Policy Documents

Double Coverage: How It Drives Up Medicare Costs for Patients and Taxpayers

Robert E. Moffit –
June 4, 2013

In this Backgrounder, the author writes that traditional Medicare’s cost-sharing structure has remained virtually unchanged since 1965, and seniors face unlimited out-of-pocket costs. In sharp contrast to private insurance, the greater Medicare patients’ medical needs and the longer the duration of their care, the more they pay. Structurally, traditional Medicare is not only generating excessive costs for seniors and taxpayers alike, it is also failing as a health insurance program. While a Medicare defined-contribution (“premium support”) system of financing would vastly improve the program—enabling seniors to choose fully integrated health plans—Congress can make short-term changes that would not only reduce Medicare’s excess costs, but would also lay the groundwork for comprehensive market-based reform. One such change would be rationalizing cost sharing in Medicare Parts A and B.