Plans to Curb Medicare Spending Spurred by Federal Deficit Concerns

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Author: Ruskin Booth

With growing concerns about the ever-increasing federal deficit, plans to slow Medicare spending are proliferating. That could mean potential conflicts between seniors' advocates and the budget cutters.

"No one wants to have to increase the cost of health care to Medicare beneficiaries," says Alan Weinstock, an insurance broker at MedicareSupplementPlans.com, "however, the federal budget deficit is now over $1 trillion and the national debt continues to soar. Lawmakers just might agree that Medicare beneficiaries will have to pay a larger share for coverage."

Proposals to Change Medicare Program

In fact, having Medicare beneficiaries pay a larger share of Medicare is just one of the many proposals put forth by various groups. Another idea would be to fundamentally change the program by providing seniors with a set amount of money so that they can buy their own Medicare coverage.

Other ideas presented include setting a budget target for Medicare spending and increasing premiums or beneficiary cost-sharing to limit the growth of the program. Another suggestion is to turn Medicare into a voucher program rather than promising a specific set of benefits. This proposal wouldn't take effect until 2021.

Arguments for and against Proposed Changes to Medicare

There are those who are against changes to Medicare because they contend that the new health care law already includes cost-saving measures, including some directed at Medicare.

Some claim that the proposals that would require seniors to pay more for their Medicare health coverage would only hurt those with lower incomes. "We just don't want to get to the point where we are placing seniors in the position of having to choose between health care and the necessities of life," says Weinstock.

However, proponents argue that changes are necessary. With a budget gap of over $1.3 trillion this year, the deficit is growing out of control.

One of the most controversial suggests proffered is called "premium support." In such a scenario Medicare beneficiaries would get a set amount of money which they could then use to buy health care coverage from the traditional Medicare fee-for-service program or from a group of private plans. Some want to take this idea a step further and completely replace the current Medicare fee-for-service program with one that would provide vouchers that would allow seniors to purchase coverage from private health insurance carriers.

The biggest complaint about the "premium support" and voucher plans are that they take Medicare from being a defined benefit program to a defined contribution program. The end result is that Medicare beneficiaries might wind up with fewer benefits or have to pay higher premiums than they currently do. What supporters of the two plans - premiums or vouchers - suggest is that by limiting the government's contribution, seniors would be forced to be more cost-conscious when choosing their health plan while at the same time they would increase competition between insurance carriers and drive down costs.

The best Medicare Supplemental Insurance is one that provides full security to the people and hence is called Medigap, Medicare supplemental plans should be beneficial for the people.