How Will Medicare Supplement Insurance Face Cost Cuting Efforts?
Healthcare reform is taking aim at cutting waste in Medicare
. Will a new system of competitive bidding preserve Medicare to help seniors for many years to come?This change addresses the cost of common medical equipment and supplies that are used to help seniors get the care they need to stay at home, such as diabetic supplies, oxygen equipment and wheelchairs. According to multiple government reports, the fee-based system used in Medicare to pay for such medical equipment for home use not only inflates costs, but is also subject to fraud.
Cutting Costs Nationwide by One-third
Nationwide, the new bidding system is projected to cut costs by an average 32 percent. It's anticipated that the average savings will be even greater in Florida with a reduction of 34 percent in Central Florida and 35 percent in Southern Florida. These savings can benefit not only seniors, but taxpayers as well. Here's one specific example: In Central Florida, the cost of an oxygen concentrator averages about $173.17 monthly. That could drop to $115 a month, but remember that reductions may vary depending on the kind of equipment or supplies as well as by the location. With greater reductions expected in Florida, the $127.12 average cost of a hospital bed for a month could fall to just $85.79.
Nine Florida metro areas are scheduled to participate in the new bidding system next year, but expansion to many other regions is planned. Once this system spreads across the nation, it's estimated to save approximately $17 billion in a single decade, according to Medicare deputy administrator Jonathan Blum.
Will Medicare Supplement Plans Change?
These and similar savings are anticipated in 2011 unless the industry succeeds in efforts to kill the new bidding system. U.S. Rep. Kendrick Meek is trying to stop the bidding system before it gets started. Despite his support in the House, attempts to block the savings are going nowhere in the Senate.
With such drastic reductions in the cost of medical equipment and supplies, the Medicare Supplement industry may feel governmental and public pressure to either lower premiums or expand benefits. After all, if Medicare supplemental insurance spends less in equipment and supplies costs, why not pass at least some of the savings back to "valued" customers?
And the Winner Is...
Medical equipment and supply companies have already submitted bids, and the Centers for Medicare & Medicaid Services are evaluating which winning bidders will be offered contract proposals. Their final decision will come in September so it may take a while to see whether this system will produce lower premiums or increased benefits among Medicare Supplement Insurance Plans.
There's also the possibility that companies not awarded contracts will succeed in lobbying Congress to thwart the savings. With Medicare already running on empty, that seems like a long shot. Historically, humanity has shown a tendency to ignore reality right up to the bitter end, but with repeated projections that Medicare wasn't sustainable for the baby boomers generation, corporate America may be forced to compromise.
Don't Miss Beneficial Changes
This new bidding system, the coming healthcare reform changes and the aging U.S. population may all have an impact on Medicare Supplement Insurance in coming years. One way to stay on top of this and be sure to get the advantage of lower premiums and/or expanded coverage is to request an annual review of these plans.
Agents offer annual reviews to customers and websites make comparing Medigap Plans quick and easy. In the long run, it pays to shop around when your health makes changing plans simple. Compare new plans as they come to market on a regular basis, and you're more likely to find better values and save more of your hard-earned retirement assets.
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