Bipartisan Health Options
U.S. Senator Ron Wyden (D-OR) and U.S. Representative Paul Ryan (R-WI) introduced a new proposal that represents a major advance in the effort to build a more secure future for the millions of seniors who rely on Medicare.
The new report from Sen. Wyden and Rep. Ryan, titled “Guaranteed Choices to Strengthen Medicare and Health Security for All: Bipartisan Options for the Future,” outlines a detailed proposal to offer expanded health care choices for older Americans while preserving a traditional Medicare plan as an option. The report also proposes to give Americans under 65 more power and freedom to purchase insurance products they can carry with them into retirement.
Press Release | Wyden-Ryan White Paper | Wyden & Ryan's op-ed in The Wall Street Journal | Wyden's op-ed: Preserving the Medicare Guarantee: Why I've Been Working with Paul Ryan | Frequently Asked Questions | Facts on the Wyden-Ryan Plan
Why do we need Medicare reform?
Unless Congress enacts meaningful Medicare reform in the near future, seniors will be faced with inevitable cost-shifting and eventual benefit cuts until Medicare doesn't look anything like the program does today.
The Congressional Budget Office projects that the Medicare Hospital Trust Fund will be out of money by 2022. And as MedPac explained in its report to Congress last year, Congress's continued inability to come up with a long-term solution for Medicare's reimbursement rate for doctors "is undermining confidence in the Medicare program."
Last year, Congress passed a mere 60-day extension of Medicare physician pay rates in order to avoid asking doctors to swallow a 27.4 percent cut to Medicare physician pay. Although a 'deal' was eventually reached to pay doctors for their services through the end of this year, chronic payment uncertainty and already low reimbursement rates are forcing more and more doctors to consider dropping or limiting the number of Medicare patients they are willing to treat. This is a significant problem given that retiring Baby-Boomers are no longer a theoretical problem. Starting this year, an average of 10,000 Americans will enroll in Medicare each day for the next 20 years.
Why do you say Wyden-Ryan won’t “end Medicare as we know it?” Won’t allowing seniors to choose private health plans be a major change?
First of all, the hallmark of Medicare is not its structure but its guarantee that every American will have high quality health benefits as they get older. And, as has been mentioned before, “Medicare as we know it” will end in 2022 if nothing is done to change its current course. Wyden-Ryan takes action to ensure the Guarantee is preserved.
Contrary to what many believe, every Medicare beneficiary does not currently get their Medicare from the government-administered Medicare insurance plan. Many seniors are already getting their Medicare from private health insurance plans. In Oregon, for example, 56 percent of seniors currently get all or some of their health coverage from a private plan. (15 percent of Oregon seniors purchase private Medigap policies to supplement their traditional Medicare, while 41 percent of Oregon's Medicare beneficiaries are enrolled in private health insurance plans through Medicare Advantage.)Wyden-Ryan would allow seniors to continue to choose between the traditional government-administrated Medicare option and privately administered plans. But instead of maintaining separate programs, Wyden would make those private plans more robust and accountable by forcing them to – for the first time – compete directly with traditional Medicare.
Every private plan that participates in the program would be required to offer health benefits that are AT LEAST as comprehensive as those offered by traditional Medicare and premium support payments would be pegged to the actual cost of health care in a given area, determined by an annual competitive bidding process. Therefore, every senior – whether they get their health insurance from a private plan or the government – will be guaranteed to have the high quality health benefits that has long been Medicare’s promise.
How will Wyden-Ryan ensure that private insurance companies don’t take advantage of seniors?
All participating private plans will be required to offer benefits that are at least as comprehensive as traditional Medicare, with such standards enforced by the Centers for Medicare and Medicaid Services. Any plan that is found taking advantage of seniors or providing inadequate care will be kicked out of the system. Cherry picking healthier seniors will be made unprofitable by robust risk-adjustment, and the Medicare Exchange where plans will seek to offer coverage to seniors, will be policed by the federal government.
It is worth noting that the Medigap law Senator Wyden authored to regulate the private market for Medicare’s supplemental insurance market has been protecting seniors from unscrupulous insurance practices for more than two decades.
How will Wyden-Ryan guarantee that health care will be affordable for all seniors? Isn’t it just a voucher?
A voucher suggests giving seniors a fixed amount of money indexed by a set rate of growth that may/may not have anything to do with the actual growth of health insurance costs. Vouchers would not guarantee that seniors could afford health coverage. (This is what the last year’s House Republican Budget did.)
Wyden-Ryan does not give seniors vouchers. Instead Wyden-Ryan would guarantee that seniors can afford their health insurance premiums by giving seniors premium support payments, the amount of which will be determined by the actual cost of insurance premiums each year.
It would do this through a competitive bidding process in which private insurance plans, wanting to cover Medicare beneficiaries, would submit their benefit packages and the amount they will charge in premiums for the upcoming year. The amount seniors receive in premium support will be determined by either the cost of traditional Medicare premiums or the second cheapest private plan available on the exchange (whichever is cheaper.) This process will take place each year, so if health care costs – and therefore insurance premiums -- grow dramatically from one year to the next, so will the premiums support payments that seniors get to pay for them – thus ensuring that every senior can afford their health insurance premiums.
