Tumblr Icon RSS Icon

The Inherent Problems Of Premium Support

By Guest Contributor on December 19, 2011 at 5:00 pm

"The Inherent Problems Of Premium Support"

Share:

google plus icon

Our guest blogger is Topher Spiro, the Managing Director for Health Policy at the Center for American Progress.

Last week Sen. Ron Wyden (D-OR) and Rep. Paul Ryan (R-WI) released the latest proposal to restructure Medicare by providing “premium support” or vouchers to beneficiaries. The plan, as we’ve noted, is problematic. But it also begs the question: can any design of premium support work?

The answer is: probably not.

No version of premium support can achieve real savings without adverse consequences for beneficiaries. Some versions (like Rep. Paul Ryan’s budget) would impose an arbitrary cap on the amount of the voucher, significantly shifting costs to beneficiaries—regardless of their choice of plan. Other versions would make many of those who wish to remain in traditional Medicare pay sharply higher premiums. For these beneficiaries, the choice of traditional Medicare would be a false one in reality.

What’s more, no version of premium support can fully prevent private health insurance plans from attracting healthier beneficiaries, driving up premiums for those who remain in traditional Medicare. And finally, no version of premium support can create a level playing field between private plans and traditional Medicare. As a result of these two factors, more and more beneficiaries would gradually shift to private plans over time.

These risks are too great. Medicare coverage costs less than comparable private coverage, and Medicare is more successful at containing costs per enrollee than private plans. While diluting traditional Medicare would sacrifice these advantages, premium support would provide little benefit in savings because the Affordable Care Act already created a mechanism to limit the growth in Medicare costs.

Find out more about the flaws that are inherent in Medicare premium support here.

‹ PREVIOUS
Video: Wyden/Ryan Would Fare Better Under Republican Administration

NEXT ›
Gingrich Endorses Personal Responsibility In Health Care

By clicking and submitting a comment I acknowledge the ThinkProgress Privacy Policy and agree to the ThinkProgress Terms of Use. I understand that my comments are also being governed by Facebook, Yahoo, AOL, or Hotmail’s Terms of Use and Privacy Policies as applicable, which can be found here.