A new study from the Kaiser Family Foundation finds that the majority of seniors would end up paying more for their plans if the Medicare program were transformed into a “premium support” system, the same model as the proposed Romney/Ryan plan for Medicare. In fact, nearly six in ten seniors are projected to face higher premiums for their Medicare benefits under a plan like the one that the Romney/Ryan ticket endorses.
Under a premium support system, seniors would receive a voucher from the federal government to purchase an insurance plan in the market, choosing between competing private plans and traditional Medicare. Researchers at the Kaiser Family Foundation used 2010 data to project that, if Medicare adopted that approach today, more than half of the seniors who choose to remain under traditional Medicare plans would end up paying higher premiums, with an average annual increase of $720. And according to the Kaiser researchers, the proposed subsidies from the federal government won’t cover the total cost of the benefits that seniors currently receive under Medicare, forcing 25 million seniors to pay more for their current benefits under a premium support plan:
Kaiser points out that their research is not a perfect analysis of the Romney/Ryan plan, since their study projects an immediate implementation of a premium support system while the GOP ticket’s proposed changes to Medicare wouldn’t begin to take effect until 2023. Still, it builds on previous research to provide further confirmation that reforming the Medicare program into a premium support model, rather than its current defined-benefit model, will ultimately negatively impact seniors.
And although the GOP touts the Romney/Ryan plan as a model for encouraging competition within the insurance industry, private insurance providers are likely to simply adjust their business models to focus on picking up the least costly — and therefore healthiest — beneficiaries, leaving sicker seniors in traditional Medicare with the spiraling costs that Kaiser projects. Analysts warn that this strain on Medicare could lead to a “death spiral” that will ultimately collapse the public program.