Representative Paul Ryan (R-WI) and Senator Ron Wyden (D-OR) today revealed their joint proposal for Medicare reform, a plan that would give beneficiaries a set amount of money to use for purchasing private coverage or enrolling in a traditional Medicare fee-for-service plan.
The lawmakers’ “premium support” (or voucher) plan would begin in 2022 and would allow private insurers to compete against traditional Medicare on an insurance exchange. Each year, plans would participate in a competitive bidding process that would affect the level of the premium subsidy, with seniors receiving an amount equal to the cost of the second-cheapest plan to purchase their insurance. Payments would be adjusted based on an individual’s risk and geography, and plans would be required to cover at least the same benefits as those covered in traditional Medicare.
This is not Representative Ryan’s first foray into the realm of Medicare reform. Earlier this year, the Chair of the House Budget Committee included in his 2012 budget blueprint a Medicare reform plan that would have eliminated Medicare fee-for-service and instituted a voucher system for purchasing private coverage. The Ryan plan has been widely criticized for shifting costs onto seniors. According to an analysis by the Congressional Budget Office, under Ryan’s proposal, seniors would have had to foot the bill for 68% of their Medicare costs by 2030.
Ryan and Wyden claim that their new plan will not place an undue burden on seniors. However, if competition among private plans did not lead to the expected cost decreases, Medicare would be required to spend less in other areas or wealthier seniors could be required to pay more for their care. A white paper with additional details will be released today at the official unveiling of the plan at a Bipartisan Policy Center event.