Learning about Premium Support proposed to save Medicare

Posted By on March 4, 2012

We’ve all heard the “kicking the can down the road” metaphor as it relates to those we elect to govern the country and manage our tax contributions (or mismanage as the case may be). I’ve been trying to educate myself on one component my parents and my wife’s parent rely on – Medicare. I suspect that our family is not alone and that someday we all hope Medicare is available as well. leonhardt-graphic-popupFor most seniors, there really is no other healthcare option and they need the quality care Medicare affords them … the key term “afford” … and from what I’m reading, it is something we can’t continue to afford as it exists today.

Only a deceitful politician can justify not changing Medicare for future seniors, as the skyrocketing cost of the millions going onto the Medicare roles is going to cost billions of dollars and going to go on for many more years than ever before. That said, even those who are willing to tackle the issue from the back row, but are keeping their distance from the hornets nest are hesitate to touch healthcare for senior citizens. For those attempting to save the program, it take guts.

To save the program, most are talking about modifying how Medicare will operate “in the future” … for those of us 55 and younger. There really isn’t a feasible way to keep it solvent unchanged (and we all know that). The leading proposal that comes up time and time again by one of the more fiscally minded representatives is that of “Premium Support.” It is being promoted and tweaked by Wisconsin’s Paul Ryan (R) in the House of Representatives and Oregon’s Ron Wyden (D) in the Senate – obviously both know this is going to require bi-partisan support and some compromise.

Fred Barnes (Weekly Standard editor) explains how the plan is suppose to work

Beginning in 2022, it would create a marketplace in which seniors have a fixed amount of money to buy health insurance. The amount of "support" would match the price of the insurance "premium." The poor would get additional support to offset out-of-pocket expenses. The better-off would get less. Payments would be "risk-adjusted" so the sick would be assured of full coverage.

He continues to point out the complications:

Insurers would compete for the business of seniors. There would be three options. One would be coverage at the support level. Another would offer less coverage at a lower price, with the difference rebated to the beneficiary. The third would provide broader coverage at a higher price, requiring the beneficiary to pay the amount above the support level.

That’s the health-care part of premium support. The cost-saving part is simpler. Medicare in its current form is open-ended, its expenditures uncontrolled and unsustainable. With premium support, the cost of Medicare would be capped. Its payment would rise with the rate of inflation or GDP growth, or slightly above.

The salience of premium support doesn’t depend on who wins the White House in November. It is bound to be a major part of budget negotiations. Without it, serious deficit reduction would be almost impossible. With it, a debt crisis like Europe faces today is avoidable.

One of the significant shortcomings is that even in its simplest explanation … it is too complicated for most voters to understand. We’ll see it as cutting care for seniors and making health decisions that much more difficult especially when politicizing of the issue (pushing grandma off a cliff type ads). It is easy to see why more than likely Medicare reform will continue to get pushed to the next congress … the next administration … the next generation … until we are no longer able to pay the bills. Hmm, come to think about it, that’s why we have a $16 Trillion of debt. I wonder if … or more than likely when we’ll hit that Greece type wall?

Pessimism? Maybe. But I’ll keep looking for those with the guts to face this issue … as I’d rather have politicians floating ideas rather than just sitting in the back of the room without raise a hand and badmouthing those with the ideas for political gain.


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