Although President Trump has pledged not to cut Medicare, House Speaker Ryan and others continue to press for fundamental changes to Medicare, including converting it into a premium support system. Under such a system, the government would provide a set, monthly payment on behalf of each eligible person on Medicare to be applied toward the purchase of health insurance, either a private plan or traditional Medicare.
Speaker Ryan and other premium support proponents have said that, under their approach, Medicare would remain essentially the same as it is today for 1) seniors already on Medicare and 2) those over age 55 and thus nearing their retirement. Specifically, Ryan and other proponents would split Medicare into two parts: one for people now over age 55 who would be “grandfathered” into the current Medicare program, and one for younger adults, now 55 or younger, who would get coverage under the new premium support system once they became eligible for Medicare. Those covered under the current Medicare program could switch to the new premium support system if they prefer.
Maintaining the current Medicare system for today’s seniors is smart politics. Medicare is a popular program; the majority of seniors say it works well and want the program to continue as is rather than change into a premium support system. Promising today’s seniors that they can stick with the current Medicare program could help soften the opposition among this powerful voting block. Splitting the system in this way is also practical because it provides a longer lead-time for people younger than age 55 to prepare for this change, and for the Administration to get the new system up and running.
How Would Premium Support Proposals Affect Today’s Seniors?
But would today’s seniors really be unaffected by a transition to a premium support system? In short, no. Once the system is fully implemented, younger, healthier, and lower-cost beneficiaries, those now 55 and younger, would be cut off—at least actuarially—from older, sicker, and more expensive beneficiaries, those now 55 and older. Medicare costs per person in the current system, which would cover the older group of beneficiaries, would rise more rapidly than they do now (see Figure 1). Since Medicare premiums and cost-sharing requirements are tied to average Medicare spending per person, the increased rate of cost growth in the current system would result in higher premiums, deductibles, and cost-sharing for those covered by it: today’s seniors and near-seniors.
The cost increases would affect grandfathered seniors in both traditional Medicare and Medicare Advantage plans. The increases could also lead to premium increases for private insurance that supplements traditional Medicare, such as Medigap, and Medicare prescription drug plans. Premium increases, if relatively steep, could also result in private insurers exiting Medicare markets if their plans were no longer profitable, and such exits could disrupt coverage for older enrollees.
Safeguards For Older Seniors Are Possible But Would Undermine The Cost-Cutting Argument For Premium Support
Lawmakers could take steps to protect older, grandfathered seniors from these cost increases. They could, for example, provide additional premium or cost-sharing subsidies to older seniors who remain covered under the current program. Or they could change the way in which Medicare premiums and copayments are calculated so that they are not directly tied to the growth in Medicare spending per person. Doing so, however, would increase federal spending on Medicare, undermining the primary purpose of many premium support proposals.
Policymakers could also devise strategies to prevent instability and any disruption in coverage that would occur from market exits among insurers selling private plans to today’s seniors. Again however, this could increase federal spending.
Proponents of Medicare premium support say their approach would protect today’s seniors by allowing them to remain in the current program. However, if a new premium support system for Medicare separates younger from older seniors, it runs the risk of rapidly rising premiums and health care costs for today’s seniors, possibly culminating in a “death spiral” for the current Medicare program.
Thus far, there has been little discussion about this risk, or ways to avert it. If Congress decides to press forward on changes to Medicare, this will be one among many issues that warrant serious consideration.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2mF4RK7
No comments:
Post a Comment