The proposals to modify Medicare will have varying degrees of impact on spending for beneficiaries; while some would pay less, others would pay more depending on the features in each option:
• Option 1: A single $650 deductible for Medicare Part A and Part B, modify cost-sharing requirements, add $6,700 annual cost-sharing limit to Medicare and limit the extent Medigap plans could cover the deductible
• Option 2: Reducing the deductible to $400 and the cost-sharing limit to $4,000
• Option 3: Provide some low-income beneficiaries with full Medicare cost-sharing subsidies under the modified benefit design
• Option 4: Income-relating the deductible and cost-sharing limit
A Kaiser Family Foundation report shows the Option 1 would produce the greatest federal savings, at $5.5 billion, but only have $0.7 billion in savings for beneficiaries and expose more than 3 million low-income beneficiaries to higher out-of-pocket costs. The second option would have more financial protections and savings for beneficiaries, but federal spending would increase.
Here is how each plan would impact beneficiaries:
1. Option 1 — 35 percent of beneficiaries would see OOP spending increase, 25 percent would have no or nominal change and 40 percent would see OOP spending reduction.
2. Option 2 — 25 percent of beneficiaries would see OOP spending increase, 35 percent would have no or nominal change and 40 percent would see OOP spending reduction.
3. Option 3 — 32 percent of beneficiaries would see OOP spending increase, 24 percent would have no or nominal change and 44 percent would see OOP spending reduction.
4. Option 4 — 35 percent of beneficiaries would see OOP spending increase, 44 percent would have no or nominal change and 21 percent would see OOP spending reduction.
The report concludes “adding a cost-sharing limit would provide valuable financial protection to a relatively small share of the Medicare population that incurs catastrophic expenses in any given year, although a larger share of beneficiaries would be helped by this provision over multiple years.” At the same time, the opposition reduce the impact of out-of-pocket spending could produce lower federal savings or increase federal spending.