Leave it to Connecticut Sen. Joe Lieberman to speed along the process of making seniors on Medicare pay more for their care—the cost control method of choice at the moment, since it doesn’t disturb the profits of major stakeholders. After all, it was Lieberman who sealed the death warrant for the public option during the health reform debate. So the legislation he has proposed along with Senator Tom Coburn is consistent with his political MO. Lieberman’s proposal along with others like it may well slip into the bill, authorizing an increase in the debt ceiling with nary a word from the seniors who depend on the program. It would be grand if they knew what was afoot.
The plan is deceptively referred to as “Medicare benefit simplification,” says Joe Baker, who heads the Medicare Rights Center, a New York City advocacy group. “What they are proposing is not simplifying the benefit to help consumers but to save the federal government money, and they do that by increasing costs to consumers and providing a disincentive to use medical services.” Lieberman et al want to create a single deductible of $550 for all Medicare services, replacing the separate hospital deductible—this year $1132—and the separate medical deductible of $162. They also want to cap out-of-pocket spending for people with low to middling incomes at $7500.
Those with higher incomes would have to pay more out-of-pocket in a further effort to means-test the program. There’s already some means testing in Medicare, but Lieberman’s proposal would add more. For example, under his plan, people with an income of $85,000 would have to pay $12,500 out-of-pocket, or about 15 percent of their income before collecting benefits. Experts have long feared that as those with higher incomes pay more, they will lose their support for the program and opt out for private market coverage—thus weakening Medicare’s risk pool, which makes it possible to insure sick people in their old age.
Baker says a lower, combined deductible is not a good idea. It would raise out-of-pocket costs for millions of beneficiaries who don’t use hospital services during the year. But nearly all seniors go to the doctor, often several times a year, and Lieberman’s plan would require them to pay a $550 deductible instead of the $162 deductible they pay now for physician services. Under current law, they also pay 20 percent of the bills for doctor services, but Medigap policies, the popular ones at least, cover that amount.
That brings up another goal of Lieberman’s plan—to reduce the amount of coverage Medigap insurance can provide. His plan would forbid Medigap policies, which are owned by some ten million seniors, from paying that deductible. All Medigap policies now cover the hospital deductible, and two of them—Plans F and C—cover the medical deductible. Two-thirds of seniors who have Medigaps buy these plans because they want to reduce their risk of out-of-pocket expenses. Over the last few years, under the guise of consumer choice, Congress has authorized insurers to sell new Medigap plans that cost less but don’t cover as many of the holes. Guess what? Older people don’t seem to buy them. “Seniors are very risk averse,” says Bonnie Burns, a policy specialist with California Health Advocates.
It’s worth noting that Congress also pulled a fast one during the health reform debate. It slipped into the law a provision that will make seniors who buy Plans C and F assume more costs for their medical services. The law calls on the National Association of Insurance Commissioners to draft rules that would make seniors who choose Plans C and F pay a greater percentage of the Part B coinsurance. So, for example, instead of policies paying the entire 20 percent coinsurance as they now do, they may cover only a fraction of it. Campaign Desk has repeatedly noted that the pols haven’t been eager to promote this, but there has been little press interest, too.