Medicare Expansion Proposals


August 5, 2021 9:56 am

Congressional Democrats and the Biden administration are looking to expand Medicare

Senate Democrats are crafting a $3.5 trillion budget proposal that could add dental, vision, and hearing coverage to Medicare or lower the eligibility age

Broader proposals, such as “Medicare for All” or a public option, may be on the backburner

Medicare Covers Different Services Under Several Parts

Part A: Hospital Insurance Inpatient hospital, SNFs, hospice, some home health, Coverage Premium-free for most; out-of-pocket costs vary, no annual catastrophic cap on out-of-pocket costs Payroll tax revenue, goes into Hospital Insurance Trust fund
Part B: Medical Insurance Physician services, outpatient hospital, equipment, drugs furnished by physicians, some home health & preventive services Premiums vary by income; deductible $203 in 2021, 20% coinsurance, no annual catastrophic cap Beneficiary premiums, general revenue into Supplementary Medical Insurance Trust Fund
Part C: Medicare Advantage Private plans similar to Part A & B, may include additional benefit options or drug coverage Premiums and out-of-pocket costs vary by plan; catastrophic cap and generally smaller out-of-pocket costs than Part A or B Funded through both trust funds
Part D: Prescription drugs Outpatient prescriptions drugs through private plans Income-based premiums; standard coverage includes 25% coinsurance, 5% above catastrophic limit Premiums, revenue go into separate SMI fund account

Medicare Covers Roughly 63 Million People

Serves adults 65 and older and those of any age who receive disability benefits

-Parts A and B are considered “original” or “traditional” Medicare; government pays for services directly

-About 60% of beneficiaries are enrolled in Parts A & B

-40% in Medicare Advantage

-Medicare Advantage and Part D are optional; government pays private insurers to provide benefits

88% of beneficiaries had additional coverage in 2016 to cover other services, help offset costs

-Eyeglasses, contact lenses, hearing aids, dentures, aren’t included in traditional Medicare coverage—though Medicare Advantage plans may offer these services at additional cost

-Most long-term care services aren’t covered

-Medigap policies cover Medicare’s out-of-pocket costs

-Some beneficiaries may qualify for Medicaid or have access to employer-based coverage

Democrats Eyeing Medicare Expansion

Progressives want to expand benefits, lower eligibility age in budget reconciliation

-Proposal to add vision, dental, and hearing benefits to Part B could cost $358 billion over a decade, according to CBO estimate of a previous proposal (H.R. 3 in the 116th Congress)

-Lowering eligibility age to 60 could cost $200 billion, according to document on Senate Budget Chairman Bernie Sanders’ (I-Vt.) budget plan

Centrist Democrats pushing for other health-care policies

-Some moderate Democrats prefer encouraging states to expand their Medicaid programs and making Affordable Care Act subsidies permanent

-House Budget Chair John Yarmuth (D-Ky.) said lowering eligibility age “has about 75% support in the caucus”

Medicare Costs Projected to Reach Nearly $1.5T by 2031

Bills Offer Variety of Approaches to Medicare, Health Coverage

President’s budget proposal indicated support for Medicare proposals but didn’t including funding for them

-Said access to dental, vision, and hearing through Medicare should be improved

-Supports option to enroll in Medicare at 60, with financing outside the Medicare trust fund

Democrats reintroduced ‘Medicare for All,’ public option, and buy-in plans

-Rep. Pramila Jayapal (D-Wash.) introduced the “Medicare for All Act” (H.R. 1976) to create a single-payer system that offers universal coverage and no cost-sharing

-Several bills, including “Medicare-X Choice Act” (S. 386, H.R. 1227), would create a public insurance option that individuals could purchase through the ACA health exchanges

-Other measures (S. 1279, H.R. 2881) would allow those ages 50 to 64 to purchase Medicare with separate premiums and financing

Medicare is Third-Largest Source of Health Coverage

Budget Reconciliation Is Key Path Forward for Democrats

Democrats eyeing $3.5 trillion reconciliation bill without support from Republicans

-Senate crafting a budget resolution that would set up reconciliation process

Aim to adopt resolution before August recess; unclear when House would take up measure

Reconciliation bill with proposals from several committees will likely come later in the year

Only a simple majority needed for passage of measure, though provisions must comply with budget rules

-Leaders must chart a path between progressive proposals and moderates in closely divided chambers

Lawmakers have floated Medicare drug price negotiations as a way to offset some of the costs of proposals to expand benefits and coverage

Republicans oppose expanding Medicare, point to trust fund’s approaching insolvency

-Lowering Medicare eligibility “would likely crowd out private coverage without moving the needle on access or affordability,” Finance Committee ranking member Mike Crapo (R-Idaho) wrote June 10

-“Medicare is five short years from going effectively broke,” and Biden’s budget proposal didn’t address the problem, wrote Ways and Means ranking member Kevin Brady (R-Texas) in a June 8 letter