Pawlenty Offers Partial Medicare Privatization Scheme

Former Minnesota Gov. Tim Pawlenty (R-MN), who has been hesitant to endorse Rep. Paul Ryan’s (R-WI) budget, has released a bare-bones outline of his plan to reform entitlements. Via Ben Smith:

His Medicare plan, he said, “will feature payment reform” and will…give individuals rebates and financial incentives to get care in places that are higher in quality.”

Pawlenty also suggested he’d offer “premium support” — Paul Ryan-style vouchers — to people who aren’t yet enrolled in the program. He suggested, though, that he’d make the Ryan-style plan an option for individuals, not an immediate replacement for the entire program.

His payment reform ideas — which he outlined in greater detail during a recent event in Iowa — are already part of the health care law that he wants to repeal. The premium support proposal reads like a partial privatization scheme that could lead to some adverse selection problems and increase costs for existing beneficiaries. Insurers will recruit healthier applicants to enroll in private insurance, leaving the traditional fee-for-service (FFS) risk pool with a very sick (and costly) profile. Doctors could follow the patients, abandoning FFS’s lower reimbursement rates in favor of private insurance. That would result in provider shortages for the seniors who remain in the traditional program.

All of this looks very similar to the existing Medicare Advantage program in which private insurers are receiving an average of 9 percent — about $8.9 billion — more than traditional Medicare and don’t seem to be saving the program any money (with an estimated 13 percent of the payment going towards profits and administrative costs).


Austin Frakt has some questions for Pawlenty.

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