From Medicare Watch, by medicarerights.org

Lieberman-Coburn Medicare Proposal Would Raise Costs for People with Medicare

The budget battle over Medicare continued this week with the introduction of a new proposal from Senator Joseph Lieberman and Senator Tom Coburn. While some elements of the proposal are benign, such as strengthening protections in Medicare and Medicaid against fraud, waste, and abuse, the proposal saves the government money largely by increasing what people with Medicare pay out of pocket for medical care. For example, the proposal increases Medicare consumers’ Part B premium levels from 25 percent of Part B financing in 2010 to a minimum of 35 percent in 2019. People with Medicare already spend on average two-thirds of their health care budget on premiums, so these premium increases would have a significant financial impact on the population.

The proposal also includes a major restructuring of the Medicare benefit that would limit costs to the government but increase costs for the majority of Medicare consumers. Specifically, the proposal creates a combined Part A and Part B deductible of $550, a universal 20 percent copay for all services under Medicare, and an out-of-pocket limit of $7,500. In addition, it would institute a Medigap deductible and limit future coverage protection offered by Medigap plans. Thus, many would have to pay $550 out of pocket before receiving Medicare coverage and would be responsible for copays for services like home health, for which none have existed in the past. Even with increased out-of-pocket costs, most people with Medicare would never reach an out-of-pocket limit set so high. Lastly, the purpose of eliminating or limiting Medigap coverage is to drive down utilization by Medicare consumers, who are in a poor position to determine which services are medically necessary. The Medicare Rights Center supports the creation of an out-of-pocket limit, but only if such a limit would result in more affordable coverage for most Medicare consumers—something this proposal does not do.

There are, however, proposals that would reduce government spending without shifting costs to the Medicare population. This month, Senator Jay Rockefeller and Representative Henry Waxman introduced the Medicare Drug Savings Act of 2011 (S. 1206/H.R. 2190). Similar to the rebates that existed before the implementation of Part D by the Medicare Modernization Act (MMA), the proposed legislation would require drug manufacturers to pay a rebate to the government for drugs provided to dual-eligible beneficiaries and would further extend such rebates to people with Medicare enrolled in the low-income subsidy (LIS) program. The Congressional Budget Office (CBO) estimates that this proposal would save an estimated $112 billion over 10 years. Most importantly, this legislation does not achieve savings to Medicare by increasing costs to people with Medicare, who already spend about 15 percent of their total household incomes on health care.

Read Medicare Rights Center President Joe Baker’s statement on the Lieberman-Coburn proposal.