Blended Medicare Plan Could Save $180B Over 10 Years, Study Finds
A single plan that provides Medicare beneficiaries with drug, physician, hospital and supplemental coverage could generate as much as $180 billion in savings over 10 years and lower beneficiaries' out-of-pocket costs, according to a new studyÂ by researchers from the Commonwealth Fund and the Johns Hopkins Bloomberg School of Public Health,Â The Hill's "Healthwatch" reports (Viebeck , "Healthwatch,"Â The Hill, 5/6).
The plan -- named "Medicare Essential" -- blends Medicare's Part A benefit for hospital care, Part B benefit for physician visits, Part D benefit for prescription drugs and supplemental private Medigap plan F coverage with an annual limit on out-of-pocket costs for covered benefits (CQ HealthBeat, 5/6).
Study co-author Karen Davis -- director of the Center for Integrated Health Care at Johns Hopkins and former president of the Commonwealth Fund -- said the plan "builds on traditional Medicare, which beneficiaries are more satisfied with than private coverage" (Zigmond,Â Modern Healthcare, 5/6).
However, Davis noted, "Medicare is overly complex, and it fails to protect beneficiaries against high costs unless they buy supplemental coverage." She said, "Medicare Essential would simplify and modernize Medicare for beneficiaries and keep premiums and out-of-pocket costs reasonable" (CQ HealthBeat, 5/6).
Details of 'Medicare Essential'
Under the researchers' proposal, Medicare would feature Medicare Essential in 2014 with a single $250 deductible per beneficiary for hospital and physician services.
The plan would fully cover with no deductible preventive care and would charge copayments for other services. For example, the copay for primary care would be $20, while copays for specialists and emergency department care would be $40 and $50, respectively.
The plan also would include with no deductible prescription drug benefits that would be provided through a nationwide pharmaceutical benefit manager.
Further, the plan would "replace the first-dollar supplemental coverage that many beneficiaries buy under Medigap without modest cost-sharing," and limit beneficiaries' out-of-pocket costs for Medicare-covered services to $3,400 annually, which would include prescription drug costs.
The researchers estimated total savings of $180 billion between 2014 and 2023, including:
- $90 billion in savings for private employers who switch from current retiree supplemental coverage plans;Â
- $63 billion in savings for beneficiaries; and
- $27 billion for states and local governments through reduced Medicaid spending and lower public retiree health benefits.
Beneficiaries who switch to Medicare Essential would spend about $354 per month for comprehensive Medicare coverage, supplemental private coverage and out-of-pocket costs, compared with $427 per month on premiums for the comparable coverage under the current program.
The savings from this benefit would come from lower administrative costs and the use of the PBM's drug-price negotiating service (Modern Healthcare, 5/6).
Lawmakers' Stance on Blended Plans
According to "Healthwatch," President Obama and House Republicans have separately signaled their willingness to consider plans that combine Medicare parts A and B. Obama suggested his plan would have one deductible as part of a "balanced" plan to cut government spending.
However, House GOP lawmakers have faced criticism from senior advocates and liberal lawmakers who argue that such a plan would raise premiums for the average senior, "Healthwatch" reports (Viebeck , "Healthwatch,"Â The Hill, 5/6).
RAND Study Suggests Efforts To Curb Medicare Cost Growth Could Impede Enrollment
For the study, researchers measured the budget and enrollment consequences of implementing a premium on Medicare Part A, turning Medicare into a premium-support program and increasing the Medicare eligibility age from 65 to 67.
Such cost-saving proposals have been widely discussed in Congress as lawmakers seek ways to reduce the federal deficit and were among the proposals in House Budget Committee Chair Paul Ryan's (R-Wis.) House-approved fiscal year 2014 budget blueprint.
The study found that each of the approaches could reduce Medicare enrollment by about 2% to 14%. In addition, the study found that raising the Medicare eligibility age would have the biggest effect on enrollment, cutting the number of beneficiaries by about 14%, while cutting spending by 7.2%.
Further, the study found that between 4% and 13% of beneficiaries would leave the program if it was converted to a premium-support system, which would reduce spending by up to 24% (Viebeck , "Healthwatch,"Â The Hill, 5/6).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.