3. Change Medicare to a Premium Support Plan
Under this proposal, newly eligible Medicare beneficiaries would receive their health coverage through private insurance plans, not traditional Medicare. Beneficiaries would choose among competing plans and the federal government would contribute a fixed amount to pay the premiums for the private insurance plan. If the private insurance premiums prove to be higher than the federal contribution, seniors would be required to pay the difference. If the government’s annual contribution does not increase by the same amount as the annual cost increase in premiums, beneficiaries would pay the difference, which could get larger over time.
PRO: It makes sense to put Medicare on a long-term budget that reduces the burden on our children and grandchildren while making health care affordable for seniors. The best way to do that is through the idea called “premium support.” This means older people would receive their own share of the Medicare budget to use toward a health insurance plan or with doctors. One way or another, older people will have to pay more for Medicare benefits. Premium support is the best way for Medicare to stay within a budget because it would give older people more control and choice over how that budget is actually spent. (Stuart Butler, Heritage Foundation)
CON: Now is not the time for premium support. All current proposals carry a threat that the vouchers will not keep pace with rising health costs, threatening the elderly and disabled with increased health care costs they cannot afford. Not until and unless we find out how to effectively enroll and pay subsidies to the working age Americans in the health insurance exchanges that are called for by the health reform legislation will it be time to consider whether to take on the much harder job of shifting elderly and disabled Medicare beneficiaries into such new and untested organizations. (Henry J. Aaron, Brookings Institution)