Speaker Paul Ryan and former HHS Secretary Tom Price, among others, have called for redesigning Medicare from a program that covers all medically necessary services for a fixed premium to one in which people are given an amount of money, “premium support,” that covers some amount of the cost of their health insurance. In a report for the Urban Institute, Robert Berenson and his colleagues explain why premium support would undermine Medicare and potentially drive up health care costs significantly for older adults and people with disabilities.
Medicare today is a defined benefit program. You are covered for a set array of benefits with fixed out-of-pocket costs at a set premium. You are guaranteed coverage for as much care as you need. In sharp contrast, a defined contribution program, such as a premium support program, would allow the government to limit the amount it contributes to your health care coverage–essentially it would give you a voucher–and shift increasing costs onto you.
The big danger with premium support is that people with costly health care needs who cannot afford to pay for them, go without needed care. Premium support could make it harder for people to afford their health care coverage and out-of-pocket costs. As Berenson and his colleagues explain, with premium support, traditional Medicare would become increasingly unaffordable in many parts of the country. In those areas, more people in relatively good health would enroll in lower cost Medicare Advantage plans and drive up out-of-pocket costs in traditional Medicare in the process.
What Paul Ryan and others fail to mention when they advocate for premium support is that traditional Medicare is far more efficient and offers people far more choice of doctors and hospitals than commercial Medicare Advantage plans. Between 2010 and 2015, Medicare per capita spending grew 1.3 percent as compared to growth in commercial insurance, which grew 3.2 percent.
Today, about a third of people with Medicare are enrolled in Medicare Advantage plans, commercial health plans that contract with the government to deliver Medicare benefits, either because their employers require them to be in a Medicare Advantage plan if they want retiree health benefits or because these commercial health plans appear to be lower cost than traditional Medicare; you can save money if you do not need a lot of health care. You also may have lower costs with Medicare Advantage plans because the government helps to limit the amount these plans pay hospitals and doctors to traditional Medicare rates.
Like other commercial health insurers, Medicare Advantage plans would pay far more than traditional Medicare for provider services and would be far more expensive than traditional Medicare if they did not have government assistance in negotiating their provider rates. Medicare Advantage plans also keep costs down by narrow networks that deter people with costly conditions from enrolling. You will never find a Medicare Advantage plan that promotes its great cancer and stroke care or, for that matter, any care they offer to people with costly and complex conditions.
The commercial health insurance marketplace is in desperate need of government regulation to contain costs and ensure people have access to the care they need. Everyone needs traditional Medicare to bring down their health care costs and give them a wide choice of doctors and hospitals. Leaving the design and cost of health insurance to for-profit insurance companies puts consumers at their mercy.
Commercial insurers have shown that they are not able to contain costs or give people the affordable access to specialty care or the continuity of care that we all need. Moreover, these health plans tend to keep their data proprietary so it is generally hard, if not impossible, to know whether they are delivering value.
It’s time that Congress stepped in, improved Medicare to cover hearing, dental and vision services as well as long-term care, and offered Medicare to everyone in America. If you agree, please sign this petition.
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