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There are policy makers and think tanks who believe that Medigap coverage, especially Plan G (the most popular option) insulates retirees from out of pocket costs too much and as a result encourages them to use unnecessary health care, to not care what it costs.
I don’t know about you, but I have no desire to use any healthcare beyond what is absolutely necessary. In any case, discussions are underway to increase the out of pocket costs under Medicare with the idea of saving federal funds.
Instead of the current Medicap policies, a minimum OOP would be required.
The proposal being discussed would require Medigap policies to leave beneficiaries with some minimum amount of their own Medicare cost sharing rather than allowing supplemental insurance to cover virtually everything.
“Minimum” is hardly a uniform amount for all income levels among seniors.
One specific framework discussed recently would:
For many retirees those amounts are not so minimal. The only positive for some retirees is that the Medigap premiums should decrease.
For this theory to be correct retirees are using more care than needed, providers are ordering a great deal of unnecessary healthcare and Medicare is not efficiently monitoring claims.
In any case, it’s a good idea to keep an eye on all efforts to lower spending on Medicare. The Part A trust will be depleted around the same time as SS, so something has to change.
Folks planning for retirement these days have to deal with a lot of moving parts as the two main components of SS and Medicare are under stress.
There is an excellent episode from An Arm and a Leg podcast about this
https://armandalegshow.com/
This is the same old argument policy makers have been trotting out for years. I really doubt that the vast majority of Plan G patients are over using healthcare. Who really wants to waste time calling , be on hold, then drive to the doctor and wait in the waiting room?
Ensuring patients have “skin in the game” by increasing their out of pocket co-pays and deductibles will dissuade many from going to the doctor, at first, until their problem has worsened and now may require more costly investigations, treatments, and possibly face less favorable outcomes. They already have skin in the game: their health, and sometimes their life. We should not crack down on the hypochondriacs by making it more difficult for others to afford care when they need it.
I agree with you. This was the same argument used for high deductible health plans and HSAs and employers and everyone else still complain about costs and lower income workers suffer the consequences. At the same time estimates by physicians say up to 25% of health care is unnecessary or ineffective and that is beyond the control of patients … unless they want to say “I don’t think I need the MRI, it’s too expensive.”
Dick, I’m curious, who’s making these proposals, and how did you learn about them?
Here is a more specific answer. MedPAC stands for the Medicare Payment Advisory Commission which is where the idea originated. It’s non-partisan group charged with making recommendations for Medicare
There is a few in Congress looking at various solutions. They made a similar change before. There are other groups outside Congress making suggestions. I was alerted to this by a press release from the Committee for a Responsible Federal Budget.
I monitor many different sources related to SS, healthcare and retirement issues. Keeping up on this stuff was my job for nearly 50 years. I can’t let go😎
“I don’t know about you, but I have no desire to use any healthcare beyond what is absolutely necessary.”
I believe either some or a lot of people are not like you. I know people who go to a doctor more frequently than I think is necessary.
And I admit that I am tempted. If something is not quite right, I think, “Sure, let’s go to the doctor and get some tests. It does not cost me anything.”
I am confident that some sort of co-pay for every visit or test would reduce Medicare expenditures. But I can’t begin to guess what the “right” amount of that co-pay should be.
Agreed, Larry. It makes me mad when I hear people refer to the services as being ‘free’.
You are right. I have relatives who are constantly going to one doctor or another. From my perspective this would cause more hardship for low and modest income retirees than it is worth.
I can just imagine the public reaction if this goes forward. Just think of the message. “We want seniors to pay more so they can’t afford to receive healthcare and thus spend federal funds” That doesn’t play well.
The type of care that might be avoided is not the most expensive care in any case.
Though it is political suicide it might be a good idea to cut ALL entitlement programs by 10%. Go full bore on eliminating waste and fraud. And freeze and/or reduce government spending for 5 years.
About 95% of incumbent US members of congress and senators who run for office are reelected. So, if we don’t like what they do for us, we should blame ourselves.
Here we go gain potentially changing the rules of the game after we have already have begun playing the game. People who are already on Medicare should be grandfathered into the plan they signed up for. This was done previously when Medicare no longer allowed Medigap plans to be sold which paid the federal part B copay.
As I have written on several previous occasions the increase in the full retirement age from 65 to 67 in 1983 resulted in an effective 13-14% cut in benefits.
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