Health Affairs

Restructuring Medicare

Bethesda, MD -- A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation discusses the debate around proposals to redesign Medicare's cost-sharing policies to reduce federal spending, advance entitlement reform, and simplify benefits. Except for the addition of Medicare Part D in 2006, Medicare's design has remained largely unchanged since its inception in 1965; its complex design makes it very different from other insurance programs available today.

This policy brief examines different proposals to change and streamline the program's deductibles, copays, and limits. In addition to providing a refresher course on Medicare Parts A, B, C, and D, supplemental coverage, and Medigap, the brief's topics include:

• What's the proposal? The brief discusses different proposals from the Congressional Budget Office, Medicare Payment Advisory Commission, Bowles-Simpson Commission, Bipartisan Policy Center's Debt Reduction Task Force, The Commonwealth Fund, and others. Most plans have suggested combining Parts A and B, with a maximum out-of-pocket spending.
  
  
• What's the debate? Supporters of redesign believe that cost sharing under a redesigned program would better align incentives to reduce any overuse of services. Skeptics maintain that the chief goal of most redesign proposals is just to shift the burden of cost sharing to beneficiaries to reduce the federal spending. Critics also fear that the increased burden on beneficiaries could make them less likely to seek much needed care.
  
  
• What's next? President Barack Obama's budget proposal for fiscal year 2014 includes some measures of reform but not a drastic overhaul. Although out-of-pocket spending limits and combined deductibles are something that both sides seem open to at least considering, it is unclear whether they can reach agreement on the specifics of a redesigned program at this time.

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at www.healthaffairs.org. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.