“The Pain: Critics see danger ahead. Most voucher proposals peg the growth in value of the voucher to general inflation or economic growth. But the cost of Medicare benefits is likely to be higher. That raises concerns that costs will slowly be shifted to beneficiaries. Some health analysts say the same could occur under a premium support model, depending on how it’s designed. Ryan says, under his plan, wealthy beneficiaries would pay more for Medicare than less-affluent seniors.
CHANGING MEDICARE’S DEDUCTIBLE AND MEDIGAP COVERAGE: Medicare charges beneficiaries separate deductibles for their hospital care (Part A) and for outpatient and physician services (Part B). This year, in Part A, beneficiaries pay $1,132 for each hospital stay, and enrollees also pay daily co-payments for extended hospital and skilled nursing care. For Medicare Part B, the annual deductible this year is $162. Nearly one in five beneficiaries in Medicare’s fee-for-service program have supplemental insurance known as Medigap coverage to help with those costs.
Some proposals, including one advanced by the president’s deficit panel chaired by former GOP Sen. Alan Simpson and former Clinton chief of staff Erskine Bowles, have suggested combining the Part A and B deductibles into one $550 yearly deductible. That could reduce beneficiaries’ costs for hospital care but be more expensive for seniors who mostly use Part B. In addition, some proposals suggest a 10 to 20 percent co-payment for all services until beneficiaries reach a catastrophic limit. Others argue for making that $550 deductible ineligible for Medigap coverage so that beneficiaries are responsible for covering the cost of those initial services.
How Much Would It Save? Instituting the change in deductibles, co-pays and Medigap rules would save about $93 billion over the next decade, CBO estimates.
The Gain: Medicare would save money, but not just because beneficiaries were putting up more of their own. If Medigap plans were less generous, analysts believe beneficiaries would be more careful about spending and that could help lower Medicare costs.
The Pain: Once again, this proposal would shift costs to individuals.”