This paper analyzes an illustrative range of conservative and expansive options to modernize the Medicare benefit package. The most generous option modeled would eliminate all Medicare deductibles and coinsurance except for a $200 annual Part B deductible, and would introduce a $105 monthly Part B premium to offset the increase otherwise occurring in Federal spending. Assuming the elderly would drop their Medigap policies because of the benefit expansion, this option would reduce average out-of-pocket spending by 24 percent. A Medicare prescription drug benefit similar to many Congressional proposals also was modeled. A mandatory drug benefit with a 50 percent coinsurance requirement, a $2,500 beneficiary cost-sharing limit, and a $26 monthly premium would increase Federal spending by 6 percent in 2000. (Published by the Commonwealth Fund; 2001 May.)
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