Proposals under consideration by Congress that would significantly increase cost-sharing for Medicare beneficiaries may result in higher costs to the Medicare program long-term and worsening health of beneficiaries due to avoidance of needed services, according to a paper on Medicare Supplement Insurance First Dollar Coverage and Cost Sharing adopted by the NAIC.

Cost saving are based on unknown assumptions, the paper concluded, after an actuarial review.  

The paper was authored by the Medigap PPACA Subgroup of the NAIC’s Senior Issues Task Force.

The Subgroup solicited actuarial review of the Congressional and the underlying Congressional Budget Office (CBO) proposals. 

Additional hospital expenses due to  cutting off or decreasing some  services  as well the impact of asking for more  out-of-pocket costs should go into the analysis, among other things, the paper suggests. 

The Patient Protection and Affordable Care Act (PPACA) requires the NAIC to review the NAIC Medicare Supplement (Medigap) Insurance model act and regulation and propose nominal cost shares for certain Medicare Part B expenses in Plans C and F.

After the NAIC Subgroup began its work, Congress began looking at changes to Medicare and Medigap insurance as part of proposals for deficit reduction. The Subgroup believed that it was important to comment on the discussions in Congress and was therefore given an expanded charge to develop this discussion paper. 

Congress os looking at  cutting costs  Medicare program to repair  the nation’s deficit, but poor, sick and  rural people will bear the brunt of it, according to the NAIC’s paper–and that will cause more hospitalization costs down the line. 

The  NAIC paper concluded that “the seniors who will be hurt the most by the actions currently under consideration for Medicare supplement insurance are those who can least afford it – the sick, chronically ill, and those with modest incomes who need predictability in their out-of-pocket Medicare costs through Medigap. Medigap policyholders affected by the proposed changes have already expended substantial premium for coverage that would be significantly cut,” it stated.

Congress’ approach, moreover, impacts rural beneficiaries disproportionately, the NAIC subgroup concluded. A full  31% of  Medigap policyholders live in rural areas, while just 24% of all beneficiaries are rural.and  in rural areas nearly two-thirds of Medigap policyholders receive less than $30,000 a year in income.