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Consensus Stirs for Medicare Reform

Margaret Dick Tocknell, for HealthLeaders Media, June 27, 2013

2. Institute a cap on out-of-pocket spending to protect beneficiaries from the threat of medical bankruptcy.
In his opening statement Rep. Joe Pitts (R-PA), subcommittee chair, expressed concerned about the uncertainty of out-of-pocket costs. He noted that Medicare typically requires a 20% copayment, but without knowing the total cost for a doctor's visit, hospitalization, or procedure, seniors can't translate that 20% into dollars and cents until after the service is delivered.

While most beneficiaries in FFS Medicare have supplemental insurance to help with unpredictable health expenses, Patricia Neuman of the Program on Medicare Policy said that even with Medicare and supplemental coverage, beneficiaries still have high out-of-pocket costs.

"They spend three times as much of their household budgets on health expenses as do non-Medicare households. Among beneficiaries with incomes below $20,000, half of them spend 20% of their income on healthcare and health insurance premiums."

3. Incentivize high-value care.
While there was general agreement that the current FFS system does very little to engage patients to seek the most effective healthcare, witnesses noted that a body of research indicates that any increase in cost sharing will change how Medicare beneficiaries use services. The goal is to develop incentives that increase the use of essential health services while reducing the use of less effective services.

In her testimony, Katherine Baicker of the Harvard School of Public Health noted that Medicare reforms are typically evaluated on how they impact the bottom line or whether the burden is borne by providers by beneficiaries.

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