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MedPAC Examines How Medicare Premium Support Might Work

By Kerry Young, CQ Roll Call

November 3, 2016 -- Congress's advisers on Medicare are studying what steps would be needed if lawmakers eventually were to shift the giant federal health entitlement program to a so-called premium support model designed to restrain spending. House Republicans have called for making such a change.

The Medicare Payment Advisory Commission (MedPAC) intends to offer lawmakers a review of these options in its June 2017 report, said Eric Rollins, an analyst with the panel. MedPAC will not make formal suggestions to Congress on this topic next year.

"We are not going to recommend for or against premium support," said Paul Ginsburg, a MedPAC member and healthy policy researcher with the Brookings Institution and the University of Southern California.

Ginsburg said he expects Congress at some point to take a serious look at the concept of premium support, although it's currently unlikely to do so at this time. MedPAC's work this year will help prepare lawmakers for eventual discussions of this approach to managing Medicare, he said.

MedPAC intends to outline possible paths and pitfalls toward a more competitive system for administering health benefits for senior citizens and people with disabilities. Traditional fee-for-service Medicare might compete with insurer-run Advantage plans under this system, Rollins said in his briefing. People enrolled in Medicare could avoid higher premiums by seeking out plans with lower costs in this new model, MedPAC's Rollins said.

House Republicans earlier this year called for a move toward premium support as part of their policy paper on health care. In the House GOP model, people on Medicare would be given a choice of insurer-run plans and traditional Medicare starting in 2024. In the paper, House Republicans note that the idea of premium support "is based on a long history of bipartisan reform plans, including the 1999 Breaux-Thomas Commission and the 2010 Domenici-Rivlin Report."

Many Democrats oppose the notion of a move to premium support. At this time, the majority—or about 70 percent—of people enrolled in Medicare have stuck with the fee-for-service program that allows them to visit any physician or provider that accepts Medicare payments, although insurer-run Advantage plans often offer additional benefits such as dental care.

The prospect of more out-of-pocket costs for beneficiaries likely will prove a hurdle for lawmakers who want to shift to premium support. Willis D. Gradison Jr., a MedPAC member who represented an Ohio district in the House from 1975 through 1993, raised this political consideration.

"I don't see how you are going to get anymore from Miami, Florida, to vote for this," said Gradison, citing an area with historically high Medicare costs. Gradison was a member of the Health Subcommittee of the House Ways and Means Committee.

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