Changes to Medicare

It looks like Democrats and Republicans have agreed on a package of Medicare reforms that will fix some problems… and push more costs onto seniors. The biggest fix prevents reduced payments to doctors that have been threatened as a result of the Balanced Budget Act passed in late 1990’s.

It has taken 15 years to fix a rule that would have cut doctor payments by 25%.  The “fix” will cost $200 billion over 10 years and Congress hasn’t figured out who will pay for this – except for seniors and disabled people on Medicare.

I read a column in Reuters which said:

There are better places to go for the money, such as allowing Medicare to negotiate drug prices with pharmaceutical companies and tightening up reimbursements to Medicare Advantage plans. But there’s no political will in Congress for that approach.

Changes to Medicare supplements

One area of agreement between Republicans and Democrats is to make changes to Medicare supplements – but not until 2020.   As of 2020, no Medigap plan would cover the Part B deductible, which is currently $147 and will surely be much higher in five years.

There has been talk for some time that Plan F Medigap (think “F as in full coverage”) should be discontinued because having 100% coverage is too good for seniors – and too expensive for Medicare.

With a Plan F Medicare supplement (also called medigap), Medicare pays its part of the bill and the supplement pays the rest, leaving the patient with no co-pays, or 100% coverage.

The theory is that people who have no co-pays will use the system more and thus will cost Medicare more money.  So even though the Medigap plan is paying what Medicare doesn’t pay, the overall charges are more because people see too many doctors, get too many tests, or…… get too much cancer treatment (??).

Exactly how having to pay $147, or $200, before a supplement kicks in is beyond me.  I always figured they would require seniors to pay even more of their medical bills – but the changes proposed don’t seem very drastic.  So I guess that is good news.

Other proposed changes that will raise money for Medicare would be to increase what high-income Medicare beneficiaries pay for Part B.  Most people currently pay $104.90 per month for Medicare Part B, but the premium is higher for people who earn more than $85,000 per year ($170,000 for a couple).

I think I have four clients who fall into this high-income category.

The proposed changes will start in 2018 for those with income between $133,500 and $214,000.

Nancy Pelosi and John Beohner agreed on these changes – which I think are modest.  Now it moves to the Senate where there may be modifications.  The final draft should happen in the next month.



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