Medicare Essential Plan Worth Considering

A proposed “Medicare Essential” plan that bundles all parts of Medicare services – hospital, clinician, prescription drug, and commonly purchased supplemental coverage – could save the system $180 billion over the next 10 years while improving care for recipients. 

A proposed “Medicare Essential” plan that bundles all parts of Medicare services – hospital, clinician, prescription drug, and commonly purchased supplemental coverage – could save the system $180 billion over the next 10 years while improving care for recipients. 

According to a new report from the Commonwealth Fund and Johns Hopkins Bloomberg School of Public Health, beneficiaries could save $63 billion in direct costs through 2023, with anywhere from 17 to 40 percent lower out-of-pocket expenses than recipients currently lay out. Other savings would come through simplified administrative costs, additional value-based health care decisions, and shifting beneficiaries into patient-centered medical homes and accountable care organizations that meet high standards for care coordination and management of high-risk, high-cost conditions.

 The findings are summarized in the May 2013 issue of Health Affairs. 

photo: Alex Proimos, creative commons lic.

The proposed plan would include a comprehensive set of benefits that includes medications and lower deductibles. According to the report, beneficiaries gain better financial protection, a limit on out-of-pocket spending, and the opportunity for additional savings in premiums, co-pays and out-of-pocket expenses for those who select high-value health care providers and hospitals that are able to provide quality care while keeping costs down. 

Additional enhancements like patient-centered medical homes, stronger support for people with multiple chronic conditions, and help with care coordination among providers would also be available through the lower-cost plans. Since benefits are financed through premiums, the Medicare Essentials would not add to the Federal budget deficit.   

Premiums would be substantially lower than current Medigap and drug coverage payments. The savings come partly from lower administrative costs compared to supplemental coverage purchased in the private insurance market, where administrative costs range from 10 percent to 20 percent, compared to 2 percent for traditional Medicare. That would make total Medicare costs (premiums and cost-shating) lower for beneficiaries and for private employers that opt to purchase this coverage for retirees.

Let’s see: comprehensive benefits, lower premiums, cost-savings, value-added extras, self-funding. This is a plan that deserves serious consideration.