Analysts at the U.S. Government Accountability Office say modernizing the traditional Medicare fee-for-service program benefits design could help cut many enrollees’ costs, discourage unnecessary use of care, and reduce demand for Medicare supplement (Medigap) insurance.
About 81% of Medicare fee-for-service enrollees now use some kind of public or private arrangement to cap their maximum out-of-pocket spending, and to cope with ordinary deductible, co-payment and coinsurance bills, according to GAO analysts.
About 31% of Medicare fee-for-service enrollees use Medigap coverage from private insurers, with an average annual premium of $2,400 per enrollee.
If the Medicare fee-for-service program offered enrollees the kind of annual out-of-pocket spending cap that Affordable Care Act-compliant private major medical plans now provide, “the addition of an annual cap would reduce the need of some beneficiaries to purchase supplemental insurance,” James Cosgrove, a GAO director, writes in a new GAO report.
“While beneficiaries who drop their supplemental insurance would then need to pay all their Medicare cost-sharing responsibilities, those might be less than their annual premium for supplemental insurance,” Cosgrove writes.
A copy of the report is available here.
Sen. Orrin Hatch, R-Utah, and three other Republican congressional leaders asked the GAO to look into proposals for making Medicare fee-for-service benefits more like commercial health plan benefits, and more like the benefits typical Medicare Advantage plans already offer.