MEDIGAP: Restrictions Would Hurt Seniors, Says HIAA

      Proposals to ban Medigap policies from covering Medicare copayments and deductibles, currently being discussed by the National Bipartisan Commission on the Future of Medicare, would hurt the most vulnerable beneficiaries, says a new study by the Health Insurance Association of America. The Medicare panel's elimination of the out-of-pocket cap "would save money in the short run, but would '... have severe financial implications for the 10% of the Medicare population with chronic and/or catastrophic illnesses'" (Reuters, 1/6). In addition, it would cost "the most vulnerable" Medicare beneficiaries "as much as $10,000 more a year in out-of-pocket" expenses, according to the report (HIAA release, 1/5). Author Dr. Gerard Anderson of the Johns Hopkins School of Public Health wrote that currently, "supplemental insurance spreads the burden of cost-sharing across Medicare beneficiaries,' ... thereby reducing the financial burden on older beneficiaries and beneficiaries with chronic or catastrophic illnesses. ... The elimination of Medicare supplemental insurance would adversely affect ... the old, poor and sick" (Reuters Health, 1/6). HIAA President Chip Kahn said, "Nearly nine out of 10 Medicare beneficiaries have some type of private Medicare supplement insurance, and a government survey shows an equal number of them are pleased with their coverage. Nevertheless, some self-anointed experts want to foist high out-of-pocket costs on vulnerable seniors in pursuit of illusory Medicare savings" (HIAA release, 1/5).

Getting Specific
      While the bipartisan commission has made no formal recommendations on banning copayments, HIAA called its news conference yesterday "to offer counterarguments before the idea moves any further." Study author Anderson noted that greater cost-sharing would restrict preventive care services available to seniors, thereby burdening the system when they become sick. The proposal before the commission would limit Medigap coverage by "expand[ing] Medicare to cover items now covered by ... private insurers" (Morrissey, CongressDaily, 1/5). Supporters of the reform argue that Medigap cost-sharing encourages Medicare beneficiaries to "overuse" medical services, thus increasing medical spending. HIAA notes that estimates of Medicare savings derived from increasing seniors' cost-sharing are exaggerated because they are based primarily upon a RAND study that did not survey Medicare beneficiaries. As a result, the RAND study cannot be used to predict how Medicare beneficiaries would react to being forced to pay deductibles and copayments out of their own pocket (HIAA release, 1/5).