Health-care costs: Debt talks boost Medicare reform plans
Health-care costs for seniors have been largely picked up by government. But their health-care costs could rise under various Medicare reform plans.
WASHINGTON – The heated debate over the federal deficit has pumped new life into controversial proposals for requiring Americans on Medicare to pay more for their health care, raising the possibility that seniors' medical bills could jump hundreds, or even thousands of dollars.Skip to next paragraph
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It remains unclear if any of the proposals, which congressional Republicans have demanded to cut trillions of dollars from the federal budget, will be enacted this year, given the continued stalemate over government spending.
But the ideas, once considered politically toxic, have gained enough traction that many in Washington expect them to resurface, if not now, then after the 2012 elections.
"Over the long haul, beneficiaries will have to pay more and taxpayers will have to pay more," warned Henry Aaron, a longtime health care expert at the Brookings Institution. "It's just too darn expensive."
That could mean higher co-pays, higher deductibles or higher premiums for many seniors.
Though the elderly are much better off financially than they were when Medicare was enacted, half of seniors subsist on incomes below $22,000 a year.
Raising costs for consumers would also represent a substantial shift in how the federal government has provided health insurance to the elderly for the last half-century.
Since Medicare's creation in 1965, presidents and members of Congress from both parties have largely avoided transferring costs to seniors. Though the program began charging high-income seniors higher Medicare premiums in 2003, Washington leaders have mainly sought to control Medicare costs by regulating what hospitals, doctors and other providers could charge, a strategy employed again in the health overhaul that President Barack Obama signed last year.
Many health care experts believe this can drive improvements in quality and efficiency by rewarding medical providers that get good results and penalizing those that commit costly errors. That could yield savings in the long run.
But with the nation's Medicare tab projected to nearly double over the next decade to almost $1 trillion, pressure is growing to restrain the program's spending more quickly.
That is fueling renewed interest in charging beneficiaries more, a phenomenon that is already happening in the commercial insurance market.
Medicare, which now insures nearly 50 million elderly and disabled Americans, was designed to require enrollees to pay at least some of their own health care bills.
"What many people may not realize is that the Medicare benefit package is not actually very generous," said Jonathan Oberlander, a University of North Carolina health policy professor who has written extensively about the program's history.
On top of standard premiums of more than $141 a month, enrollees must pay a $1,132 deductible for every hospital stay, and hundreds of dollars a day more for long hospital stays.
Medicare beneficiaries are also responsible for 20 percent of the bills for medical equipment such as wheelchairs and non-hospital procedures, such as kidney dialysis, physical therapy or outpatient surgery.
Medicare also doesn't cover long-term care in nursing homes. And unlike many private health plans, Medicare doesn't offer catastrophic protection by capping how much beneficiaries have to pay out of pocket every year.
That can mean substantial health care tabs for some seniors.
Medicare households on average spent $4,620 on health care in 2009, more than twice what non-Medicare households spent, according to the nonprofit Kaiser Family Foundation.
But millions of seniors protect themselves from even higher medical bills by buying supplemental health plans that cover at least some of their out-of-pocket expenses.