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Once taboo, Medicare cuts gaining traction

Opponents of cuts to entitlements walk to President Barack Obama’s campaign office in Chicago on Friday to deliver signatures of those who refuse to help his campaign if he cuts the programs.

Associated Press

Opponents of cuts to entitlements walk to President Barack Obama’s campaign office in Chicago on Friday to deliver signatures of those who refuse to help his campaign if he cuts the programs.

WASHINGTON — The heated debate over the federal deficit has pumped new life into controversial proposals for requiring Americans on Medicare to pay more for their health care, raising the possibility that seniors' medical bills could jump hundreds, or even thousands of dollars.

It remains unclear whether any of the proposals, which congressional Republicans have demanded to cut trillions of dollars from the federal budget, will be enacted this year, given the continued stalemate over government spending.

But the ideas, once considered politically toxic, have gained enough traction that many in Washington expect them to resurface, if not now, then after the 2012 elections.

"Over the long haul, beneficiaries will have to pay more and taxpayers will have to pay more," warned Henry Aaron, a longtime health care expert at the Brookings Institution. "It's just too darn expensive."

That could mean higher co-pays, higher deductibles or higher premiums for many seniors.

Though the elderly are better off financially than they were when Medicare was enacted, half of seniors subsist on incomes below $22,000 a year.

Raising costs for consumers would also represent a substantial shift in how the federal government has provided health insurance to the elderly for the last half-century.

Since Medicare's creation in 1965, presidents and members of Congress from both parties have largely avoided transferring costs to seniors. Though the program began charging high-income seniors higher Medicare premiums in 2003, Washington leaders have mainly sought to control Medicare costs by regulating what hospitals, doctors and other providers could charge, a strategy employed again in the health overhaul that President Barack Obama signed last year.

Many health care experts believe this can drive improvements in quality and efficiency by rewarding medical providers that get good results and penalizing those that commit costly errors. That could yield savings in the long run.

But with the nation's Medicare tab projected to nearly double over the next decade to almost $1 trillion, pressure is growing to restrain the program's spending more quickly.

Medicare, which now insures nearly 50 million elderly and disabled Americans, was designed to require enrollees to pay at least some of their own health care bills.

"What many people may not realize is that the Medicare benefit package is not actually very generous," said Jonathan Oberlander, a University of North Carolina health policy professor who has written extensively about the program's history.

On top of standard premiums of more than $141 a month, enrollees must pay a $1,132 deductible for every hospital stay, and hundreds of dollars a day more for long hospital stays.

Medicare beneficiaries are also responsible for 20 percent of the bills for medical equipment such as wheelchairs and non-hospital procedures, such as kidney dialysis, physical therapy or outpatient surgery.

Medicare also doesn't cover long-term care in nursing homes. And unlike many private health plans, Medicare doesn't offer catastrophic protection by capping how much beneficiaries have to pay out of pocket every year.

Medicare households on average spent $4,620 on health care in 2009, more than twice what non-Medicare households spent, according to the nonprofit Kaiser Family Foundation.

How much more seniors can afford to pay continues to stoke intense debate, however, especially as Medicare beneficiaries are already projected to spend as much as a quarter of their income on health care in 2020, up from around a sixth now.

House Republicans faced a fierce backlash when they proposed replacing Medicare with a system of vouchers for private insurance. That plan would increase the average senior's medical bill by $6,000 in 2022, according to the Congressional Budget Office.

None of the proposals that have been discussed in the current debt negotiations would shift costs that dramatically. But some could still push up beneficiaries' bills.

Negotiators have considered charging $530 to seniors who buy the most generous Medigap plans. Another proposal to begin charging co-pays for home health services would cost seniors on average $600 more a year in 2013.

Once taboo, Medicare cuts gaining traction 07/16/11 [Last modified: Saturday, July 16, 2011 10:52pm]
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