Editing Medicare (United States) (section)

==== Premium support ====
Since the mid-1990s, there have been a number of proposals to change Medicare from a publicly run social insurance program with a defined benefit, for which there is no limit to the government's expenses, into a publicly run health plan program that offers "premium support" for enrollees.<ref name="Aaron">Henry Aaron and Robert Reischauer, "The Medicare reform debate: what is the next step?", Health Affairs 1995; 14: 8–30.</ref><ref name="AaronFrakt">{{cite journal |last1=Aaron |first1=Henry |last2=Frakt |first2=Austin |year=2012 |title=Why Now Is Not the Time for Premium Support |journal=The New England Journal of Medicine |volume=366|issue=10|pages=877–79|doi=10.1056/NEJMp1200448 |pmid=22276779|doi-access=free }}</ref> The basic concept behind the proposals is that the government would make a defined contribution, that is a premium support, to the health plan of a Medicare enrollee's choice. Sponsors would compete to provide Medicare benefits and this competition would set the level of fixed contribution. Additionally, enrollees would be able to purchase greater coverage by paying more in addition to the fixed government contribution. Conversely, enrollees could choose lower cost coverage and keep the difference between their coverage costs and the fixed government contribution.<ref name="Moffit">{{cite web |url=http://www.heritage.org/research/lecture/2012/08/premium-support-medicares-future-and-its-critics#_ftn8 |archive-url=https://archive.today/20130414235834/http://www.heritage.org/research/lecture/2012/08/premium-support-medicares-future-and-its-critics%23_ftn8 |url-status=unfit |archive-date=April 14, 2013 |title=Premium Support: Medicare's Future and its Critics |last=Moffit |first=Robert |date=August 7, 2012 |work=heritage.org |publisher=The Heritage Foundation |access-date=September 7, 2012}}</ref><ref name="Moon">{{cite web |url=http://www.urban.org/uploadedpdf/309232_medicare_comp.pdf |title=Can Competition Improve Medicare? A Look at Premium Support |last=Moon |first=Marilyn |date=September 1999 |work=urban.org |publisher=Urban Institute |access-date=September 10, 2012 |archive-date=October 18, 2012 |archive-url=https://web.archive.org/web/20121018133026/http://www.urban.org/uploadedpdf/309232_medicare_comp.pdf |url-status=dead }}</ref> The goal of premium Medicare plans is for greater cost-effectiveness; if such a proposal worked as planned, the financial incentive would be greatest for Medicare plans that offer the best care at the lowest cost.<ref name=Aaron/><ref name=Moon/>

This concept is basically how public Medicare Part C already works (but with a much more complicated competitive bidding process that drives up costs for the Trustees, but is advantageous to the beneficiaries). Given that only about 1% of people on Medicare got premium support when Aaron and Reischauer first wrote their proposal in 1995 and the percentage is now 35%, on the way to 50% by 2040 according to the Trustees, perhaps no further reform is needed.

There have been a number of criticisms of the premium support model. Some have raised concern about risk selection, where insurers find ways to avoid covering people expected to have high health care costs.<ref>{{cite web|last=Frakt|first=Austin|title=Premium support proposal and critique: Objection 1, risk selection|url=http://theincidentaleconomist.com/wordpress/premium-support-proposal-and-critique-objection-1-risk-selection/|work=[[The Incidental Economist]]|access-date=October 20, 2013|date=December 13, 2011|quote=[...] The concern is that these public health plans will find ways to attract relatively healthier and cheaper-to-cover beneficiaries (the 'good' risks), leaving the sicker and more costly ones (the 'bad' risks) in fee for service Medicare. Attracting good risks is known as 'favorable selection' and attracting 'bad' ones is 'adverse selection'. [...]}}</ref> Premium support proposals, such as the 2011 plan proposed by Senator [[Ron Wyden]] and Rep. [[Paul Ryan]] ([[Republican Party (United States)|R]]–[[Wis.]]), have aimed to avoid risk selection by including protection language mandating that plans participating in such coverage must provide insurance to all beneficiaries and are not able to avoid covering higher risk beneficiaries.<ref name="PolitiFact">{{cite news |title=Debbie Wasserman Schultz says Ryan Medicare plan would allow insurers to use pre-existing conditions as barrier to coverage |url=http://www.politifact.com/truth-o-meter/statements/2011/jun/01/debbie-wasserman-schultz/debbie-wasserman-schultz-says-ryan-medicare-plan-w/ |work=PolitiFact |date=June 1, 2011 |access-date=September 10, 2012}}</ref> Some critics are concerned that the Medicare population, which has particularly high rates of cognitive impairment and dementia, would have a hard time choosing between competing health plans.<ref>{{cite web|last=Frakt|first=Austin|title=Premium support proposal and critique: Objection 4, complexity|url=http://theincidentaleconomist.com/wordpress/premium-support-proposal-and-critique-objection-4-complexity/|work=[[The Incidental Economist]]|access-date=October 20, 2013|date=December 16, 2011|quote=[...] Medicare is already very complex, some say too complex. There is research that suggests beneficiaries have difficulty making good choices among the myriad of available plans. [...]}}</ref> Robert Moffit, a senior fellow of [[The Heritage Foundation]] responded to this concern, stating that while there may be research indicating that individuals have difficulty making the correct choice of health care plan, there is no evidence to show that government officials can make better choices.<ref name=Moffit/> Henry Aaron, one of the original proponents of premium supports, has since argued that the idea should not be implemented, given that [[Medicare Advantage]] plans have not successfully contained costs more effectively than traditional Medicare and because the political climate is hostile to the kinds of regulations that would be needed to make the idea workable.<ref name=AaronFrakt/>

Currently, public Part C Medicare health plans avoid this issue with an indexed risk formula that provides lower per capita payments to sponsors for relatively (remember all these people are over 65 years old) healthy plan members and higher per capita payments for less healthy members.