Fix Health Care Policy

In recent weeks, liberal politicians, editorialists, and policy analysts have vigorously attacked reform of Medicare based on defined-contribution financing. In fact, this approach to reforming Medicare has a long bipartisan tradition going back to the 1980s and Representatives Richard Gephardt (D–MO) and David Stockman (R–MI). In fact, much of this criticism is distorted, misleading, or just plain wrong.

Here are some articles that set the record straight:

See the full list on The Foundry…

Tags: biased, defined contribution, Medicare, mistruths, myths, premium support system

Recently, economist Paul Krugman derided the premium support plan to reform Medicare:

Still, wouldn’t private insurers reduce costs through the magic of the marketplace? No. All, and I mean all, the evidence says that public systems like Medicare and Medicaid, which have less bureaucracy than private insurers (if you can’t believe this, you’ve never had to deal with an insurance company) and greater bargaining power, are better than the private sector at controlling costs.

Of course, Medicare has been shown to be “efficient” enough to lose more money to fraud than private insurance. Peter Suderman of Reason magazine recently pointed out a number of studies suggesting that the private sector can effectively control costs in health care. One notable study recognizes that private plans do have the potential to control costs better than the government, as illustrated by Medicare Advantage’s success in constraining costs compared to traditional Medicare.

Read the rest on The Foundry…

Tags: controlling costs, defined contribution, guaranteed benefits, Medicare, Medicare Advantage, more competition, premium support, private plans

Quick quiz: Who said this about Medicare? “With an aging population and rising health care costs, we are spending too fast to sustain the program. And if we don’t gradually reform the system while protecting current beneficiaries, it won’t be there when future retirees need it. We have to reform Medicare to strengthen it.”

It wasn’t Representative Paul Ryan (R-WI), Mitt Romney’s new running mate, who has been vocal about the need for Medicare reform. It was President Barack Obama, just last year.

As the debate reignites over the government’s health care plan for seniors, which has a long-term unfunded liability of nearly $37 trillion, two things are important to remember:

1. Obamacare has already “ended Medicare as we know it.”

2. There is bipartisan consensus for moving Medicare toward a premium support model, meaning that the government would make a fixed contribution toward each enrollee’s plan, but the enrollee would have the freedom to choose which health care plan he or she wants.

Read the rest on The Foundry…

Tags: bipartisan consensus, defined contribution, Medicare, ObamaCare, premium support

The House Ways and Means Subcommittee on Health held a hearing last Friday to discuss the bipartisan effort behind competing premium support plans. These plans would restructure traditional Medicare and guarantee its fiscal stability in the future.

As Chairman Wally Herger (R–CA) said:

Unless Congress acts, the Medicare program that seniors and people with disabilities rely on will go bankrupt in just a few short years.… The premium support model holds promise to place Medicare on sound financial footing while transforming and modernizing the program to provide greater choice for beneficiaries.

In premium support, beneficiaries receive a defined contribution from the government toward a health plan of their choosing. This financing change—already the method for Medicare Part D drug coverage—would stimulate intense competition and lower costs and improve quality.

(Read the rest on The Foundry…)

Tags: bipartisan, defined contribution, Medicare premium support

Congressman Paul Ryan (R–WI) and Senator Ron Wyden (D–OR) have proposed a new bipartisan framework for structural Medicare reform. It continues the conversation with the American people on a solution to save the popular but financially troubled entitlement program.

While there are differences between the proposal and the Heritage plan outlined in Saving the American Dream, and while their proposal does not go as far or as fast as it should in changing the massive entitlement program, it would establish a premium-support system of financing for Medicare, a variant of a defined contribution toward the health care plans chosen by retirees. This policy is central to the transformation of Medicare into a consumer-based system relying on competition rather than bureaucratic fiat.

Also, similar to the Heritage proposal, government payment for health coverage would be based on competitive bidding among health plans, and Medicare would be put on a budget. This is a crucial improvement in the functioning of the program, because pricing would be determined by market competition rather than by Washington bureaucrats.  (Read the rest on The Foundry…)

Tags: competition, consumer-based health care, defined contribution, Medicare, premium support, Rep. Paul Ryan, Saving the American Dream, Sen. Ron Wyden

Conservatives, including The Heritage Foundation, support reforming Medicare to provide seniors with a defined contribution to apply to the health care plan of their choice. This approach would address the program’s insolvency, and it is superior to other options—including the President’s plan to allow an unelected board of officials to ratchet down spending—because it would allow consumer choice to catalyze patient-centered innovations and better value in the health care system.

Among the straw man arguments liberals have made against this “premium-support” model is the claim that it would be too confusing for seniors to act as cost-conscious, savvy consumers in a controlled marketplace. But choice is nothing new in Medicare.   (Read the rest on The Foundry…)

Tags: cost-conscious, defined contribution, Medicare, premium support, Seniors, straw man