DALLAS (Feb. 4, 2000) — America's seniors could have access to full prescription drug coverage without the government spending an additional dime on a costly new benefit. The solution? Allow the elderly to combine Medicare funds with the money they currently spend on private insurance and pay premiums into a comprehensive private plan instead.
That's the conclusion of a new study prepared for the nonpartisan National Center for Policy Analysis (NCPA) by Milliman & Robertson, Inc., one of the nation's leading actuarial consulting firm on health benefits.
"We have all the money we need for prescription drug coverage; we just need to spend it more wisely," said NCPA President John C. Goodman. "If the elderly were able to put all their health insurance money into one plan, they could have the same coverage most non-elderly citizens have."
Because Medicare coverage is incomplete, seniors are exposed to significant out-of-pocket costs. About 360,000 face expenses in excess of $5,000 every year. To avoid these high costs, most seniors acquire private insurance to fill the gaps in Medicare – either through a former employer (33 percent) or by purchasing Medigap insurance (36 percent). However, economic studies show that the two different types of coverage cause a great deal of waste. Furthermore, drugs are not covered by Medicare nor by many private plans.
According to the study, Medicare will spend about $5,800 on each beneficiary this year. Add to that about $1,611 for the most popular Medigap policy and the combined sum should pay for any of a range of health insurance options.
- With this amount and only another $153 out-of-pocket, seniors could pay premiums for an HMO with comprehensive health coverage, including prescription drugs.
- Seniors who want to exercise more choices should be able to enroll in a fee-for-service plan with a high deductible and a Medical Savings Account – in many cases for a premium that is considerably less than what they currently pay for Medigap. The out-of-pocket cost under these plans could average about $1,200 a year, depending on the degree of managed care – far less than the unlimited exposure most seniors now face.
- In many cases, moving to a private plan would not only provide coverage for prescription drugs, but would also generate considerable financial savings; for example, the average senior who currently has Medigap insurance would save more than $1,000 a year in lower premiums and out-of-pocket costs.