What’s in the wind? There’s serious talk of carrying this “more skin-in-the-game approach” a step further. Under a proposal marketed as “Medicare benefit simplification” and pushed by Connecticut Sen. Joe Lieberman, seniors would pay one so-called “unified deductible” instead of three separate deductibles they now pay for hospital, doctor, and drug coverage. More to the point, Lieberman’s proposal would instead cap all out of pocket spending at $7,500 for low and moderate-income families—meaning such families would pay the first $7,500 of medical expenses. Those with higher incomes—$85,000 and up—would have to pay about $12,500 on their own, before they could collect Medicare benefits.
But the biggest way to make seniors pay more is through a voucher arrangement, and that’s at the core of Ryan’s budget proposals. Vouchers are a way to transform Medicare, a social insurance program, into a privatized system, and giving seniors a lot of “skin in the game.”
Under such an arrangement, the government would give beneficiaries a fixed amount of money each year to buy health insurance in the private market—similar to the way some uninsured people may get subsidies under the Affordable Care Act. If vouchers, sometimes called “premium supports,” are insufficient to buy what the seniors want, they will have to pay the difference out-of-pocket. Over time, Medicare experts believe, the voucher may not keep pace with medical inflation, shrinking in value. In analyzing Ryan’s plan last year, the Congressional Budget Office found that “most elderly people who would be entitled to premium support payments would pay more for their healthcare than they would pay under current the Medicare system.”
To understand exactly how a voucher plan would work and how much seniors will pay on their own, you need details, which are lacking at the moment. Ryan says people currently on Medicare can stay in the traditional program, but the fear is that the healthiest and wealthiest might opt out. If only sick people remain, Medicare could find itself in a what insurers call a “death spiral,” with the people remaining in the program paying ever heavier premiums. But Ryan is a big champion of voucher plans for Medicare, and if the GOP ticket wins, this could move to the top of the agenda. The president is not a fan of vouchers, so this change is unlikely if Obama wins.
MAKING PEOPLE PAY MORE FOR THE BENEFITS THEY HAVE
What’s already happened? A change already in place—called for by the prescription drug law passed in 2003 (under George Bush) and by the ACA, and thus supported by both Democrats and Republicans—requires people with higher incomes to pay more for their Medicare Part B benefits (doctor visits, lab tests, and outpatient hospital services), as well as for their Part D benefits (prescription drugs). The higher premiums now affect those with incomes of $85,000 and up and couples with incomes of $170,000.
What’s in the wind? There’s Beltway talk of requiring people whose incomes are not considered high by today’s standards to pay more. Some proposals call for changing the way the income thresholds for the higher premiums are determined. That would mean people who do not have high incomes now would be considered having high incomes for the purposes of paying more. As I recently explained, about 5 percent of seniors now pay an income-related premium for Part B; by the end of the decade 10 percent will. For drug, or Part D benefits, the proportion of seniors paying higher premiums would grow from 3 percent today to 8 percent by 2019 if these changes are enacted. Look for some politicians from both parties to support this one.
GIVING BENEFITS TO FEWER PEOPLE