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NJ Daily

New Language for Old Ideas in GOP Medicare Proposals

Hatch: New nomenclature.(AP Photo/J. Scott Applewhite)()

photo of Margot Sanger-Katz
February 14, 2013

In the months leading up to last November’s elections, politicians were engaged in a linguistic war over how to describe Republican Medicare-reform plans.

Democrats, eager to demonize the partial privatization favored by GOP presidential nominee Mitt Romney and his running mate Rep. Paul Ryan, R-Wis., repeated the word “voucher” over and over. Republicans kept responding that their plan called for “premium support,” not vouchers.

Since the election, there’s been another linguistic shift. Three major Republican Medicare-reform proposals have surfaced in Congress. All of them share the basic structure of a “premium-support” system. But none are going by that name. The new preferred nomenclature: “competitive bidding.”


Years of testing have shown that Americans like “choice” and “competition.” Many associate “premium” with something high-end, like a premium car.

“We’re moving the term from premium support—which no one understands what that means, [among] at least the American people—to something they can understand,” said former Rep. Wally Herger, R-Calif., who introduced a Medicare reform bill just before leaving office at the end of the last Congress.

The term premium support originated in a 1995 paper by economists Robert Reischauer and Henry Aaron. Their idea was to open a marketplace of competing private health plans alongside the traditional Medicare program. Plans would submit bids for premiums they would accept to cover Medicare benefits, and seniors would get a fixed subsidy, linked to one of the bids.

Herger’s plan shares that basic structure, as does legislation introduced late last year by Sen. Bob Corker, R-Tenn. Last month, Senate Finance Committee ranking member Orrin Hatch, R-Utah, promoted his own proposal on the Senate floor and in a “Dear Colleague” letter. His too included the basic features of a premium-support system.

All three of those plans made use of the term “competitive bidding,” with “premium support” nowhere to be found.

Pollsters and communications professionals say the shift makes sense. Premium support was an opaque term that had little public resonance. According to polling from the Kaiser Family Foundation, only about 20 percent of those surveyed knew what it meant. But politicians may also have been worried about a potential negative taint the 2012 campaign had placed on their policies.

“I know why they’re searching for a new term,” said William Pierce, a senior director at APCO Worldwide and a former health official in the George W. Bush administration. “It’s because ‘premium support’ has gotten a bad name.”

The postelection competitive-bidding plans also share a common policy difference from the most famous and vilified of the premium-support plans: the Ryan plan in last year’s House Republican budget. That plan would have placed a cap on how quickly insurance subsidies could grow, regardless of how quickly premiums rose. By using historic rates of health inflation, critics were able to calculate a part of the price tag that they said would be shifted to seniors.

The new plans rely exclusively on bidding, without any arbitrary price cap.

Robert Moffit, a senior fellow at the Heritage Foundation who has been advocating for such a system for years, said the name makes no difference, though he said he thought the Obama campaign’s attacks had “scared the hell out of people.” Moffit proposed widespread adoption of the Heritage terminology: “defined contribution.”

“The answer to your question was given by Shakespeare, which is, a rose by any other name smells as sweet,” he said.

Whether the renamed proposal is likely to earn bipartisan support is unclear. In the 1990s, when premium support first emerged, it had boosters on the left. And more recently, premium support plans have enjoyed the endorsements of Alice Rivlin, President Clinton’s former budget director, and Sen. Ron Wyden, D-Ore., who coauthored a white paper with Ryan. Lately, the idea of a major structural change to Medicare has been a nonstarter among most Democrats.

“It gives them a shot, maybe, at creating a bipartisan approach,” said James Capret­ta, a senior fellow at the conservative Ethics and Public Policy Center, who thinks the policy formerly known as premium support will eventually be embraced by both parties. “I don’t think many Democrats are going to be fooled by it.”

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