12:00pm

Wed December 1, 2010
Shots - Health News Blog

Plan To Cut Deficit Would Sock Seniors On Medicare

Apparently the president's blue-ribbon panel on reducing the federal debt didn't get the memo about Medicare being the third rail of politics. You know, touch it and die.

There are two proposals in the bipartisan group's new draft for reducing the federal deficit that sure to draw yowls from a constituency key to both political parties: the nation's seniors.

Panel co-chairmen, former Wyoming GOP Sen. Alan Simpson and former Clinton White House Chief of Staff Erskine Bowles, presented what seems like a simple, sensible idea.

Why not merge Medicare’s two annual deductibles? That would scrunch $1,132 for Part A, which covers hospital and other inpatient costs, and $162 for Part B, which covers doctor visits and other outpatient costs. The new, combined deductible would be $550 annually.

Sounds good, right? Well, there's a catch, of course.

To make sure beneficiaries don't evade the new out-of-pocket charge by purchasing supplemental Medigap coverage to pay the deductible (something many beneficiaries currently do), the proposal would bar Medigap plans from covering the first $500 in Medicare cost-sharing "and limit coverage to 50 percent of the next $5,000 in cost-sharing."

The idea is to prevent insurance from kicking in with the first dollar spent on care, something the document says "encourages over-utilization of health care."

But seniors are notoriously attached to their first-dollar coverage. And combining the deductibles would have the effect of raising out-of-pocket costs for a lot of Medicare recipients.

A quick look at how health care is actually used by those on Medicare tells you why. According to the Kaiser Family Foundation’s latest Medicare chart book, only about 1 in 5 Medicare beneficiaries has a hospital stay each year (think Part A). Yet 4 in 5 have a see their doctors in office visits (think Part B). So all the beneficiaries who go to the doctor but not to the hospital will be paying more than they used to and won't be able to purchase supplemental insurance to cover the increase.

Meanwhile, the proposal is unlikely to make the nation's doctors happy, either. It would fix the Medicare lingering problem known as the "sustainable growth rate" that’s been threatening to cut physician pay by 20 percent or more each year. But it would order a freeze on their Medicare pay through 2013 and a 1 percent cut in 2014.

On the other hand, no one ever said fixing the deficit would be easy, particularly when it comes to a politically sacred program like Medicare.

This afternoon, John Rother, executive vp for the AARP, criticized the plan in a statement. The co-chair's proposal would lead to "dramatic cost shifts in the Medicare program, with most beneficiaries experiencing significant increases in cost-sharing," he said. The plan also wouldn't go far enough in making sure doctors stay in Medicare, he added. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.