Medicare’s benefit package is outdated and fails to provide adequate protections for enrolled seniors and people with disabilities. As a result, approximately 90 percent of Medicare beneficiaries have some source of supplemental insurance to fill in coverage gaps. At the same time, assistance for low-income Medicare beneficiaries is inadequate.
A number of policymakers have recommended improving, simplifying, and modernizing Medicare’s benefit package. Beneficiary advocates have raised concerns about this approach, concerned that beneficiaries would see higher out-of-pocket costs, which may result in barriers to access for low- and middle-income beneficiaries. The Bipartisan Policy Center (BPC) proposal combines a redesign of Medicare’s cost-sharing, reform of supplemental coverage, enhanced low-income assistance, and reduced subsidies for higher-income beneficiaries within the Medicare program. As a result, BPC’s benefit redesign reduces overall costs for beneficiaries, producing savings for the Medicare program and taxpayers, and adopting a modern insurance design that gives beneficiaries, as well as providers, a stake in appropriate utilization. Most importantly, these reforms seek to provide beneficiaries protection against the costs of catastrophic illness through a simpler and more up-to-date benefit structure.