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February 2, 1999
1. Does the reform proposal provide relief for people in need of prescription drugs, including caps on out-of-pocket prescription drug costs?
The Breaux proposal does not (as of 1/26/99) include prescription drug benefits for Medicare beneficiaries, but it raises the possibility that some drug benefit might be included in the eventual Commission proposal.
2. Does the reform proposal cap beneficiaries' out-of-pocket costs, providing relief for those with the highest health care costs, i.e., the sickest?
The Breaux proposal does not assure that beneficiaries' out-of-pocket costs are capped though it is possible that some plans will offer such caps. Many seniors' out-of-pocket costs could increase since traditional Medicare benefits as defined in law today would not be guaranteed.
3. Does the reform proposal establish a framework (even if not fully funded at first) for addressing the growing problem of long-term care?
The Breaux proposal does not establish a framework for meeting growing long-term care costs.
4. Does the reform proposal establish a framework, a beginning, for addressing the insurance needs of people who are 55-64, before they are eligible for Medicare, and begin to reduce the ranks of uninsured Americans?
Not only does the proposal not establish a framework for addressing the insurance needs of people who are 55 to 64, but it would increase the age of eligibility from 65 to 67, without providing a health insurance plan for people 55 to 67. Millions of people in this age bracket are likely to remain uninsured. Millions of people aged 65 and 66 could become uninsured. Since employed people (and spouses) 65 and 66 are covered first by employer plans, savings for the Medicare budget will be modest.
5. Does the reform proposal put marketplace competition to work on behalf of consumers, or is marketplace competition likely to bolster profits of companies that don't best serve consumers' needs (e.g., by denying needed care, or avoiding enrolling the sickest consumers)?
It is unclear to what degree market competition will benefit beneficiaries under the Breaux proposal, and the proposal contains risks of destructive competition. Since there is not a standard benefit package, HMO's and insurance companies can compete by paring back benefits that may not be very visible. They will compete by seeking good health risks and rely on being a step ahead of the Medicare Board in assessing risks (and undermining risk adjustment). While the proposal includes subsidies that are adjusted by risk (helping to assure that the sickest will be able to get coverage), there are many questions about the authority of the Medicare Board, the benefit structures that will be offered, guarantees for the sickest, how the most vulnerable seniors (who are unable because of infirmity to comparison shop) will fare. It is unclear whether the benefits of market competition will be offset (or more than offset) by the administrative costs, marketing costs and profits that will eat into any savings. (Traditional Medicare has been able to achieve 2 to 3 % administrative costs, much lower than that of private companies). To what extent will the Areformed@ Medicare program be accountable to the public vs. the interests of the HMOs and insurance plans?
6. Does the proposal target relief to moderate income individuals and families - those whose income is too high to qualify for Medicaid yet too low to be able to afford medigap coverage?
The details provided so far do not allow firm conclusions about the impact on low-income and moderate income consumers. One of the examples suggests that low income consumers might have to pay 10 percent of their premiums. Many low-income consumers face no premiums under today's Medicare system. It is possible that the burden on low-income beneficiaries could increase under the Breaux reform plan.
7. Does the reform proposal tap financing sources that appropriately seek revenues from those people who are able to pay?
The reform proposal calls on high income consumers to pay higher premiums than lower income consumers. Consumers Union supports higher premiums for higher income consumers. Senator Breaux suggests that higher income beneficiaries (with income at least five times the poverty level) should pay 25 percent of the average total Part A and Part B Medicare cost, and this seems a reasonable target. (Subsidies for low-income beneficiaries should continue to come from general Medicare revenues, which include a contribution from high-income Medicare beneficiaries.)
8. Does the reform proposal assure that Medicare is universal (for the covered age group) to help achieve the highest quality and highest level of political support?
The Breaux proposal preserves Medicare as a universal system for the covered group.
9. Does the reform proposal spread risks broadly?
The ability of the Breaux proposal to spread risks broadly is not entirely clear. To its credit, it calls for risk adjustment. It is not clear that the government will have the ability to do this accurately in the time frame needed to implement this proposal. There is a serious risk (depending for example on design details and accountability of the Medicare Board to the public) that HMOs and insurance plans will select lower risk beneficiaries (as Medicare HMOs have done) and that risk adjustment will not be adequate to compensate for this.
10. Does the reform proposal assure that beneficiaries have the freedom to choose their own doctor?
Uncertainties of design and implementation make it impossible to predict whether beneficiaries will enjoy they level of freedom of choice of doctor that they now have under traditional Medicare. It is possible that traditional Medicare will be out of reach for many beneficiaries. The plan calls for choice for low-income consumers, but there are many uncertainties about how this will translate into choice of provider and choice of plan for beneficiaries.
What's Good/What's Bad About Senator Breaux' Medicare Proposal
What's good:
What's bad:
Major uncertainties:
