Rep. Paul Ryan, R-Wis., and Sen. Ron Wyden, D-Ore., laid out a bipartisan plan for Medicare reform on Thursday that would give seniors a choice of using their premium dollars to purchase private plans, or stay in traditional Medicare.
Ryan proposed a simpler voucher system as part of his budget plan last year. He and Wyden said the key to success in the program will be the power of choice and the market to drive down health care costs by transitioning one large government payer into a series of smaller plans.
"Traditional Medicare will always be part of this program, not something that's going to be shrouded in ambiguity," Wyden said at a breakfast event hosted by the Bipartisan Policy Center. "It will also offer a menu of private sector choices."
People 55 and over now would be unaffected by the proposal. But starting in 2022, it would introduce a “premium support” system that would allow seniors to choose between enrolling in traditional Medicare or in a Medicare-approved private plan.
"Doing it this way harnesses the power of choice and competition," Ryan said.
“Unlike Medicare Advantage, these private plans would compete head-to-head with traditional, fee-for-service Medicare on a federally regulated Medicare exchange,” the lawmakers wrote in a Wall Street Journal commentary.
Unlike similar proposals, including those from presidential candidates Newt Gingrich and Mitt Romney, the Wyden-Ryan plan includes a number of consumer protection provisions designed to ensure that competing plans maintain similar benefits to those of traditional Medicare.
“Participating plans would be forbidden to charge discriminatory premiums and would be required to cover everyone regardless of age, gender or health status," they wrote.
The federal government would contribute more money to plans that cover the sickest seniors, the lawmakers wrote, and the government would continue to help low-income seniors pay for their out-of-pocket expenses, both through Medicaid and, for some, “fully funded savings accounts.”
Ryan and Wyden argued that introducing market competition would “spur a wave of innovation to lower health-care costs and provide higher-quality health care," as private options compete to offer better plans than Medicare.
But just in case innovation doesn't slash costs as expected, the lawmakers also proposed “a cap on the program’s rate of growth.” They promised that efforts to rein in spending would neither result in “bureaucratic cuts” nor in raising premiums for beneficiaries. Rather, Congress would “reduce payments to providers, drug companies or others who may be responsible for escalating costs.”
The plan would also change the way working Americans receive health insurance coverage by introducing a “free choice option” for employees of small businesses. Employees would be able to take the amount of money set aside for health care coverage by their employer and use it to buy an insurance plan of their own choosing.
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