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Premium Support and the Impact on Medicare Beneficiaries

Under a premium support system, the federal government would replace Medicare beneficiaries’ guaranteed benefit package with a fixed dollar amount or “defined contribution” that beneficiaries would apply toward their health care coverage.  This fact sheet describes the likely impact on Medicare beneficiaries of moving to a premium support system, also known as a defined contribution or voucher system.

  • Premium support could end the promise of a guaranteed set of Medicare benefits
  • Beneficiaries in traditional Medicare could pay more
  • Premium support could shift more costs to beneficiaries over time
  • Most Medicare beneficiaries cannot afford to pay more for their health care
  • Premium support could lead to reduced access and higher risk of catastrophic out-of-pocket medical expenses for Medicare beneficiaries with lower income
  • Premium support assumes that beneficiaries are willing and able to make complex health care coverage decisions