“The only way Medicare Advantage plans are competitive with traditional Medicare is that there is a public option and there is price regulation that limits balance billing by non-network providers,” said Dr. Robert Berenson, a co-author of the Health Affairs study and former member of the Medicare Payment Advisory Commission.
Another question is if traditional Medicare had to compete with private plans, how would that change the way the public program pays providers? Would the fee-for-service program have to establish limited networks rather than allowing patients to see any participating provider? Would benefits and premiums vary by local area? What would happen to Medicare's value-based payment demonstrations and Medicare payments to teaching hospitals, rural hospitals and those serving disproportionately poor and uninsured populations?
A few days after the election, Ryan said he wanted to address Medicare's “serious problems” as part of repealing and replacing the ACA. He argued that Medicare's financial problems were caused by the healthcare reform law—though actually the ACA extended the projected solvency of Medicare's Part A Hospital trust fund.
The Trump transition team updated its website after the election to include a new proposal to “modernize Medicare, so that it will be ready for the challenges with the coming retirement of the Baby Boom generation—and beyond.”
And House Budget Committee Chairman Dr. Tom Price—a top contender to become HHS secretary—said that congressional Republicans will push ahead with a Medicare overhaul within the first six to eight months of 2017, and that the Senate will pass it through an expedited budget reconciliation process that avoids a likely Democratic filibuster. A spokesman for the Republican committee members confirmed that Ryan's premium-support model is what Price has in mind.
Drawing on Ryan's white paper, the 2016 Republican Party platform proposes to give Americans now under 55 an “income-adjusted contribution toward a plan of their choice, with catastrophic protection,” which people could apply either to traditional Medicare or the new privatized program when they become eligible for Medicare. This would strengthen patient choice, promote cost-saving competition among providers, and guard against fraud and abuse, the platform says. People now 55 and older could stay in the current Medicare program when they become eligible or choose to participate in the new privatized model, picking a plan on a new Medicare exchange.
According to Ryan's one-page A Better Way outline, the federal contribution for those under 55 would be adjusted when they become eligible based on each beneficiary's health status. Lower-income seniors would receive additional assistance to help cover out-of-pocket costs, and wealthier seniors would pay a higher share of premium costs.
Republicans have been promoting some version of a defined-contribution or voucher system for Medicare since the 1990s as a solution to Medicare's rising costs, which have moderated over the past several years. President Bill Clinton vetoed such legislation in 1995. Ryan has included different versions in a series of House Republican budgets since 2011, softening some of the tougher cost-saving features with each new edition.
But the concept is strongly opposed by Democrats and so far lacks public support. According to a mid-2015 Kaiser Family Foundation survey, 70% of Americans support keeping Medicare as it is today, with only 26% supporting a shift to premium support. Those percentages were similar among Democrats and Republicans. Just 18% of seniors supported turning Medicare into a premium-support program.
While some observers expressed surprise that Republicans want to leap into the perilous politics of Medicare reform after Trump's narrow election victory, Tom Scully, who served as CMS administrator under President George W. Bush, was enthusiastic. “If they're going to reform the ACA and Medicaid, absolutely they'll do premium support, and they should, it's the right thing to do,” he said. “They might get killed, but I don't think they're going to find it that politically difficult.”
Another Republican expert was less certain whether his party would speed ahead on Medicare. “It will come to a point where replacing the ACA is such a big exercise that they'll have to separate the two and figure out which one they want to do first,” said Chris Condeluci, who worked as Senate Finance Committee Republican staffer during the drafting of the ACA. “Ryan is pragmatic and will be willing to table Medicare restructuring if he recognizes it's a longer exercise.”
Meanwhile, Democrats are promising a unified front to block the GOP Medicare plans, recalling their success in stopping Bush's Social Security privatization proposal in 2005. They hope a big win on this issue could help produce Democratic election gains in 2018. Medicare “is a fundamental pillar of health and economic security,” said House Democratic leader Nancy Pelosi. “And we will not go down that path.”