Health Reform WK-EDGE Report finds need to reduce cost burdens on low-income Medicare beneficiaries
Wednesday, September 26, 2018

Report finds need to reduce cost burdens on low-income Medicare beneficiaries

By Vanessa M. Cross, J.D., LL.M.

An estimated 40 percent of low-income Medicare beneficiaries spend 20 percent or more of their incomes on premiums and health care costs, according to a recent policy report issued by The Commonwealth Fund. According to the report, reducing Medicare premiums and cost-sharing for low-income beneficiaries with incomes up to 150 percent of the federal poverty level (less than $18,000 annually for an individual) would ensure more adequate financial protection where beneficiaries are increasingly suffering from multiple chronic health conditions or beset with high cost medical needs. Using Medicare Part D as a guide and following the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) subsidy provisions, the report proffers three policy proposals to reduce these costs.

Background. In 2016, 56 million people were covered by Medicare. Of these Medicare beneficiaries, 18 million—one-third of the covered population—had incomes below 150 percent of the federal poverty level, with many having limited assets to last their lifetimes, according to the report. Medicare premiums, cost-sharing, benefits gaps, and limited assistance has created financial hardship on low-income Medicare beneficiaries requiring policy changes to reduce this economic burden.

Reduce cost-sharing. One of the three policy options proposed within the report to enhance financial protection of low-income Medicare beneficiaries is to reduce Medicare cost-sharing for hospital, physician, and other services and implement a new limit on out-of-pocket costs for people with incomes up to 150 percent of the federal poverty level. It recommends lowering the hospital deductible to $100 per admission, reducing Medicare Part B cost-sharing to 10 percent from 20 percent, and setting a new annual limit of $2,000 on out-of-pocket costs for Part A and Part B services.

Extend partial premium subsidies. The second policy proposal to alleviate the financial burden to Medicare beneficiaries is to provide full premium help for people with incomes up to 150 percent of the federal poverty level. Medicare Savings Programs currently provide a full Medicare Part B subsidy for beneficiaries with incomes up to 135 percent of poverty. According to the report, the cost-sharing burdens will be reduced for more beneficiaries by using the Part D premium sliding-scale design that phases out premium help in three steps.

Simplify administration. The report also proposes administrative changes to reduce costs. It is recommended that Medicare administer the cost-sharing reduction and sliding-scale premium reduction as it does for low-income assistance in Medicare Part D. Also, the report advocates for streamlining administration by using income alone to determine eligibility. It is recommended that the asset test used by states to determine Medicaid eligibility be eliminated and that Medicare Part D data be drawn upon as a source to determine premium surcharges for high-income beneficiaries.

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