Problem: The
Medicare program pays too many small medical bills which the elderly could
easily afford to pay out-of-pocket, but it leaves Medicare beneficiaries exposed
to the risk of a catastrophic medical event – such as Alzheimer's disease,
requiring an expensive nursing home stay.
Solution:
Private insurers should be given the opportunity to repackage Medicare benefits
and compete for customers based on the package of benefits they offer.
A major reason why
Congress was unable to solve the problem of catastrophic coverage for the
elderly was the fact that Medicare is a one- size- fits- all insurance policy
designed for a very diverse group of people. Since the elderly who have few
assets would be on Medicaid anyway, if faced with a catastrophic health care
bill these people are far more interested in coverage for small medical bills.
The elderly who have substantial assets are capable of paying several thousand
dollars of small medical bills each year, but need catastrophic coverage in case
a large medical bill threatens to take all their assets.
Private health insurers should have the opportunity to repackage Medicare
benefits by offering private policies as an alternative to Medicare. The only
required benefit would he catastrophic hospital insurance. If an elderly person
chooses a private insurer, the insurer would receive 95 percent of the
actuarially fair value of Medicare insurance. For example, a private insurer
might offer Medicare beneficiaries a policy with a $2,000 hospital deductible, a
$2,000 physician deductible and a combined deductible of $3,000. In return for
these higher deductibles, the insurer might offer immediate nursing home
coverage for Alzheimer's disease and an expanding nursing home benefit for other
illnesses, depending on the number of years of coverage.
[37]
Under
this proposal, private insurers would have the option of reimbursing hospitals
under Medicare's fixed DRG rates. But they would also have the option of finding
less expensive ways to deliver medical care .
