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Medicare: looking for pareto optimal changes.

S Christensen¹

¹Congressional Budget Office, U.S. Congress, Washington, DC 20515.

Inquiry : a Journal of Medical Care Organization, Provision and Financing

|January 1, 1992

Summary

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Medicare beneficiaries face high out-of-pocket costs. Eliminating Medigap could fund a Medicare copayment cap and prescription drug benefit, potentially lowering overall expenses for most enrollees.

Area of Science:

Health Economics
Public Health Policy
Medicare Policy

Background:

Medicare enrollees risk unlimited out-of-pocket expenses for acute care, including prescription drugs and copayments.
Medigap insurance supplements Medicare but increases enrollee premiums and service utilization.

Purpose of the Study:

To identify strategies for limiting Medicare enrollees' acute care cost risks.
To achieve cost limitations without increasing federal spending.

Main Methods:

Analysis of Medicare and Medigap policy impacts on enrollee costs.
Modeling potential savings from Medigap prohibition and benefit restructuring.

Main Results:

Savings from prohibiting Medigap could fund a Medicare copayment cap.

Related Experiment Videos

Restructuring Medicare copayments could finance a prescription drug benefit.

Most enrollees could see reduced combined premium and out-of-pocket costs.

Conclusions:

Eliminating Medigap offers a pathway to cap Medicare copayments and introduce drug benefits.
This restructuring could lower overall costs for the majority of Medicare enrollees.
A significant minority of current Medigap policyholders may face higher expenses.