Budget Office report.
Health insurers aren’t keen on adding an expense cap to traditional Medicare, which would make the program more attractive and, therefore, could cause people to drop their Medicare Advantage and Medigap plans. . STAT reached out to the biggest insurance lobby groups — the U.S. Medicare Plans, the Better Medicare Alliance, the Alliance of Community Health Plans, and AARP — and none offered an endorsement without subject to cost caps in traditional health insurance.
AHIP released a report last month that found federal spending would be higher on traditional health insurance if it had reimbursement limits like Medicare Advantage — an assumption the group has used to justify the higher payments than Medicare Advantage insurers receive. So, would the group support adding a cap to traditional Medicare to compete with Medicare Advantage? Maybe, but only if the government increases payments to insurers even more.
“If Congress is considering improving the base benefits of Original Medicare, the existing cost structure must be included in the MA benchmarks to be consistent with the payment structure under the MA program and to be fair to Americans who choose MA,” AHIP said in a statement.
The Better Medicare Alliance hasn’t explicitly supported a maximum payout for traditional Medicare beneficiaries, saying in a statement that it wants seniors to have financial protection, but “a payout cap won’t replicate itself.” the coordinated package – personal care found in Medicare Advantage.
The Alliance of Community Health Plans did not offer an official position on maximum spending in traditional health insurance, and said it believes “the best way forward is Medicare Advantage and [we] are advocating for a next generation of the program, not volume-based care in traditional Medicare.
AARP, which generates revenue from the sale of Medigap plans and has a financial relationship with UnitedHealth Group, the nation’s largest Medicare Advantage insurer, had no comment.
Congress is no closer to closing that gap, but that doesn’t make it any less concerning for the 17% of patients in the traditional Medicare program — about 5 to 6 million people — who have no supplemental coverage.
“There are a lot of Americans who can’t afford extra coverage or don’t want to be in a [Medicare Advantage] health plan and want to stay on traditional health insurance,” said Bocciti of West Health. “They are really exposed to a year of high payouts if they have a serious health condition.”
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