National Bipartisan Commission on the Future of Medicare

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MEMORANDUM

 

TO : Medicare Commission
FROM : Senator John Breaux
DATE : February 23, 1999
SUBJECT : Premium support estimate from the HCFA Actuary

Attached is the estimate from HCFA's Office of the Actuary on the premium support proposal I put forward at the Commission meeting last month. I am pleased that HCFA's actuaries have joined Commission staff in confirming that a premium support model would result in savings to the Medicare program.

The HCFA actuaries have produced estimates under two alternative versions: one assuming a core, standardized benefit package with no more than 10 percent variation and a second option assuming a benefit package with no variation at all. Under the first scenario, HCFA estimates that my proposal would save $347 billion through 2009 and produce savings equivalent to 11.2 percent of what Medicare expenditures otherwise would have been through 2030. If no variation were allowed in the benefit package, the proposal would save $372 billion through 2009 and produce savings equivalent to 11.9 percent of what Medicare expenditures otherwise would have been through 2030. Please note that savings from the income-related premium would be used to pay for enhanced low-income protections, thereby reducing total savings.

I look forward to discussing this and other premium support analyses at tomorrow's meeting.

Package 1--Draft Medicare legislative package introduced by Senator Breaux at January 26 Commission meeting1

Office of the Actuary
February 23, 1999

 

Estimated costs (+) or savings (-) under two alternative versions of Medicare legislative package introduced by Senator Breaux at January 22 Commission Meeting
(Calendar year estimates; amounts in billions)

--Option (1): Limited variation in benefit package--

Notes:
  1. Refer to specification summaries for description of provisions.
  2. Estimates shown for each provision are on a "stand alone" basis, that is, the financial impact of that provision only, relative to present law. Total savings for the package reflect interactions.
  3. "Savings" are defined as either expenditure reductions or increases in premium revenues.
  4. Estimates are preliminary and subject to change pending improved data and more refined methodologies. In particular, estimates of interactions among proposals are very rough.

 

Estimated costs (+) or savings (-) under two alternative versions of Medicare legislative package introduced by Senator Breaux at January 22 Commission Meeting
(Calendar year estimates; amounts in billions)

--Option (2): No variation in benefit package--

Notes:
  1. Refer to specification summaries for description of provisions.
  2. Estimates shown for each provision are on a "stand alone" basis, that is, the financial impact of that provision only, relative to present law. Total savings for the package reflect interactions.
  3. "Savings" are defined as either expenditure reductions or increases in premium revenues.
  4. Estimates are preliminary and subject to change pending improved data and more refined methodologies. In particular, estimates of interactions among proposals are very rough.

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