A new federal law, which Obama signed on April 16, precludes people with Medicare from buying supplemental insurance that offers first-dollar health care coverage. Requiring people with Medicare to pay the Medicare Part B deductible will impede access to needed care for many of them and is bad public policy.
If Medicare supplemental insurance does not cover the deductible, it forces those who need health care to pay more for their care or to forego it. The cost of the insurance policy should come down a little. But, Medicare becomes more expensive for people who need to see the doctor. The value of having supplemental insurance cover the deductible is that it pools risk; everyone shares in the cost of the deductible regardless of whether they need care, bringing down costs a little for those who need it.
For sure, requiring people with Medicare to pay the Part B deductible (currently $147) themselves will keep some of them from getting health care services they need because of the cost. It will be harder for them to budget for their care and to have predictable out-of-pocket costs. Based on the research, it will no more dissuade them from getting care they don’t need, the purported reason for this proposed change in the law, than it will keep them from getting care they do need.
The new law’s provision prohibiting Medicare supplemental insurers from offering policies with first dollar health care coverage would apply only to people newly eligible for Medicare beginning in 2020. The law discriminates against people buying supplemental coverage in the individual market since people with supplemental coverage from their former employers will still be able to have first-dollar coverage. The law also weakens Medicare by raising premiums for wealthier individuals with Medicare and positioning Medicare as a welfare program rather than a social insurance program.
The law does benefit many people with Medicare in two important ways. It pays for the Qualifying Individuals program that covers the Medicare Part B premium for about 500,000 people with incomes between 120 percent and 135 percent of the Federal Poverty Level ($14,100-$19,100 for individuals). And, it fixes payments to doctors, preventing a 21 percent cut in their fees. A cut that large would likely push many doctors to stop providing care to people with Medicare.
In short, the law–a fix in Medicare payments to doctors, an extension of the Qualifying Individuals program and the Children’s Health Insurance Program–seem to outweigh the risks–a weakening of Medicare through a premium increase to some individuals with high incomes and an end to first-dollar coverage through a Medicare supplemental insurance policy.