HEARING - U.S. Senate Special Committee on Aging

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(with a $2000 annual limit) for an extra premium of about $5 per
month. This option would displace a portion of sedigap policies
and would force many medigap policies to restructure their
benefits. (When Medicare cost-sharing amounts increase, medigap
policies often increase their coverage to fill in the increased
Medicare gaps; similarly, when Medicare benefits increase,
medigap policies need to adjust their coverage so as not to
duplicate the coverage Medicare provides.) We recognize that
the Report focussed on catastrophic care. However, if the
Report weighed the medigap market problems more heavily, we
believe it would have at least considered a more ambitious
expansion of Part B. What about a federal-government-sponsored
medigap policy? (This would merely expand the Report's
recommendation to cover deductibles, coinsurance, and possibly
drug costs that do not reach the catastrophic level of $2000 per
year). The Harvard Medicare Project recently made a proposal
for a Medicare-sponsored insurance policy. [See Medicare:
Coming of Age -- A Proposal for Reform, March 186, p. 19].
Under this program, marketing and administrative cost savings
would be significant.
To preserve the partnership with the
private sector, the government could have private companies
compete to administer the program.
In order to preserye freedom of choice for consumers, two
levels of Part B voluntary coverage could be established; level
1 would include current plus catastrophic coverage; level 2
would include in addition the expanded medigap coverage. This