HEARING - U.S. Senate Special Committee on Aging

100
Catastrophic Protection within Medicare
Consumers Union strongly supports the concept of
restructuring Medicare to provide the elderly with protection
against catastrophic illness. Secretary Bowen's proposal
regarding catastrophic expenses of the elderly would greatly
benefit those individuals with the most severe medical
expenses. With Medicare paying less than one half of the health
care costs of the elderly, there is clearly a compelling need
for this protection. The cost of catastrophic illness on the
elderly often imposes a serious financial burden. Data
contained in Secretary Bowen's Report indicate that lot of the
elderly have out-of-pocket health care liabilities of $1000 or
more a year. [Bowen Report, p. 26] Additionally, this financial
burden doss not fall according to ability to pay. Expected
out-of-pocket expenditures represent a much larger percent of
income for low-income consumers than of higher income consumers.
[Changing the Structure of Medicare Benefits: Issues and
Options, Congressional Budget Office, March, 1983]
We recognize that a catastrophic insurance program of the
type proposed by Secretary Bowen would displace a portion of
nedigap policies and would force many medigap policies to
restructure their benefits. we welcome this shift to the public
sector, because we believe that an expanded Medicare can serve
consumers far better than the private medigap market.
Medicare's administrative costs are 3% [The Medicare and
Medicaid Data Book, Health Care Financing Administration, 1983,