Association for Public Policy Analysis & Management

Insurance coverage for Medicare beneficiaries is provided through a complex, fragmented combination of Parts A, B, and D for hospital care, physician services, and prescription drugs, and supplemental private insurance, or Part C for those opting for private plan coverage. Poor beneficiaries can receive supplemental coverage through Medicaid and subsidies for Part D from Medicare; but help is limited above poverty. This patchwork quilt is confusing for beneficiaries, has high administrative costs, and undermines coordination of coverage and care. Most importantly, current policies fail to limit out-of-pocket costs and ensure adequate financial protection for beneficiaries, especially those with low incomes and serious health problems.  This policy brief describes potential reforms that would offer a new integrated Traditional Medicare benefit option and reduce cost-burdens for at-risk low-income beneficiaries. We estimate the number of people who would benefit from illustrative reforms.  We also discuss innovative benefit options to address service needs for complexly ill, frail Medicare patients beyond those covered by Medicare.  The conclusion discusses the potential to enhance Medicare’s role in stimulating and supporting care system innovations in addition to strengthening the program’s ability to provide health and financial security for beneficiaries.