HEARING - U.S. Senate Special Committee on Aging

85
o Eliminate Part A coinsurance and lifetime limits.
o Limit the Part A deductible to two per year.
o Finance these changes with "self supporting" premiums deposited in a new
earmarked Trust Fund.
o Index both this premium and the annual liability cap to future cost increases.
This proposal is identical to HHS Secretary Bowen's proposal except that the S. 210
program would be authorized as a "freestanding" program under the Public Health
Service Act, rather than as an integral feature of Medicare Part B. Therefore,
enrollment in the S. 210 program would be entirely voluntary, in contrast to Secretary
Bowen's proposal to tie continued eligibility for the current Part B program to payment
of the new premium for catastrophic coverage.
Private Insurance Protects Most Elderly from Acute-Care Catastrophic Expense
We believe that the private market has functioned well In providing protection against
major financial loss for acute-care expenses of the majority of Medicare beneficiaries.
Most Medicare beneficiaries are protected against excessive out-of-pocket costs for
hospital and physician care by private coverage which supplements Medicare benefits -
Medigap. Overall, 72 percent of the elderly supplement Medicare with private
coverage, according to the Congressional Budget Office. About half of this
supplemental coverage is provided on a group basis - mainly through retirees' former
employers - and about half is purchased individually.
We believe the private Medigap market has functioned well to protect the majority of
the Medicare population from excessive financial liability. An amendment to the Social
Security Act in 1980, often referred to as the Baucus Amendment, established minimum
2