Skip to main content

Medicare: Cost Sharing Policies Problematic for Beneficiaries and Program

GAO-01-713T Published: May 09, 2001. Publicly Released: May 09, 2001.
Jump To:
Skip to Highlights

Highlights

Medicare provides valuable and extensive health care coverage for beneficiaries. Nevertheless, significant gaps leave some beneficiaries vulnerable to sizeable financial burdens from out-of-pocket expenses. Medigap is a widely available source of supplemental coverage. This testimony discusses (1) beneficiaries' potential financial liability under Medicare's current benefit structure and cost-sharing requirements, (2) the cost of Medigap policies and the extent to which they provide additional coverage, and (3) concerns that Medigap's so-called "first dollar" coverage undermines the cost control incentives of Medicare's cost-sharing requirements. GAO found that Medicare's benefits package and cost-sharing requirements leave beneficiaries liable for high out-of-pocket costs. Medigap policies pay for some or all Medicare cost-sharing requirements but do not fully protect beneficiaries from potentially significant out-of-pocket costs such as prescription drug coverage. Medigap first-dollar coverage eliminates the ability of Medicare's cost-sharing requirements to promote prudent use of services.

Full Report

Office of Public Affairs

Topics

Cost sharing (finance)DrugsHealth insuranceHealth insurance cost controlInsurance premiumsMedicaidMedicareBeneficiariesDeductibles and CoinsurancePrescription drugs