Saturday’s New York Times offers a fairly convincing rebuke to the GOP’s push for privatizing Medicare through a premium support program that would give seniors a pre-determined contribution to purchase basic benefits from an exchange of private insurers:
What they do not say is that private plans have long been more costly than traditional Medicare and have shown far less ability to slow spending. Nor do they admit that the most extreme versions of premium support — like the one championed by Representative Paul Ryan — would save the government money mainly by shifting costs to the beneficiaries, who would have to decide whether to forgo treatments or pay more for coverage. [...]
What critics of the current program don’t acknowledge is that over the past four decades, Medicare’s spending per enrollee has risen much more slowly than private insurance premiums — an average of 8.3 percent a year between 1970 and 2009, compared with 9.3 percent for private premiums. And the private Medicare Advantage plans that cover roughly a quarter of all enrollees cost an average of 10 percent more than what the same coverage would cost in traditional Medicare.
The point here isn’t to reject changes to Medicare out of hand, but rather to voice a healthy dose of skepticism about untested reforms that would radically transform one of the nation’s most successful (and popular) government programs. On a purely theoretical level, Austin Frakt and I have discussed some of the potential shortcomings of introducing competitive bidding into the Medicare system here, but the NYT reminds us that we’ll know if that kind of approach can be successful soon enough: “The health care reform law, starting in 2014, will provide premium support subsidies to help people with modest incomes buy private policies on new insurance exchanges. That will be the next big test of whether premium support can work to hold down costs while providing good coverage. With so many uncertainties, it would be rash to weaken or jettison the traditional Medicare program now. The good news is there is some time to get it right.”