Adding an out-of-pocket cap to Traditional Medicare should be Congress’ top Medicare priority

In a new AARP Public Policy Institute paper, Harriet Komisar and Claire Noel-Miller explain why Traditional Medicare is a critical part of the Medicare program, both for all its enrollees and for the program. If members of Congress recognize the enormous value of Traditional Medicare both to guaranteeing people the care they need and to the public health, their top priority should be adding an out-of-pocket cap to the program. Without that cap, most people with Medicare have no choice but to enroll in Medicare Advantage.

Traditional Medicare is vital for a host of public health reasons, including:

Keeping Medicare spending down, as people in Medicare Advantage cost the Medicare program 14 percent more than people in Traditional Medicare.
Providing data on emerging and persisting health care issues and trends that need addressing. Only traditional Medicare makes timely data available about the care people are receiving, where they are receiving it and when.
Setting provider rates, which corporate insurers in Medicare Advantage use as leverage to negotiate low rates with network providers and which, in turn, keeps Medicare Advantage costs down.
Allowing the government to test new models of care and payment.

Traditional Medicare is also vital to older adults and people with disabilities who cannot get the care they need in Medicare Advantage. These people include people in rural communities who are forced to travel 50-70 miles for their care in Medicare Advantage; people in communities with only poor quality Medicare Advantage plans; people with cancer who cannot get care covered in a cancer center of excellence through a Medicare Advantage plan. People whose physicians leave their Medicare Advantage plan and who want continuity of care from those physicians. And, people who are facing inappropriate delays and denials of care that their treating physicians say they need. ‘

Because Traditional Medicare lacks an out-of-pocket cap, people need supplemental coverage to protect themselves from exorbitant health care costs. People with Medicaid have that coverage. But, for people who don’t have Medicaid, that coverage is too often unaffordable or unavailable. The average cost for supplemental coverage is around $2,500 a year, which is not in the budget of millions of people with Medicare who have annual incomes below $30,000.

Health care affordability is increasingly an issue for people with Medicare. While older adults and people with disabilities need additional benefits, such as dental, vision, hearing and long-term care, the out-of-pocket cap is a foundational benefit. Not only would it protect them from financial risk in Traditional Medicare, with no upfront costs, it would free up funds for them to spend on other benefits.

Prioritizing an out-of-pocket cap in Traditional Medicare offers critical value over adding other important benefits. Adding other benefits would mean paying more money to the insurers offering Medicare Advantage, without guaranteeing everyone with Medicare a meaningful choice between public and private insurance. It would still leave millions of people without the option of Traditional Medicare. It would further weaken Traditional Medicare and endanger its ability to promote the public health and guarantee health care coverage to people for whom Medicare Advantage is not a viable option.

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