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Kaiser Family Foundation

Kaiser Family Foundation

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About eight of 10 of the 2.6 million people who died in the US in 2014 were people on Medicare, making Medicare the largest insurer of health care provided during the last year of life.1  In fact, roughly one-quarter of traditional Medicare spending for health care is for services provided to Medicare beneficiaries in their last year of life—a proportion that has remained steady for decades.2  The high overall cost for health care received in the last year of life is not surprising given that many who die have multiple serious and complex conditions.

Medicare provides coverage for a wide array of medical and drug benefits, but, with its deductibles, cost-sharing requirements, and lack of an annual out-of-pocket spending limit, many people on Medicare purchase Medigap supplemental insurance to help cover their out-of-pocket costs.

Overview of Medicare Spending

Medicare, the federal health insurance program for 57 million people ages 65 and over and people with permanent disabilities, helps to pay for hospital and physician visits, prescription drugs, and other acute and post-acute care services. In 2015, spending on Medicare accounted for 15% of the federal budget (Figure 1).

Employer- and union-sponsored retiree health benefits have served as an important source of supplemental coverage for people on Medicare.  Retiree health plans help fill the gaps in Medicare’s benefit design, often cover some or all of Medicare’s cost-sharing requirements and deductibles, and include a cap on out-of-pocket spending – a benefit that is required to be provided by all Medicare Advantage plans, but not covered under traditional Medicare, and of great value to retirees needing costly medical care.  For retirees, employer-sponsored supplemental coverage limits the costs they would otherwise incur for their medical care.

Proposals to modify the benefit design of traditional Medicare have been frequently raised in federal budget and Medicare reform discussions, including in the June 2016 House Republican health plan as part of a broader set of proposed changes to Medicare.1 Typically, benefit design proposals include a single deductible for Medicare Part A and B services, modified cost-sharing requirements, and a new annual cost-sharing limit, combined with restrictions on “first-dollar” Medigap coverage. Some proposals also include additional financial protections for low-income beneficiaries. Objectives of these proposals may include reducing federal spending, simplifying Medicare cost sharing, providing people in traditional Medicare with protection against catastrophic medical costs, providing low-income beneficiaries with additional financial protections, and reducing the need for beneficiaries to buy supplemental coverage.

Prescription drugs play an important role in medical care for 57 million seniors and people with disabilities, and account for $1 out of every $6 in Medicare spending. The majority of Medicare prescription drug spending is for drugs covered under the Part D prescription drug benefit, administered by private stand-alone drug plans and Medicare Advantage drug plans. Medicare Part B also covers drugs that are administered to patients in physician offices and other outpatient settings.

After a period of relatively slow growth, total and per capita Part D spending has increased more rapidly in the past few years mainly due to treatments for Hepatitis C, and is projected to increase more rapidly in the next decade as more high-priced specialty drugs become available, according to the recently-released annual report of the Medicare Boards of Trustees.

Sounds Like A Good Idea? Selling Insurance Across State Lines

 

Presidential candidates like to propose solutions to long-standing problems. Health care is no exception.

But there’s a reason some problems are “long-standing.” They may have no easy solution. Or the solution is not politically feasible. Or there’s a solution that sounds good on the campaign trail but is not likely to actually work.

In this first of a series of videos of health policy promises that “sound like a good idea,” Julie Rovner explores why increasing competition in health insurance by allowing sales of policies across state lines might not be such a good idea after all.

As a result of the recently enacted budget deal in Congress, the 2016 Medicare Part B monthly premium will be $121.80, increasing by 16 percent over the 2015 amount—far lower than the increase initially projected by the Medicare actuaries, a new brief from the Kaiser Family Foundation explains. The Part B premium increase will affect 3 in 10 Medicare beneficiaries. The remaining 7 in 10 beneficiaries will pay the same $104.90 monthly premium in 2016 as they paid in 2015, thanks to protections in Social Security law that exempt them from the increase.