By Susan Jaffe
Kaiser Health News, August 30, 2011
A provision of the 2010 federal health law seeking to increase Medicare beneficiariesā share of health care costs is meeting resistance from an unlikely group of 33 state insurance regulators, health insurers and consumer advocates charged with revising Medigap insurance policies that cover most out-of-pocket expenses.
The National Association of Insurance Commissioners assembled the group to come up with ways to raise the beneficiariesā cost for the most popular and generous Medigap policies, a task Congress assigned to the association in the health law. Since then, the idea of shifting some costs to beneficiaries in Medigap policies has emerged as one of several proposals to reduce the federal deficit.
The proposals suggest that if Medigap policies cover less of beneficiariesā costs, some seniors will be less likely to overuse Medicare-covered health care services.
“Some of those proposals are fairly dramatic in the cost shifting effect onto seniors,” said Mary Beth Senkewicz, Florida’s deputy insurance commissioner, who chairs the NAIC’s senior issues committee, which includes the Medigap group.
Bonnie Burns, a policy specialist at California Health Advocates and another member of the Medigap group, questioned whether patients need incentives to reduce their use of medical services.
“Beneficiaries don’t order services, providers do,” she said. “To suggest that Medicare beneficiaries overutilize services on a whim because they don’t have ‘skin in the game,’ is pretty disturbing.”
Although some studies have found that seniors with Medigap policies use more Medicare services, Burns said they may be sicker than the average Medicare beneficiary, which is why they bought Medigap coverage.
Several members have suggested that Medigap policies aren’t responsible for Medicare’s growing costs.
William Schiffbauer, a member of the group and an independent health care attorney who has represented insurers, said the health law requires the group to suggest raising beneficiary cost-sharing in Medigap plans in order to encourage more appropriate use of physicians services, based on evidence published in medical journals. Schiffbauer said that the medical literature reviewed so far does not identify which services are inappropriate and should be discouraged by making them more expensive for patients.
The group is being asked to decide what’s medically necessary — an impossible task, he said.
A review of proposed Medigap changes by the Kaiser Family Foundation in July found that one in five Medigap beneficiaries would face higher out-of-pocket expenses, primarily those with health problems and low incomes. The study also noted that the savings to the Medicare program and Medigap members depend on patients seeking less medical care, including treatment they may really need.
Reducing Medicare spending for the wrong reason – by making it inaccessible – also worries members of the Medigap group, including Ruch.
“There may be seniors who would forego medically necessary care because they can’t afford it – even though they have a Medigap policy,” he said.
http://www.kaiserhealthnews.org/Stories/2011/August/30/Medigap-concerns.aspx
Comment:
By Don McCann, MD
The Medigap working group established by the National Association of Insurance Commissioners (NAIC) has reinforced the view presented in yesterday’s message that we should be very concerned about forcing out-of-pocket cost sharing onto patients.
Sec. 3210 of the Affordable Care Act (ACA) states, “The Secretary shall request the National Association of Insurance Commissioners to review and revise the standards for benefit packages (in Medigap plans) to otherwise update standards to include requirements for nominal cost sharing to encourage the use of appropriate physicians’ services under Part B (of Medicare).”
As stated yesterday, the alleged need for cost sharing is a concept so deeply entrenched within the political and policy communities that a requirement was placed in ACA to mandate the introduction of cost sharing to Medigap plans – plans which have been designed to cover the patients’ exposure to cost sharing. There is something really weird about requiring co-payments for a plan that insures co-payments.
Again, as stated yesterday, cost sharing has only a nominal impact on controlling total health care spending, but it clearly impairs access and imposes financial burdens on those who need care.
As today’s article demonstrates, members of the NAIC working group are appropriately alarmed at the prospect of making recommendations that would impair the ability of Medigap plans to improve access and reduce financial risk. They should be.
Instead of protecting Medigap plans, think what would happen if we were to eliminate the need for Medigap plans by eliminating cost sharing from Medicare – providing first dollar coverage as is commonplace in other nations which spend far less on health care.
Remember that Medigap plans are private health plans with low actuarial values that burn up too much of the premiums for their own administrative purposes and profits. Also they place an additional administrative burden on the providers who must deal with two payers – Medicare and the private Medigap plans.
When we speak of an improved Medicare-for-all, one of the improvements would be to eliminate cost sharing. We would have better access, less burden on people who need care, and at a negligible cost for this particular benefit alone. These costs would be more than offset with the multitude of other savings that would be made possible by a single payer Medicare-for-all program.
Of course, we’d have to go back to Congress… (It seems like there’s a flaw in every plan… in this case depending on Congress to do the right thing.)
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For those who didn’t read yesterdays’ crucial message on moral hazard and welfare gain which explains the concerns expressed here, you have another chance by clicking on this link (or at least save it for weekend reading):
https://pnhp.org/news/2011/august/urgent-message-reprising-john-nymans-new-theory-of-moral-hazard