Medicare Beneficiaries Require More Financial, Coverage Support

Low income and minority seniors as well as those who are almost of age to become Medicare beneficiaries require greater financial and coverage support from the Medicare program, researchers from CommonWealth Fund asserted in a recent issue brief.

“Although Medicare provides a stable, trusted source of health insurance for older adults and younger people with disabilities, the program’s benefit design can leave beneficiaries exposed to high out-of-pocket costs and premiums,” the researchers noted. “In the current crisis, this is particularly a concern for those without supplemental coverage.”

Older generations are rapidly transitioning to Medicare. According to the national Census Bureau, 10,000 baby boomers turn 65 years old every day and by 2030 every baby boomer in the US will be in the Medicare-eligible bracket. As a result, Medicare spending is expected to rise from 15 percent of federal spending in 2018 to 18 percent by 2029.

Medicare already had gaps in coverage before the pandemic, leaving beneficiaries exposed to higher out-of-pocket healthcare spending. These costs are particularly difficult to manage for low income beneficiaries.

The annual out-of-pocket cost for a dual eligible beneficiary living on less than 150 percent of the poverty line with three or more chronic conditions is $2,243 per year. For those without supplemental coverage, the cost is $3,731.

During the pandemic, this financial burden has only worsened. Pandemic-related unemployment skyrocketed for senior workers in April 2020, particularly among minority workers who already face racial disparities in coverage.

CMS made changes to Medicare in response to the public health emergency, but the CommonWealth Fund researchers found these to be inadequate. They called for additional research on the following seven solutions regarding how Medicare can best support its beneficiaries.

First, they recommended waived cost-sharing. This could produce immediate results by further waiving cost-sharing for Medicare beneficiaries without supplemental insurance. Those in this narrow category of beneficiaries are most likely to need financial aid, as they tend to be lower income.

Second, policymakers could consider expanding the age of eligibility for Medicare to include those ages 55 to 64. These individuals often lose their employment as they approach Medicare eligibility, thereby potentially losing access to their employer-sponsored health plan coverage.

Third, policymakers may consider lowering cost-sharing for Medicare Part A to $100 per year. Along with a $3,500 cap on out-of-pocket costs, this strategy could help keep Medicare spending in a more reasonable range for beneficiaries, costing Medicare only $44 more per beneficiary per month (in 2016 dollars).

Fourth, for all beneficiaries who fall below 150 percent of the poverty line, Medicare should offer more premium and cost-sharing assistance. Over 8 million of those who currently fall in this category do not receive such support, from Medicare or Medicaid.

Fifth, the researchers recommended more research on expanding Medicare benefits, citing the proposed Lower Drug Costs Now Act. The Act added a targeted benefit under Medicare Part B. They recommended covering preventive care and maintenance dental, hearing, and vision benefit to help fill coverage gaps and lower beneficiary spending.

Sixth, Medicare could better support home healthcare and community-based organizations that allow beneficiaries to live more independently at home. The extra support could be linked to the severity and number of a beneficiary’s conditions, to the Part D low-income subsidy, or could give providers more flexibility to extend non-medical benefits, as in Medicare Advantage.

Finally, since payroll tax revenues are used to fund Medicare Part A, funding for this coverage will likely decline due to the pandemic’s economic impact.

To continue funding Medicare Part A, the researchers suggested joining Part A and Part B trust funds and finding new sources of funding. Other options include competitive bidding for Medicare Advantage and site-neutral payments for hospitals.

“While Congress and the administration have adopted measures to financially shore up health care providers, not enough has been done to help Medicare beneficiaries, especially those with low incomes who do not have supplemental coverage,” the researchers emphasized.