Proponents believe that premium support offers several advantages for Medicare. …
Proposals to convert Medicare to premium support rely on the concepts of competition, choice, and a defined contribution subsidy. The key elements of such a reform include:
» Competitive bidding. Health plans would submit bids to the federal government establishing their cost of covering a defined set of services for an average beneficiary in each local market.
Think Tank Takes: Consumer choice for Medicare
» Comprehensive coverage. Competing plans would offer at least the basic Medicare benefit, which could be structured like the current Medicare Part A and Part B benefit or modified to better balance health needs and cost. Plans could offer additional benefits as they currently do in Medicare Advantage.
» Defined contribution. The federal subsidy would be determined solely based on plan bids, with no additional payments made to plans in particular markets or for other reasons.
The subsidy could be set to ensure that all beneficiaries have access to at least two plans that do not charge extra premiums, such as the second lowest bid in an area.
The individual’s subsidy would be adjusted to the health risk of the beneficiary, with higher subsidies for those with greater likely need for care. Additional subsidies would be provided to low-income beneficiaries.
» Traditional Medicare. Beneficiaries would have a choice of private plans or traditional Medicare, with further reforms of that program to modernize and simplify the benefit.
» Spending cap. The federal subsidy could be capped to increase annually at a rate predetermined by a formula, such as the growth in GDP plus 0.5 percent, or spending growth could be tied to growth in the bids themselves.
» Regulation. A restructured Medicare remains a federal program with an obligation to protect the interests of beneficiaries and taxpayers without also stifling competition and appropriate plan initiatives to lower cost. – Joseph Antos, American Enterprise Institute
