Medicare Chief Warns Paul Ryan’s Voucher Plan Will Shift Costs To Seniors

Rep. Chris Van Hollen (D-MD) launched a pre-emptive strike against the GOP’s forthcoming budget during a committee hearing Tuesday morning, arguing that the Republicans’ plan to transform Medicare through “premium support” would increase costs for seniors. House Budget Committee Chairman Paul Ryan (R-WI) is expected to release the party’s budget sometime next month, which will call for lowering federal health spending by providing seniors with a “premium support” voucher to purchase insurance from an exchange of private health care plans.

During a question and answer session before the house committee, Rick Foster, the program’s chief actuary, confirmed that traditional Medicare is more efficient than private insurers and went on to say that shifting beneficiaries from fee-for-service Medicare into private plans does not lower overall health care costs. “If you’re simply transferring the Medicare beneficiary from the Medicare system into the private health market and the growth in cost in the private health care market is the same or higher than Medicare, they’re not going to contain any less, are they?” Van Hollen asked. “Other things being equal that’s correct,” Foster responded.

Foster also agreed that the GOP’s “premium support” plans are different than the health care policies members of Congress enjoy through the Federal Employees Health Benefits Plan (FEHBP), where each member’s “premium support credit” keeps up with actual health care costs:

VAN HOLLEN: The Federal Employee Health Benefits System (FEHBP) — which every member of Congress is on — is targeted to the market price. But members of Congress are guaranteed a certain share of their premiums will be paid by the federal government, I think that’s right.

FOSTER: That’s correct.

VAN HOLLEN: Ok, and there is a big difference between that — in terms of economic security — between that and a system where the amount of the voucher or premium support (whatever you want to call it) is not linked to the market price, but could be linked to an indicee that does not rise as the same rate cost-wise as the market. Right?

FOSTER: Yes. […]

VAN HOLLEN: In your testimony, you point out that in those cases where your support — the amount of your voucher doesn’t keep pace with the market cost of health care, you may have to choose to either pay a lot more out-of-pocket or not get a health care plan that covers all your needs. Is that correct?

FOSTER: That’s certainly a risk and it’s a pretty important risk.

Watch a compilation of the exchange:

This year’s House budget will likely be similar to Ryan’s proposal from last year, which passed in a vote of 235-193 with no Democrats in support, but may include some changes to the Medicare provisions, akin to the plan Ryan unveiled with Senate Democrat Ron Wyden (D-OR). The proposal may maintain traditional Medicare as an option and grow the premium support credit with the actual cost of the policies. Ryan’s 2011 budget grew the premium support substantially slower than actual health care costs, shifting health care costs to beneficiaries.