Official websites use .gov
Secure .gov websites use HTTPS
Adding an out-of-pocket spending limit to traditional Medicare
Adding an out-of-pocket spending limit to traditional Medicare
- Collection:
- Health Policy and Services Research
- Author(s):
- Gangopadhyaya, Anuj, author
Holahan, John, author
Garrett, Bowen, author
Shartzer, Adele, author - Contributor(s):
- Robert Wood Johnson Foundation, issuing body.
Urban Institute, issuing body. - Publication:
- Washington, DC : Urban Institute, June 2022
- Language(s):
- English
- Format:
- Text
- Subject(s):
- Health Care Reform -- economics
Health Equity -- economics
Health Expenditures -- legislation & jurisprudence
Health Policy
Medicare -- economics
Social Mobility
United States - Genre(s):
- Technical Report
- Abstract:
- Medicare beneficiaries can receive services through traditional Medicare (TM) or through Medicare Advantage (MA), in which private plans contract with Medicare to provide covered services. Though Medicare Parts A, B, and D benefits are fairly comprehensive, TM enrollees lack a cap on out-of-pocket spending, unlike in most commercial plans (such as employer-based coverage) available to people under age 65. This can result in very high expenses for enrollees with significant health problems. There is, however, an out-of-pocket cap in MA. In 2022, MA enrollees faced maximum caps of $7,550 for innetwork expenses and $11,300 for both in- and out-of-network expenses combined. The out-of-pocket cap in MA and the absence of one in TM may be a factor contributing to the accelerated growth in MA enrollment and the decline in TM enrollment since 2018. The originally proposed Build Back Better Act included a provision capping out-of-pocket spending for prescription drugs for Medicare Part D enrollees at $2,000. 1 This brief analyzes the implications of introducing a $5,000 cap on overall spending by TM enrollees and spending by specific payers, including Medicare, beneficiary out-of-pocket, supplementary coverage plan, and Medicaid spending. Although such a cap would be more ambitious than currently proposed legislation, a uniform cap on cost-sharing expenditures across Parts A, B, and D has been previously discussed as a possible way to reform Medicare and make the program more affordable for enrollees (Cubanski et al. 2016; Davis et al. 2005; Davis, Schoen, and Guterman 2013; Garrett et al. 2019). We also analyze two variations on this policy: One option would combine a $2,000 cap on cost sharing for prescription drugs with the $5,000 cap on all services. The second would set the spending cap at the same amount as the in-network cap on cost sharing in MA. We model these policy options as taking effect in 2023.
- Copyright:
- Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY-NC-DC license. (More information)
- Extent:
- 1 online resource (1 PDF file (18 pages))
- Illustrations:
- Illustrations
- NLM Unique ID:
- 9918486685406676 (See catalog record)
- Permanent Link:
- http://resource.nlm.nih.gov/9918486685406676