And again, every private plan in the Medicare exchange will be required to offer benefits that are at least as comprehensive as those offered by traditional Medicare.
Why might a senior pick a private health plan over traditional fee-for-service options?
While most seniors are very happy with the Medicare benefits that they get from the government, just like any health insurance plan, traditional Medicare isn’t perfect and it doesn’t work the same for everyone.
For example, traditional Medicare does not offer catastrophic coverage or dental benefits. To secure those benefits, seniors have to pay for supplemental private insurance. While many private plans offer the option of prescription coverage as part of their insurance packages, under traditional Medicare, seniors have to sign up for those benefits separately. While some seniors like the freedom Medicare gives them to find and choose their own participating doctors, some prefer an integrated private health plan that has identified a network of doctors, testing facilities and pharmacies that work together, collaboratively on the needs of their enrollees.
Just because you are enrolled in Medicare's government-administered option does not mean that you are guaranteed to find a doctor willing to take on new Medicare patients. Seniors in historically-low reimbursement states like Oregon have long had difficulty finding doctors and more and more seniors in other parts of the country are starting to encounter this problem. For this reason, many seniors in Oregon have been grateful to learn that Medicare gave them the option of enrolling in a private plan.
Finally, Medicare's copays and deductibles are not insignificant for a senior living on a fixed income, regardless of plan choice. While Americans under the age of 65 pay an average of 3 percent of their total income on health care, Americans over the age of 65 are spending 16 percent of their total income on their health needs. It is projected that by 2020, that number will reach 26 percent. With nearly 62 percent of seniors living on incomes of less than $30,000 annually, this is particularly worrisome no matter what it says on a beneficiary's Medicare card.
- No changes for those in or near retirement. Americans currently over the age of 55 would see no changes to the structure of their benefits, although they would be free to opt for a private plan once the new Medicare Exchange was up and running in 2022.
- More choices for seniors, including a traditional Medicare plan: Starting in 2022, Medicare would begin offering seniors a choice among Medicare-approved private plans competing alongside a traditional Medicare plan on a Medicare Exchange.
- Premium support ensures affordable coverage: The plan would introduce a “premium support” system that would empower seniors to choose either a traditional Medicare plan or a Medicare-approved private plan.
- More help for those who need it: Low-income seniors who qualify for Medicaid would continue to have Medicaid pay for their out-of-pocket expenses, while other low-income seniors who do not qualify for Medicaid would receive fully funded savings accounts to help offset any increased out-of-pocket costs.
- Less help for those who don’t: Wealthier seniors who need help least would see their assistance reduced.
- Strong consumer protections to safeguard the Medicare guarantee: This reformed Medicare program would include some of the toughest consumer protections in American government:
- All health plans that participate in the Medicare Exchange would be required to offer benefits that are at least the actuarial equivalent of those provided by the traditional Medicare plan.
- Premium-support payments would be risk-adjusted to ensure that those with greater health needs are guaranteed affordable coverage.
- Participating plans cannot refuse coverage based on pre-existing conditions, nor can they charge discriminatory rates based on health status.
- All plans would be overseen by the Centers for Medicare and Medicaid Services (CMS), which would be empowered to review plan benefits and review all marketing materials to ensure transparency and fairness.
- Transparency, Competition Work as Powerful Cost Controls: Program growth would be determined by the competitive bidding process – with transparency, choice and competition forcing providers to reduce costs and improve quality for seniors.
- Transparency: Seniors would receive clear and easy-to-understand information on what plan they are currently enrolled in, the projected cost of that plan, what other plans in their area will be offered, and what the federal premium-support contribution will be.
- Choice: Allowing seniors to choose the plan that works best for them would force providers to compete for the patient’s business, thus curbing the unsustainable rise of health care costs that is threatening both Medicare and the affordability of health care for all.
- Competition: Allowing private plans to compete directly with a traditional Medicare plan would strengthen both by creating new incentives for plans to develop better delivery models and design better ways to care for patients with chronic illnesses.
- Cap on Growth Serves as a Backstop: However, exceeding the cap would not trigger across-the-board bureaucratic cuts or higher premiums. Instead, Congress would be forced to do its job: Determine why the costs exceeded the cap and fix the problem.
- A Proposal to Strengthen the Health Care Marketplace: Just as Medicare reform would give seniors more power to choose, reform is needed to free small businesses and individuals from restrictions that inhibit choice and control in health coverage.
- Any small business with up to 100 workers would be able to offer its employees a free choice option so that they could use the amount that their employer contributes toward their health coverage to purchase their own health insurance.
- The cost of the free choice option would be fully tax deductible to the employer, just like employer-provided health coverage.
- Allowing individuals to keep one insurance product as they transition from their working years into retirement would ease seniors’ transition into Medicare while giving small businesses and their workers more choices and freedom.
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