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Consumer Advocates Submit Joint Testimony in Opposition to Cost Shifting

Washington, DC — In testimony submitted today to the U.S. House Committee on Ways & Means, California Health Advocates, the Center for Medicare Advocacy, Inc. and the Medicare Rights Center urged lawmakers to reject Medicare redesign proposals that burden older adults and people with disabilities with added health care costs. The joint statement pressed policy makers to adopt cost saving proposals that eliminate wasteful spending on pharmaceutical drugs and private plans and to encourage value-driven payment systems.

In recent years, various plans have been introduced to significantly restructure Medicare’s cost-sharing structure. Common themes among these proposals include combining the Medicare Part A and B deductible, introducing a standardized coinsurance rate, prohibiting first dollar coverage in supplemental Medigap plans and introducing an out-of-pocket spending cap. Some of the most recent redesign concepts are floated as measures to reduce the nation’s deficit.

Joe Baker, President of the Medicare Rights Center, stated, “Our organizations bring firsthand experience serving Medicare beneficiaries to bear in this debate. At first glance, the most discussed Medicare redesign proposals seem harmless, but in reality these plans would redistribute costs to those least able to bear the expense—the poorest and the sickest. Congress has options to reduce Medicare spending without shifting costs to beneficiaries, such as by securing lower drug prices from pharmaceutical manufacturers.”

The submitted testimony cites a recent recommendation by the National Association of Insurance Commissioners (NAIC) to the Obama Administration urging against adding cost sharing to Medigap plans, a widely used form of supplemental coverage to Medicare. After extensive research by a multi-stakeholder subgroup, the NAIC found that additional cost-sharing would pose significant risks to beneficiaries.

Bonnie Burns of California Health Advocates said, “As members of the NAIC subgroup, our organizations found that added cost sharing causes beneficiaries to forego necessary medical care, leading to poorer health outcomes and a greater incidence of emergency room visits and hospitalizations. The NAIC conclusions have direct implications for any proposal to revisit Medicare cost sharing and warrant serious consideration by Congress and the Administration.”

In conclusion, the testimony notes that that any attempt to redesign the Medicare benefit must involve modernization of low-income protections for people with Medicare, namely the Low-Income Subsidy of Medicare Part D and the Medicare Savings Programs. Recommendations offered include increasing income thresholds, eliminating asset tests and fully aligning benefits to allow for cross-deeming.

Judith A. Stein, Executive Director of the Center for Medicare Advocacy, Inc., concluded, “Half of all Medicare beneficiaries live on annual incomes of $22,000 or less, about 200% of the federal poverty level.  Unfortunately, many of these beneficiaries are ineligible for assistance to cover their high health care costs. Any serious attempt to review Medicare cost sharing must strengthen the woefully inadequate benefits currently available to vulnerable older people and people with disabilities.”

Joint Testimony to House Committee on Ways & Means (February 26, 2013)

NAIC Letter to Secretary Kathleen Sebelius (December 19, 2012)

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