7. Increase Supplemental Plan Costs and Reduce Coverage
Even with Medicare coverage, seniors are often left with significant health care costs, so many people purchase supplemental private insurance coverage (such as Medigap plans) to reduce their out-of-pocket expenses. One proposal would charge more for certain types of supplemental plans, such as those that cover all costs so seniors incur no out-of-pocket expenses themselves. Other proposals would limit what Medigap supplemental insurance plans will cover. For instance, they could prevent Medigap from covering the first $500 of a Medicare beneficiary’s out-of-pocket costs, and only cover 50 percent of the remaining charges. Some proposals may also include a cap to limit overall out-of-pocket expenses.
PRO: Current Medigap plans are complicated. They cover some routine costs most Medicare beneficiaries could pay themselves, and they raise the cost of Medicare itself by increasing the use of Medicare-covered services while only paying part of the cost of this service use. Taxpayers pay the rest. Medigap plans should be changed to improve the coverage for serious illnesses and cover fewer small expenses. That change would lower Medigap premiums and Medicare costs, and improve the insurance protection Medicare beneficiaries need. (Henry J. Aaron, Brookings Institution)
CON: It would be unwise to increase the premium amounts for Medicare supplemental insurance, such as Medigap, or to decrease the amount of coverage available to enrollees under these policies. There is no evidence that these reforms would deter the use of unnecessary health care services. Rather, these Medigap proposals would simply raise costs for Medicare beneficiaries and have an unfair effect on lower-income Medicare enrollees and those in poor health. (Avalere Health)