Kaiser report details Medicare options

The Kaiser Family Foundation has released a massive report on options for stabilizing Medicare, based on a year's review of the literature and interviews and input from dozens of health care experts. They came up with 150 cost cutting possibilities in the 206 page report in five sections: "Medicare eligibility, beneficiary costs, and program financing; Medicare payments to providers and plans; delivery system reform and options that focus on Medicare beneficiaries with high needs; the basic structure of the Medicare program; and Medicare program administration and governance."

The program's costs do have to be reduced and stabilized to make it sustainable. While Medicare costs are growing at slower rate than private insurance costs, they're still rising.

But the options for getting there, as this report shows, are many and varied. The 150 recommendations aren't all-inclusive, for instance, lowering the age of eligibility to open the program up to a younger, healthier premium-paying population wasn't considered. But there's a ton of good stuff here nonetheless, to be mined over the coming weeks as Medicare reform plans are floated.

Here, though, is the key takeaway that should inform the basis of the Medicare solution discussion.

Medicare cost sharing is relatively high and, unlike most private health insurance policies, Medicare does not place an annual limit on the costs that people with Medicare pay out of their own pockets. Many Medicare beneficiaries have supplemental coverage to help pay for these costs, but with half of beneficiaries having an annual income of $22,500 or less in 2012, out-of-pocket spending represents a considerable financial burden for many people with Medicare.Cost sharing and premiums for Part B and Part D have consumed a larger share of average Social Security benefits over time, rising from 7 percent of the average monthly benefit in 1980 to 26  percent in 2010 (Exhibit I.3). Medicare beneficiaries spend roughly 15 percent of their household budgets on health expenses, including premiums, three times the share that younger households spend on health care costs. Finally, Medicare does not cover costly services that seniors and people with disabilities are likely to need, most notably, long-term services and supports and dental services.

Putting the burden of saving Medicare on the beneficiaries, already paying a significant portion of their incomes on health care, isn't a solution for saving this program, for keeping it's promise to America's seniors and disabled. That basic premise should be the starting point for reforms.