‘Premium support’ could resurface as a Medicare approach

Critics of the federal health insurance plan for the elderly say the next few months will bring several leverage points that could bring more serious discussions about overhauling the Medicare program.

This week’s fiscal cliff deal, and the compromise on tax increases for wealthy Americans, have been described  as “step one.” Many Republicans and fiscal conservatives of all stripes say “step two” needs to be an agreement on spending cuts, and one of the government’s biggest ticket items is Medicare.

Some of the Medicare overhaul options include changing payment rules for doctors or ratcheting back the benefits promised to seniors.

Another idea is called “premium support,” says health economist Daniel Polsky

Right now, the federal government sets the rules for what kind of health care Medicare members receive. Under premium support, Polsky says, the government would instead offer financial help so senior could buy private health insurance.

“Essentially what that does, it changes the program from an entitlement program,” Polsky said. “Instead, you are entitled to the benefits you can purchase in the open market with the level of support that you qualify for. It changes the very nature of Medicare.”

The “fix” started as an idea from bipartisan policy leaders. It was later embraced by Republican vice presidential candidate Paul Ryan and became a political lightning rod.

“It’s not a good policy from the perspective of equity,” Polsky said. “And whether it would produce savings would depend on the specifics, which have not been provided to date.”

Democrat U.S. Rep. Allyson Schwartz is not a fan of the approach.

“Premium support is dead, it’s not going to come back, at least not in any serious way by policymakers here in Congress,” she said.

Schwartz, who’s from Philadelphia, says she’d rather spend the next few months talking about her plan to save Medicare dollars by giving physicians options in the way they are reimbursed.

“Everything from bundled payments to fully coordinated care. It monitors performance and outcomes and quality and rewards those physicians who contain costs and improve quality,” she said.