Medicare reform

More on Premium Support

I have a new column up at National Review Online on premium support and controlling health care costs:

There are many reasons to be grateful for the introduction of the Medicare “premium support” plan by Democratic senator Ron Wyden and Republican House Budget Committee chairman Paul Ryan.

In some respects, it represents an improvement over the design of previous versions of premium support. Whereas the original Ryan plan offered seniors a subsidy based on a predetermined formula, the Wyden-Ryan plan relies on competitive bidding for setting the government’s contribution rate. Competitive bidding has the potential to cut costs even more than a predetermined index, because an index tends to lock in today’s wasteful spending. Of course, Wyden-Ryan also very usefully shook up the political debate over premium support, making it much more difficult for Democrats to demonize the concept.

But perhaps the most useful byproduct of the Wyden-Ryan plan has been the clarifying effect it has had on the debate over how to slow the rise of health-care costs.

The full article is available here.

posted by James C. Capretta | 12:45 pm
Tags: Medicare reform, premium support
File As: Health Care

Premium Support in the new Medicare proposal

I have an article up at National Review Online on the new Medicare proposal:

The release of the Medicare-reform proposal cosponsored by Democratic senator Ron Wyden and GOP House Budget Committee Chairman Paul Ryan is a milestone event in the long-running struggle for sensible entitlement reform....

The Wyden-Ryan proposal has ... brought to the surface an important issue of how “premium support” is designed. The version that Ryan released in April 2011, and which passed the House as part of the GOP’s budget plan, would have given seniors a subsidy each year based on a predetermined government formula. The new version would instead set the government contribution based on bids from the competing plans, including the “public option” of traditional “fee for service” Medicare. Setting aside the public option for a moment, moving toward competitive bidding is actually an improvement over the previous version. Most analysts agree that the potential for cost-cutting in Medicare is immense. With a government-set formula for payments, there is a danger that excessive costs get locked into the payment stream. With competitive bidding, there is much greater potential for deep cost-cutting, as plans that find new ways to deliver more for less can attract enrollment with low premiums.

You can read the whole piece here.

posted by James C. Capretta | 4:26 pm
Tags: Medicare reform, premium support
File As: Health Care