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  • Premium Support Proposals: Key Elements and a Comparison

    A new poll by Reason-Rupe shows that Americans support the structural reform of a premium support model for Medicare.

    The current Medicare program has made $38 trillion of unfunded promises to seniors over the next 75 years, and the Part A trust fund is predicted to be bankrupt as soon as 2024. The gravity of Medicare’s fiscal mess makes reform inevitable.

    With premium support, the government provides a contribution toward the cost of a health plan of the beneficiary’s choosing. Reason states, “For people not yet in the program and under the age of 55 right now, 65 percent of Americans favor changing Medicare into a program that would give recipients a credit that could be used to purchase private health insurance.”

    Premium support proposals have been gaining popularity, even across party lines. There are now five major plans that include premium support for Medicare: (1) The Heritage Foundation’s Saving the American Dream, (2) the fiscal year 2013 House budget resolution (i.e., the Ryan proposal), (3) the Burr–Coburn plan, (4) the Wyden–Ryan plan, and (5) the Domenici–Rivlin proposal.

    In a new paper, Heritage expert Bob Moffit explains that the five major premium support plans may differ in detail, but they all include certain elements that increase consumer choice and competition:

    • Seniors could still enroll in traditional Medicare. The Medicare fee-for-service plan would be transformed into a health care program that would compete with other private plans in the premium support model.
    • The government’s contribution would be market-based. All plans have similar financing: “[T]he government’s contribution to a Medicare enrollee’s coverage would be based on an annual process of (regional and national) competitive bidding among health plans to provide at least the traditional Medicare benefits.”
    • The government’s contribution would target enrollees based on need. Subsidies would be reduced for upper-income enrollees and completely phased out for the wealthiest seniors.
    • The government would ensure consumer protections and oversee competition. As Moffit explains, “A federal agency should enforce uniform rules for health insurance and rules for consumer protection, such as marketing rules and fiscal solvency requirements, and administer a risk-adjustment program.”
    • Improve or create risk-adjustment mechanisms. Moffit says, “With patient choice among a wide array of competing plans, the affordability and continuity of coverage can be disrupted by adverse selection (the concentration of older and sicker beneficiaries in certain plans) thus pushing up costs and driving out plans.” The market should be stabilized by improving or creating risk-adjustment mechanisms.

    Moffit then provides a thorough comparison of each premium support plan, highlighting their commonalities and explaining their differences.

    To read Moffit’s Saving the American Dream: Comparing Medicare Reform Plans, click here.

    Posted in Obamacare [slideshow_deploy]

    4 Responses to Premium Support Proposals: Key Elements and a Comparison

    1. pearlenesilva says:

      If you currently have pre-existing conditions like me that have prevented you from being able to qualify for health insurance for at least six months you will have coverage options under new health care. Check "Penny Health" to find how to get quality insurance for dollars.

      • Bobbie says:

        What does "pre-existing" mean? Sounds like a "target" and trick word that can be compromised for government controlled convenience?

    2. M. Dooling says:

      Face it Washington has spent everything and put us in long term debt. They and certain monetary interest must now find a plan to circumvent pending future debt to the nations seniors. The shame is it has and is being spent on scam disability claims, boards of persons who never paid into nor deserve one cent from the so called trust fund. Washington is like a room full of addicts; They will tell you any lie that you might believe . The best and most positive correction is to simply let people fend for themselves and mind our own business international matters.

    3. Bobbie says:

      you guys it's really scary. It's as if government is taking position to have us killed. My father had a heart attack and was very poorly taken care of. It breaks the heart. The worst of it was when he had to be put on oxygen and when it needed a replacement those in charge replaced it with an empty oxygen tank and if my brother wouldn't have visited him that night, he would've died! There's no excuse for this kind of "mistake." Either intentional or pure incompetence that the government is making sure we get use to.

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