August 27, 2012
Medicare: The Basics on the House-Passed Budget and the President’s Plan
The House-Passed Budget:
When those currently 54 or younger become eligible, Medicare will provide a premium-support payment and a list of guaranteed coverage options – including a traditional fee-for-service option – from which recipients can choose a plan that best suits their needs. Program growth would be determined by a competitive-bidding process – with choice and competition forcing providers to reduce costs and improve quality for seniors. Premium support, competitive bidding, and more assistance for those with lower incomes or greater health care needs will ensure guaranteed affordability for all seniors.
- 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.
- 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.
The President’s Budget:
- Raids Medicare by over $700B to pay for the new health care law.
- Establishes a board of 15 unelected, unaccountable bureaucrats to price control and to ration Medicare for current seniors.
For additional information, contact:
The House Republican Conference Policy Office