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Why more cost-sharing won't slow Medicare spending
G S Chulis1, F J Eppig, M O Hogan
1Office of National Health Statistics, Health Care Financing Administration.
The Journal of American Health Policy
|June 7, 1993
Summary
Policymakers aim to slow Medicare spending by increasing patient cost-sharing. However, data show both high- and low-income Medicare beneficiaries purchase supplemental insurance, limiting this strategy's effectiveness.
Area of Science:
- Health economics
- Public policy
- Gerontology
Background:
- Medicare expenditures are rising, prompting policy considerations to control growth.
- Increasing patient point-of-service cost-sharing is a proposed strategy to reduce healthcare demand.
- Current Medicare beneficiaries can either reduce service demand or buy supplemental insurance to manage cost-sharing.
Purpose of the Study:
- To evaluate the impact of increased Medicare beneficiary cost-sharing on healthcare spending.
- To analyze how different income groups within the Medicare population manage out-of-pocket costs.
Main Methods:
- Utilized data from the 1991 Medicare Current Beneficiary Survey.
- Examined purchasing patterns of private supplemental insurance among Medicare beneficiaries across income levels.
Main Results:
- High-income Medicare beneficiaries purchase private supplemental insurance to mitigate out-of-pocket expenses.
- A significant number of low-income Medicare beneficiaries also purchase private supplemental insurance.
- Findings suggest supplementary insurance is viewed as essential by elderly individuals, irrespective of income.
Conclusions:
- Increased cost-sharing for Medicare beneficiaries may have a limited impact on slowing Medicare spending growth.
- The widespread purchase of supplemental insurance by the elderly, regardless of income, indicates a strong demand for cost protection.
- Policy interventions focused solely on increasing beneficiary cost-sharing might not achieve desired reductions in Medicare expenditure growth.