December 13, 2011

Premium Support

(By Stuart Zechman and Jay Ackroyd)

Last Thursday, the New York Times ran a story about Democratic support for restructuring Medicare as a premium support plan, as part of the austerity negotiations:
Members of both parties told the panel that Medicare should offer a fixed amount of money to each beneficiary to buy coverage from competing private plans, whose costs and benefits would be tightly regulated by the government.
The idea faces opposition from many Democrats, who say it would shift costs to beneficiaries and eliminate the guarantee of affordable health insurance for older Americans. But some Democrats say that — if carefully designed, with enough protections for beneficiaries — it might work.
The idea is sometimes known as premium support, because Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.

Of course, the Democrats all remain nameless, as do most of the "health policy experts." These same people have been trying to drum up support for premium support as a means of cutting Medicare benefits controlling Medicare costs for years, mostly from Democrats predictably wary of how unpopular this would be. That's why any policy discussion takes place in an atmosphere of anonymity, dishonesty and misdirection, using unrepresentative processes like the creation of unelected commissions or the establishment of a specially empowered SuperCommittee.

Centrist Democrats --the New Democrat Coalition, Democratic Leadership Council, Third Way, Progressive Policy Institute and the Brookings Institute-- have been trying to get "Premium Support" legislation in front of Congress for at least a dozen years. It's the other half of what the PPACA is designed to accomplish, to restructure what they regard as obsolete New Deal social insurance policy. The policy recommendations focus on “private/public partnerships” supplanting public sector programs, while messaging focuses on selling ideologically centrist, “market-based reform" to liberal Democrats.   They reassure movement liberals by reciting platitudes that seem to affirm Medicare's sanctity with promises to “strengthen" the program for the 21st century. This has been going on since the mid to late 90s.

For instance, New Democrat John Breaux, chairing President' Clinton's Bipartisan Commission of the Future of Medicare,  introduced a premium support plan in 1999. In an Op-Ed in The Hill (pulled from the memory hole by Republican Congressman Tim Griffin), Breaux wrote:
With any restructuring approach, we must preserve Medicare's entitlement and ensure that Medicare does not become a program just for the poor. I would like Medicare, in fact, to become a model for expanding health care coverage to all uninsured Americans. I believe a Medicare premium support system is the best way to achieve that end.

What exactly is a premium support model and what does my particular version do? Premium support means the government would literally support or pay part of the premium for a defined core package of Medicare benefits. This is not a voucher program but an alternative to the current system. Today, Congress micromanages Medicare and the government uses fee schedules and thousands of pages of regulations to set prices for specific services. My plan combines the best that the private sector has to offer with the government protections we need to maintain the social safety net.

I have proposed a premium support Medicare plan modeled after the health care plan serving nearly 10 million federal workers, retirees and their families. Like that plan, my reform plan would also guarantee that the government's contribution keeps pace with health care costs.

This history makes it clear why it was so important for national Democrats, and especially Third Way partisans to differentiate their "premium support" from Paul Ryan's "premium support,” as with Ezra Klein's  interview with Henry Aaron, the Brookings'  Fellow who originally developed the premium support idea in 1995. It was crucial to centrist talking points to make the case that the GOP "Path To Prosperity" involved a voucher program, totally different from Aaron's "premium support" plan. But, as this story from the Times makes clear, there are core elements among the centrists who dominate the Democratic party leadership committed to premium support under Medicare, core elements who are well aware that reducing Medicare benefits will be extremely unpopular.

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