This paper compares Medicare cost-sharing requirements with those of private health plans insuring the non-elderly, and simulates the impact on Federal and beneficiary spending of several modest Medicare cost-sharing changes. Options modeled include stop-loss limits, combined ("Parts A and B") deductibles, and others that mimic a combined deductible within Medicare’s two-part structure. The most costly option modeled is an introduction of a $3,000 cost-sharing limit. This would increase Federal spending by 3 percent; reduce the elderly’s average Medicare cost-sharing by 14 percent; and reduce their actual out-of-pocket spending on average by 2 percent to 8 percent, depending on subsequent Medigap purchasing behavior. A $13.83 monthly increase in the Part B premium or a $200 annual increase in the Part B deductible would offset the additional Federal spending otherwise needed to fund the stop-loss. Assuming the premium or deductible increase, average out-of-pocket spending would decline by 2 percent to 4 percent, depending on Medigap purchasing behavior. (Published by The Commonwealth Fund; 2002 October.)
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