Expanded Medicare law shifts the financial load

The new Medicare law broadens coverage for hospital inpatients, skilled nursing facilities, hospices, and home healthcare, and it adds respite care and outpatient prescriptions to the list of covered services. For the first time, beneficiaries, rather than employers and employees, will pay the full cost of the benefits, with all beneficiaries paying a monthly flat premium and approximately 40 percent paying an income-based supplemental premium. The new law does not expand long-term care coverage significantly. The new financing arrangements reflect a growing sentiment that higher-income elderly and disabled persons should pay part of the cost of their Medicare benefits. It also alleviates the financial hard-ship that an older couple must endure for one spouse to quality for Medicaid nursing home benefits while the other spouse remains in the community. The higher limits on income and resources that a community spouse may retain could adversely affect the development of long-term care insurance, however. Many people who meet the higher-standards may be unwilling to purchase such insurance. The new law may displease some beneficiaries, perhaps causing them to question whether Medicare is becoming a welfare program. Its financing mechanism almost certainly will cause beneficiaries to scrutinize more closely future proposals to improve Medicare benefits.