Raising premiums, deductibles may help control Medicare spending, experts say

Making seniors pay more for their own Medicare coverage could help cover excess cost growth within the program, according to a report released Tuesday by the National Center for Policy Analysis.

Medicare's contribution to the nation's overall healthcare spending has grown significantly in the program's first 50 years and is expected to continue on that path, according to the NCPA's “How to Pay for Medicare” report. Medicare, which makes up 20% of the $3 trillion spent annually on healthcare, is projected to grow to 6% of gross domestic product over the next 75 years.

While that's mostly good news for long-term care providers, reform is still needed to control costs, the NCPA said. The report outlines four main options for reforming the Medicare program:

  • Raising beneficiary premiums to cover excess cost growth, which would reduce spending growth to 2015 baseline estimates.

  • Raising deductibles and copays in order to limit spending, which would make seniors responsible for rising cost sharing.

  • Constraining the federal payment rate by procedure and service, which would give Medicare payments to beneficiaries instead of providers. Beneficiaries who choose a provider whose chargers were higher than the Medicare payment would be responsible for the difference.

  • Premium support payments that rise at the same rate as per-capita GDP, which offers a “significant” level of individual choice and payment responsibility while limiting the Centers for Medicare & Medicaid's role in the Medicare market.

All four proposals are designed to bring the federal cost growth of Medicare in line with the growth of GDP — a goal that can't be accomplished by simply cutting providers payments, the report's authors note. Instead of widespread provider cuts, “any real solution” must increase the portion of healthcare that is paid for by seniors.

“Reforming Medicare's financing requires the younger population to provide funding for some part of their own retirement healthcare,” the report reads. “But if seniors' individual demand for healthcare continues growing at a rate faster than the ACA's implicit spending cap of per-capita GDP growth, then retirees must gradually bear a greater share of their healthcare consumption.”