Shortly after taking over one of the largest sectors of our economy, healthcare, Congress is at it again. This time they are going after your Medicare Supplement insurance.
For well over the past two years Congress has been focusing on ways to reduce Medicare spending. They are focusing on Medicare Supplement coverage because they believe that Medicare Supplement policyholders over utilize their Medicare benefits because they have very little or no out of pocket cost since their policy picks up all the deductibles and coinsurance that Medicare doesn’t cover. I won’t go into why this is not altogether accurate, but for now let’s just focus on the changes they want to make.
Their goal is to completely revise the structure of Medicare as it exists today, using the famed Simpson/Bowles report as a “solution.” They want to do this by adding more “cost sharing” to Medicare, or as they like to put it, they want Medicare recipients to have “more skin in the game.” Joe Baker of the Medicare Rights Center hits the nail on the head when he said that “cost sharing” is really “cost shifting.” And guess who the cost is shifted to? That’s right, YOU.
So what does this Simpson/Bowles report call for?
- Combining the current Part A and Part B deductibles into one $550 deductible.
- A single coinsurance rate of 20% up to $5,550.
- Set coinsurance cost at 5% between $5,550 and $7,500
- Set an annual out-of-pocket maximum at $7,500.
- Prohibit Medicare Supplement policies from covering the first $550 and limit coverage to 50% of the next $5,000.
That last one is a biggie, as Medicare Supplement policies are currently allowed to cover these deductibles and coinsurance. Even if they don’t move forward with #5 above, the president has suggested implementing a 15% tax on Medicare Supplement policies that provide these first dollar benefits, such as Medicare Supplement plans C or F. That means you would pay more money just because you choose to have good coverage. Also, there are already Medicare Supplement plans that include more “cost sharing,” so these options already exist for those who want them.
A nationwide survey conducted in 2012 showed that 9 out of 10 Medicare Supplement policyholders were satisfied with their coverage, and 91% would recommend a Medicare Supplement policy to their friends when they turn 65.
The problem with Medicare is not what is coming in the front door through more “skin in the game” payments from you. The real problem is the $50 billion dollars each year that is going out the back door through Fraud, Waste and Improper payments. I believe it makes much more sense to focus on these expenses rather than ask our Medicare population to pay more. If you agree, I strongly encourage you to call or write your Senator and Congressman and inform them that “Cost Sharing” and “More Skin in the Game” is not good legislation.
You can view a video on this subject below: