The Obama administration wants to raise $2.5 billion over 10 years by imposing a surcharge on Medicare enrollees who buy “near first-dollar” Medicare supplement insurance.
The surcharge would affect enrollees who use Medicare supplement insurance, or Medigap coverage, to fill in the coverage gaps left by the Medicare Part A hospitalization insurance program and the Medicare Part B physician services and outpatient services insurance program.
The government would collect the surcharge by adding an amount equal to about 15% of the average Medigap policy premium onto a Medigap policy owner’s Medicare Part B premium.
The administration has included the proposal in a federal fiscal year 2013 budget proposal.
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Fiscal year 2013 starts Oct. 1; the new Medigap surcharge would take effect in 2017.
Current beneficiaries and near-retirees would not have to pay the surcharge.
Obama administration officials say the surcharge is necessary because reducing Medicare enrollees’ out-of-pocket costs to very low levels eliminates their incentive to think about cost when they get care.
“Of particular concern are Medigap plans that cover substantially all Medicare copayments, including even the modest copayments for routine care that most beneficiaries can afford to pay out of pocket,” officials say.