Why more cost-sharing won't slow Medicare spending.
In considering ways to slow the growth in Medicare expenditures, policymakers have concluded that increasing point-of-service cost-sharing for patients will reduce demand for health services. Under the current system, Medicare beneficiaries faced with increased cost-sharing can reduce their demand for services or purchase additional private insurance. New data from the 1991 Medicare Current Beneficiary Survey show that high-income persons protect themselves from out-of-pocket costs by purchasing private supplemental insurance. Surprisingly, the data also reveal that many low-income persons also purchase private insurance, demonstrating that the elderly--whatever their income level--consider supplementary insurance more of a necessity than a luxury. Thus, it appears that increased beneficiary cost-sharing would have a limited effect on Medicare spending growth.
Chulis
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Office of National Health Statistics, Health Care Financing Administration.
Eppig
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Hogan
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Waldo
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Arnett
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D000368:Aged; D017047:Cost Sharing / Q000639:trends*; D003625:Data Collection; D005544:Forecasting; D005102:Health Expenditures / Q000706:statistics & numerical data / Q000639:trends*; D006301:Health Services Needs and Demand / Q000191:economics / Q000639:trends; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D017054:Insurance, Medigap / Q000191:economics / Q000706:statistics & numerical data*; D006278:Medicare / Q000706:statistics & numerical data*; D014481:United States