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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.
My medigap (plan G) goes up double digits percent each tear. I do see a lot of Doctors.
My wife’s medigap (also plan G) only goes up a few dollars every year. But then she is much healthier than I am.
Premiums are not based on individual usage. They vary by whether they are community based, entry age based or current age based.
I am curious. How many people are knowingly “using unnecessary health care”? I certainly do not. My wife doesn’t.
My first reaction is to question who the “policy makers” are and what their agenda is.
Medicare Supplement insurance exists because of the lack of coverage and the costs of traditional Medicare Parts A & B.
Medicare Advantage plans appeal to some people because they believe they are less expensive and offer “free additional benefits.” Neither statement is generally true in all instances.
MedPAC stands for the Medicare Payment Advisory Commission which is where the idea originated.
I don’t use unnecessary care, but I know people who regularly go to doctors and they always find something to test or treat. In fact, they go so often a son is paying for them to have a concierge medicine.
Just go with a Medicare Advantage plan and save yourself the $8000 a year in premiums.
Be careful taking advice from people on the internet. Sometimes people with good intentions say things that are factually untrue.
Mr. Wright’s comment falls into that category, since no one can state. unequivocally that Medicare Advantage can allow you to save $8,000 in premiums annually.
I borrowed that figure from Mr Quinn, in his reply to Randy Dobkin he states “a couple is already playing $8800 + in medicare and medigap premiums”. So not from the internet. Maybe Mr Quinn’s figures are not factually true.
That’s a combination of Part B, and typical Medigap premiums for a couple. It does not include IRMAA premiums. It’s quite realistic.
Depending on the Medigap premium it could be a little lower or as in our case higher.
I’m 73 years old. I’ve had a MA plan for 8 years. I pay no premium other than the usual part B Medicare premium that everyone pays. My oop for primary care physician is $0. My oop for a specialist is $15. A few years ago I had a hip replacement, my oop was $500. I have my teeth cleaned twice a year for an oop of $0. In the past 8 years I’ve had two dental crowns, again my oop was $0.
I’m a South Carolina resident and I spend my summers in upstate New York, I have a primary care in each location and have no problem obtaining good doctors in both locations.
By my accounting my wife and I have probably saved about $50,000 over an 8-year period for medigap premiums we didn’t have to pay.
I personally would not consider a MA plan, unless it was a “flavor” of MA sponsored by a former employer (offering retiree medical) which may offer the full network of medical providers offered by Original Medicare. Most “over the counter” MA plans offered to the general public have network restrictions to PCP and specialists which can be an eye opener when starting to lean heavily on coverage for a serious medical condition. It seems like you have a fairly generous plan for out of state health needs- most do not offer that type of coverage, as when you are away from your home network, benefits are usually somewhat limited.
You might want to rethink that and keep an eye on plans in your area.
Federal benchmark payment increases from the Centers for Medicare & Medicaid Services (CMS) have slowed relative to actual cost trends.
CMS has updated its risk adjustment model to crack down on “coding intensity” (practices where insurers claim higher diagnostic risk to receive larger federal capitation
Insurers have pulled out of underperforming geographic service areas, forcing over a million beneficiaries to switch plans during open enrollment periods.
Over-the-counter allowance dollars, home-delivered meals, non-emergency transportation, and dental/vision stipends are being scaled back or subjected to stricter limits.
Plans are tightening provider networks and enforcing stricter prior authorization rules to curb medical spend, causing friction between health systems and health plans.
Premiums are increasing. Keep in mind that unless your plan is terminated, in most cases you can’t obtain a Medigap plan without some medical underwriting.
Just something to be aware of.
A few years ago, this same group had the idea that Plan F, which even paid for the Part B deductible, was a problem because of paying for the deductible. So, we switched to Plan G. Our monthly premium over the year declined more than the amount of the deductible.
If they go this way, I predict that our monthly premium (community rating state) will decline and offset the change. In most years, our benefits under Plan G are less than the premiums. It is only when we have some significant medical event that we get more in benefits than we pay in premiums.
What Plan G does is even out the costs of medical care via monthly payments rather than lumpy actual costs. There is no part of receiving medical care that is enjoyable.
A more effective way to reduce Medicare expenses would be to change from 80-20 to 75-25 reducing the govt’s share of the expense by 5%. Medigap premiums would increase, Medicare Advantage plans would have to charge more. Fiddling with Medigap won’t change how much paying for senior healthcare costs the government.
Regarding your third paragraph:
Cost certainty was one of the major factors in our picking plan G, as was from my standpoint, knowing that if I had a significant deductible I would be less likely to address concerns earlier (due to my cheapness) when in fact at that point it would be easier and cheaper to address the issue.
Medigap premiums should decrease, but I doubt by enough to cover the added OOP cost as suggested.
Medigap premiums are equal to Medigap loss payments plus admin expenses and a small profit margin as a % of premiums. However much is saved by having participants pay say $800 more in medical expenses each year will directly reduce premiums. Individual impacts will vary depending on how much less an individual has to pay in premiums vs. how much more they pay in medical expenses.
I imagine this would be across all of the Medigap plans, not just plan G? This proposal if enacted could potentially steer folks toward MA plans (not that, it is a panacea). Are there proposals here to sweeten the MA plans? Hardening MA plans would generate insurance industry’s ire (and hence no political appetite).
Another way to look at it is to deter physicians from recommending extra care / testing (rather than patients requesting it). If my doctor suggests five additional tests, I might resist if I had to pay a portion via a revised Medigap – Pick the top three tests, doc!
Really? You feel qualified to do that? You think medicine is that quantifiable, the top three tests? Faced with the possibility of a serious condition and what may be needed to treat it, I bet you would not do that.
We wouldn’t need Medigap if Medicare had a reasonable out-of-pocket limit.
Quite possibly. But what is reasonable?
Our insurance from my wife’s employer seems reasonable with an in-network out-of-pocket of $8,000 and a deductible of $4,000. (Yes, we’re using our HSAs as stealth Roth IRAs.)
The median household income for people aged 75 and over is $50,880.
Does an $8,000 annual out of pocket cost per person really seem reasonable?
A couple is already paying about $8800 + in Medicare and Medigap premiums. That’s a potential (and at that age likely) annual cost for a couple of over $24,000 a year including OOP costs.
I’m guessing your premiums and OOP costs are not near 50% of household income or that your healthcare utilization is near that of the average age 75+ age couple. I hope.
It’s $8,000 for the two of us, and in this case Medigap would only be needed to cover beyond the out-of-pocket limit, so the premiums should be less. And we do spend the money, most years meeting the deductible and a couple times the out-of-pocket limit.
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.
“skin in the game,” was the name of the game with HMOs, promising to reduce health care spending. How did that work out?
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😎
Keep up the good work keeping us informed Dick. We’re all better off because of your knowledge and diligence in this arena.
“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.
Through 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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