For years, Paul Ryan and other Republican leaders have been touting a change to Medicare in order to safe money and increase benefits to Americans. Democrats have rigidly opposed ANY modifications to the Medicare system.
Republicans now support the idea of “premium support”. In this model, Medicare beneficiaries would purchase insurance from a group of selected plans. These plans would compete directly with traditional insurers such as Humana, United, BCBC and others. The government would contribute the same basic amount to all beneficiaries. If a individual selects a more expensive plan or a plan with a lower deductible, they would pay the difference between the premium they choose and the amount that Medicare provides. If a beneficiary chooses a less expensive option, they would receive a rebate or extra benefits from the government.
What Would This Mean for Medicare?
Competition and free market forces are likely to lower prices overall and improve the services that insurers provide—many private insurers will be competing to insure Medicare beneficiaries. Due to the sheer volume of customers, many private insurers would likely offer cheaper options and work to cash in on a “by volume” business. By providing vouchers for Medicare, Republicans argue that they are providing more choice. Currently, many physicians will not accept Medicare patients due to very poor rates of reimbursement and complex filing requirements. In addition, Medicare can refuse to pay claims for months at a time if they decide to make a rate change or computer system upgrade, for example. I believe that if there is competition among insurers, more physicians may be likely to accept Medicare patients. More physician choices will improve access to care for older Americans. In many geographies across the US, patients now have very limited choice.
What Are Democrats Saying?
Democrats are adamantly opposed to these changes. They argue that by effectively “privatizing” Medicare that individual costs for beneficiaries will rise. They worry that those with multiple chronic medical conditions will be given a fixed amount of healthcare money to work with that they will incur significant “overage” expenses. IN addition, those opposed to the “privatization” model also argue that those who are more affluent and those that have fewer medical problems will be more likely to purchase a private insurance plan with a voucher—leaving those who remain in traditional Medicare plans older, sicker and more expensive. Medicare has long been a traditional Democratic Party campaign issue—often using fear of loss of benefits as a way to sway older voters.
Nearly one third of the 57 million Americans on Medicare are already on private Medicare Advantage plans. However, current Federal law limits the competition among more traditional insurers and there is no bidding against private plans. In the next Congress, I expect we will see more debate on this issue. At the current rate of spending and under its current structure, Medicare is not going to be a viable way to care for Americans. We must do something to modify the plan and provide CHOICE, ACCESS and HIGH QUALITY care to all Medicare eligible Americans. The current system provides physicians with very poor reimbursement and ultimately, many doctors will no longer be able to care for Medicare patients—simply from an economic viability standpoint.