The Sound Bite:

Medicare benefits are too generous. 

Fact or Fiction?

Fiction. Medicare has less benefits than other standard health plans. 

The benefit value of Medicare in 2007, including Medicare Prescription Drug Plans (Part D), was lower than the typical large employer standard benefit option. 

There is evidence of this in the fact that Medicare beneficiaries often chose to supplement their plan with Medicare Supplement Insurance (Medigap), a former employer’s insurance policy or, in the case of low-income beneficiaries, Medicaid.

A 2007 Kaiser Family Foundation study found that the average benefit value of Medicare was $10,610 versus the average preferred provider organization (PPO) benefit value ($12,160) or the standard federal employee health benefits program value ($11,780). Medicare has lower average benefits than private plans because it has higher cost-sharing for inpatient care under Medicare Hospital Insurance (Part A) and less substantial drug coverage under Medicare Prescription Drug Plans (Part D), but has no out-of-pocket limit on services supplied under Medicare Medical Insurance (Part B). 

According to a Kaiser Family Foundation report, the limitless out-of-pocket spending for Part B has a consequence: 1 in 4 Medicare beneficiaries spend 30 percent or more income on medical expenses. That said, a Health Affairs survey from 2002 showed that 62 percent of Medicare beneficiaries were satisfied with their care, while 51 percent of private insurance holders, between 19 and 24 years old, said the same. 

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