Improving Health Insurance Coverage and Access to Care
Program on Medicare's Future
Task Force on the Future of Health Insurance
Health Care in New York City Program

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Patient satisfaction with Medicare and employer-sponsored coverage

Davis et al., "Medicare Versus Private Insurance: Rhetoric and Reality," Health Affairs Web Exclusive (October 9, 2002), based on data from The Commonwealth Fund 2001 Health Insurance Survey
With the new Medicare prescription drug benefit's reliance on private health plans, the Fund continues to track Medicare's experience with managed care. A recent update(4) by Marsha Gold and Lori Achman of Mathematica Policy Research showed that beneficiaries' benefits have continued to decline while out-of-pocket costs have grown under the Medicare+Choice program. Average out-of-pocket expenses for all enrollees in Medicare+Choice plans went up by 24 percent in 2002, with those in poorest health projected to spend an average of $4,783 — three times the amount spent by enrollees in good health.
Another report,(5) by Geraldine Dallek and Brian Biles, M.D., of George Washington University, delineated persistent problems in the Medicare+Choice program: lack of health plan participation in some areas, wide variability in premiums and benefits, unstable participation by plans and providers, a confusing benefits structure, signs of deliberate efforts to discourage high-risk beneficiaries from enrolling, and — the bottom line — failure to achieve savings. The findings suggest the need for caution in adopting competition-based approaches for Medicare's future.
Two investigations comparing the performance of the Medicare program with that of private insurance further challenged the notion that privatization would be better for Medicare beneficiaries. According to survey findings reported in a Health Affairs article(6) by Commonwealth Fund president Karen Davis and colleagues, Medicare outperforms private sector plans in terms of patients' satisfaction with quality of care, access to care, and overall insurance ratings. Elderly Medicare beneficiaries rated their health insurance as excellent 2.7 times more often than did enrollees in employer-sponsored plans; they were also less likely to report negative experiences with their insurance plans. In a subsequent article,(7) also published in Health Affairs, Marilyn Moon and colleagues at the Urban Institute analyzed cost trends over a 30-year period, revealing that Medicare's long-term ability to control costs equaled or surpassed that of insurers in the private sector. Medicare's health care spending for a comparable set of benefits grew at an average of 9.6 per year from 1970 to 2000, slower than the 11.1 percent average annual growth found for private health insurers. Moon noted that Medicare's track record as a purchaser able to contain costs is partly a result of its structured payment systems and regulatory controls.
Despite these successes, Medicare's track record does not compare favorably with most modern insurance packages when it comes to its cost-sharing arrangements, which are not designed to help those who need help most — the sickest beneficiaries. Stephanie Maxwell and Urban Institute colleagues Marilyn Moon and Matthew Storeygard identified possible measures to modernize cost-sharing, then simulated their impact on beneficiaries' out-of-pocket spending and overall program expenditures. Their report(8) outlined a range of modest policy options that would reduce financial burdens on the sickest beneficiaries while offering a sounder insurance package. Some measures could be implemented at little or no additional cost to Medicare.
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Geraldine Dallek
Health Policy Consultant