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  • Debunking Medicare Reform Myths

    In a recent paper, Heritage expert Bob Moffit responds to the critics of the premium-support model for Medicare. This type of reform would give seniors a defined government contribution toward the cost of a Medicare plan of their choice. All plans would compete against each other to deliver market-based prices and higher quality care for seniors.

    Here’s a summary of the most common arguments against premium support and why they don’t hold up against facts:

    • “Premium support would destroy traditional Medicare.” Under all of the major premium-support proposals, traditional Medicare is still an option for seniors. Seniors would be given a choice between the fee-for-service Medicare of today or private plans. Medicare would be forced to compete with private plans that have the potential to offer greater benefits at a lower cost.
    • “Premium support would ‘privatize’ Medicare.” Medicare is highly privatized already. Moffit points out that almost all of Medicare is comprised of private agents or institutions that are financed by the public and have to follow public rules. In addition, Medicare Advantage (MA), which currently enrolls 27 percent of all Medicare beneficiaries, is comprised of private health plans that compete against each other, and the Medicare prescription drug benefit is provided through private plans as well.
    • “Premium support would leave Medicare patients at the mercy of rapacious insurance companies.” Moffit writes that “every major premium-support proposal would retain or reinforce insurance rules that prevent ‘cherry picking’ or coverage denials based on health status.”
    • “Premium support would increase beneficiary premiums.” Moffit explains, “A transition from a defined benefit to a defined contribution would not necessarily increase premiums over current projections.” The government contribution toward premiums would be based on competitive bidding among health plans in the market, tying it to real health spending trends.
    • “Traditional Medicare does a better job of controlling costs than MA.” MA plans generally offer much more generous benefit packages than traditional Medicare, but when an MA HMO plan offers only the benefits of traditional Medicare, the plan’s costs come in at or below those of traditional Medicare.
    • “Premium support would end Medicare’s guaranteed benefits.” Moffit explains that “all major versions of premium support guarantee beneficiaries at least the Medicare benefits or the level of benefits they get today with access to new plans with even higher levels of coverage at competitive prices tomorrow.”
    • “Lower-income seniors would be vulnerable to higher out-of-pocket costs.” The Heritage plan, like all other major premium-support plans, would cap out-of-pocket spending for low-income Medicare beneficiaries. For example, as Moffit points out, the premium-support plan in the most recent (fiscal year 2013) House budget resolution would still allow Medicaid to step in and pay the extra out-of-pocket costs for eligible seniors and would provide a fully funded account to help offset increased costs for other low-income beneficiaries who are not eligible for Medicaid.
    • “Seniors would be confused and unable to choose health insurance policies.” To the contrary, millions of seniors pick the doctors who treat them, 90 percent of Medicare beneficiaries are enrolled in supplemental insurance plans of their choice, 27 percent of beneficiaries choose to participate in MA and also pick private plans within MA, and about 60 percent of beneficiaries are enrolled in private prescription drug plans.
    • “Premium support will not work because risk-adjustment mechanisms are imperfect.” They may be imperfect now, but they are clearly improving. Former CBO director Alice Rivlin, coauthor of another major bipartisan premium-support proposal, reports that “risk adjustment techniques improved substantially as relevant data and experience accumulated in MA and other programs, and can be expected to improve more.”

    Premium support is the only reform option that will ensure that Medicare is still around for future generations. It also has the added advantage of a long history of bipartisan support. To read Moffit’s entire paper, click here.

    Posted in Featured [slideshow_deploy]

    9 Responses to Debunking Medicare Reform Myths

    1. Bobbie says:

      I don't get the argument against privatizing medicare? what meaning does "privatize" have when used, to whom is it applied and to what extent regarding anything where unconstitutional government is included? Public and private are not only overlapping but interchanging for confusion purposes. I don't believe these are myths as much as I believe this and worse will happen under obamacare. The most important area of ones life is ones health. What kind of people are democrats to fear such threats of their own plans, if they're so caring? NOT! People know what kind of deceiving mental deficiency we're under. Stop embarrassing yourselves.

      I also wonder what kind of people are so against pro life that they are living hypocrites today?

    2. Hank says:

      Don't forget, the Democrats believe in Obamacare so vehemently, they declined to put themselves under it!

    3. Not a matter of if, but when. No way to save Medicare without meaningful reform.

    4. Lloyd Scallan says:

      It's hard to understand that many Americans still don't accept that Obama and the Dems will stop at nothing to get reelected and continue the socialist takeover of our nation. How many more lies, distortion, and deceptions must Obama and his lackeys produce before we realize that Obama has no honor, no sence of fairness, or moral compass.

    5. muskegonlibertarian says:

      All that is being discussed is how to best pay for a government enforced monopoly over all health care. Why not look at it from the standpoint of elimination of the various aspects of how the government creates a monopoly over health care and then consider elimination of those aspects? Repeal of prescription laws would be a good first step. Without prescription laws most people would be able to take care of most of their health care needs for considerably less money than what it is costing them now. For example, the cost of the most commonly used blood pressure medicine (generic) if purchased at Walmart is $10 for a 90 day supply. Which works out to $40 a year. Controlling your blood pressure reduces your chances of death from heart attack or stroke. Obvious anyone reading this could afford to spend $40 a year to gain these benefits. Unfortunately however thanks to the government, the cost of controlling your blood pressure will likely run 3 to 4 times this.
      Why? Prescription laws. Prescription laws exist to put additional money in doctor's pockets. For a doctor having prescription laws means a considerably higher income than they would enjoy otherwise. Unfortunately what benefits the doctor does the exact opposite for the rest of us in taking money "out" of our own pockets! You won't either major political party advocating elimination of prescription laws because one of the major donors to both parties is the US health care industry. The industry spends about half a billion dollars a year seeing that the government does what it wants. It doesn't care what the people of American want! So far only the Libertarian Party (of which I've been a member since 1983) understands these sort of things. So when you go into the voting booth, you might consider voting for more "freedom", especially if that increase in freedom will also save you hundreds of dollars a year!

    6. fumanchu32 says:

      The DemLibs will espouse Obamacare as the panacea for old folks while demonizing the GOP (especially since the addition of Ryan to the ticket) as the party that wants to shove granny off the cliff. I live in a seniors apartment building; believe me, that message convinces a lot of old folks despite the holes in the reality. You know what they say, perception is reality. Oh, brother!

    7. Jim says:

      It is plain and simple ~ to believe anything our current President says is laughable and unfortunately so sad. I think he's been trying his hardest to make America look and feel like a local community. He was never ready for the "big picture" from the start and his Affordable Health Care Act only began to make matters worst. Speaker Pelosi said ~ let's pass the bill and then we'll read it. Now that many Americans have and are reading it and portions of the bill are becoming REAL, it is extremely unrealistic to fund this entitlement and everything else on the government's plate. The problem is most people who believe in Obmacare just don't want to face up to the new realities. This is not a reality TV show with commercial breaks. The country is bankrupt! A new CEO is needed that can lead the "company" towards a more sound financial basis and keep the "employees" on a true path of fiscal responsibility. Let's rebuild America without lies and distortions.

    8. muskegonlibertarian says:

      The private health insurance industry wants people to make more doctor visits because this allows them to charge higher premiums which for every dollar paid in gives a gross profit of 20%. True, Medicare is run by the federal government, not the most efficient system there is by any means. Still, Medicare delivers more care per dollar than does private insurance. There is "waste" in the system, but private insurance is likely to waste even more!

      The real answer is to get "government out of health care" period!

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