“If you had a simpler, easier-to-understand deductible, and the catastrophic coverage, you might discourage people from buying Medigap insurance,” she said.What About Savings?
Changing the Medicare benefit structure could save the federal government money, but it really depends on where the deductible is set. Opponents of the move note that any savings to the government would mostly come from beneficiaries paying more out of their own pockets, such as under the Kaiser model.
MedPAC noted that the combined deductible would affect individual beneficiaries’ cost-sharing differently depending on which services they use. Most beneficiaries in a given year use only Part B services, and they would have their low deductibles increase. But the 20 percent of beneficiaries who use Part A hospital services each year would see lower deductibles there.
Most cost-sharing changes are meant to encourage beneficiaries to be choosier and find the most efficient, best quality health services. MedPAC says the current system fails at that because the health services that are generally optional are covered under Part B and so have a low deductible.
Hoagland said a combined deductible would have only a limited effect on making beneficiaries more aware of their health spending.
“It could have some behavioral impact, except, Part A, you really don’t have much choice,” he said. “If you have hospitalization, you have hospitalization.”
Rivlin noted that in most deficit reduction plans, changes to the Medicare benefit structure are done in a benefit-neutral way — and aren’t as focused on finding big savings.Any Problems With This Idea?
Opponents of the combined deductible plan worry that seniors will carry the burden by paying more so the federal government can pay less money. Even those seniors who wind up paying lower deductibles may not actually pay less overall, as was found in the Kaiser Foundation model.
“Because the role of a deductible is to reduce the cost of other aspects of the benefit package — such as premiums, copayments, and coinsurance — a lower deductible would not necessarily lower total costs for a given beneficiary,” MedPAC explained.
There could also be a problem with instituting the single combined deductible. Parts A and B have different funding sources. Part A is funded through the Hospital Insurance Trust Fund, which gets much of its funding through a payroll tax and premiums from some beneficiaries. Part B benefits are funded through a different trust fund, which gets some of its funding from premiums paid by people for Part B and Medicare Part D, which covers prescription drugs.
If the programs are combined and have a single deductible, with uniform cost-sharing, that would confuse what money goes into which trust fund.
“I have yet, to be honest with you, yet to see anybody that’s said: Once we combine A and B, what do we do about the trust funds?” Hoagland said.