Saving Medicare

The Path to Prosperity’s major proposals to save and strengthen Medicare:

  • The future of the nation’s health and retirement security programs is increasingly based on empty promises from a government unwilling to advance solutions that save and strengthen them.
  • This budget strengthens health and retirement security by taking power away from government bureaucrats and empowering patients with control over their care.
  • This budget repeals the new health care law’s unaccountable board of bureaucrats empowered to cut Medicare in ways that would jeopardize seniors’ access to care.
  • This budget saves Medicare for current and future generations, with no disruptions for those in and near retirement.
  • For younger workers, when they become eligible, Medicare will provide a premium-support payment and a list of guaranteed coverage options – including a traditional fee-for-service option – from which recipients can choose a plan that best suits their needs.
  • Program growth would be determined by a competitive-bidding process – with choice and competition forcing providers to reduce costs and improve quality for seniors.
  • Premium support, competitive bidding, and more assistance for those with lower incomes or greater health care needs will ensure guaranteed affordability for all seniors.

Q: I am currently receiving or will be receiving some time in the next ten years health coverage through Medicare. Will I see my benefits change?

A: No. The Path to Prosperity includes no changes for those 55 and older. This budget protects and preserves this critical program for those in or near retirement. By contrast, the President’s health care law creates a board of 15 unaccountable bureaucrats empowered to cut Medicare in ways that result in denied care for current seniors. The House Republican budget repeals this rationing board to protect those that have organized their retirements around the critical Medicare program.

Q: I am currently 54 years old or younger. Will Medicare be there for me?

A: Yes. The Path to Prosperity protects and strengthens Medicare for those 54 and younger. Starting in 2023, new beneficiaries will be given the ability to choose from a number of competing plans that are certified by Medicare and required to guarantee affordable coverage to all seniors, regardless of health history or pre-existing conditions.

Medicare-certified plans, including fee-for-service Medicare, would compete against each other to deliver the highest quality coverage at the lowest price for the senior. Medicare would provide a premium-support payment set by a process designed to ensure that seniors would always have guaranteed, affordable coverage.

Seniors with lower-incomes would be provided with fully funded health savings accounts to cover any out-of-pocket costs. And payments would be risk-adjusted, prohibiting plans from cherry-picking the healthiest seniors.

By giving seniors the power to choose among competing plans, with strong protections and guaranteed affordability, Medicare built around premium support puts seniors in control of their health care purchasing decisions instead of government.

By contrast, the President’s health care law restricts access to Medicare coverage for current seniors, while leaving this critical program bankrupt for future generations. The House Republican budget repeals the President’s costly health care law and ensures that Medicare can deliver on its promise for generations to come.

Q: What will happen if health-care costs continue to rise as fast as they have been rising lately? Will I still be able to afford care?

A: Yes. For starters, these reforms ensure guaranteed affordability for generations to come. There is bipartisan agreement that the skewed incentives built into government health care programs are a key driver of health inflation. For decades, politicians in Washington have tried to control costs through a centralized bureaucracy that attempts to set prices in health care. It hasn’t worked. By contrast, reforms built around choice and competition, as demonstrated by Medicare’s prescription drug benefit program, have more effectively controlled costs while delivering the high quality of care that seniors deserve.

While choice and competition in government health care programs are the best means to address spiraling costs, our budget provides extra protections for seniors – more financial assistance for low-income seniors and those with greater health risks, and less support for wealthier seniors.  The House Republican budget ensures that beneficiaries no longer have to pay the price for Washington’s failures.

Q: I’ve heard people say that this plan “ends” Medicare. Is that true?

A: No. Independent fact-checkers determined that this claim was the 2011 “Lie of the Year.”

This budget saves Medicare. It’s important to understand that without reforms, according to the non-partisan Medicare trustees, Medicare will go bankrupt just as current seniors are in the heart of their retirements. Our plan contains bipartisan solutions to strengthen Medicare by offering guaranteed coverage options to future seniors, regardless of pre-existing conditions or health history.

Q: You’ve put forward your solution. How would others solve this problem?

A: Other than bankruptcy, the alternative to our approach was enacted in the President’s health care law. The President’s health care law does make drastic changes to Medicare, but the enacted changes unfortunately make matters worse. The President’s health care overhaul created an unaccountable board of 15 unelected bureaucrats empowered to cut Medicare in ways that would result in denied care to current seniors.

See here for a complete contrast between the President’s approach and our approach when it comes to Medicare.

Q: Didn’t the President’s health care law improve Medicare’s solvency?

A: No. The President’s health care law raided Medicare to fund an open-ended health care entitlement. Advocates of the President’s health care law claimed that the law both improved Medicare’s solvency and paid for the new entitlement at the same time. This claim is contradictory. Medicare’s chief actuary testified before the House Budget Committee that the Medicare savings had been double-counted.

The Path to Prosperity stops the raid on Medicare and ensures that any current-law Medicare savings are devoted to saving Medicare. It is crucial that policymakers ensure Medicare’s solvency into the next decade if we want to protect the current arrangements of those in or near retirement.

Q: I’ve heard that this budget reduces Medicare spending over the next ten years. If no one over 55 is affected, how is that possible?

A: The Path to Prosperity produces near-term savings over the next ten years by proposing curbs on abusive and frivolous lawsuits. Medical lawsuits and excessive verdicts increase health-care costs and result in reduced access to care. When mistakes happen, patients have a right to fair representation and fair compensation. But the current tort litigation system too often serves the interests of lawyers while driving up costs.

This budget also advances a bipartisan proposal to further means-test premiums in Medicare Parts B and D for high-income seniors, similar to the President’s proposal in his fiscal year 2013 budget. This reform does not go into effect until 2017. These common-sense reforms to subsidize the wealthy less will not cause disruptions to seniors’ current arrangements.

Q: Will I lose my guaranteed health care through Medicare, and instead have to rely on a voucher?

A: No. The changes in the House Republican budget will not affect those in or near retirement in anyway. When younger workers become eligible for the Medicare program, they will be able to choose the kind of plan that best suits their needs from a list of Medicare plans, including traditional Medicare fee-for-service option, that are guaranteed to offer coverage to all beneficiaries regardless of pre-existing conditions. Medicare would then provide a payment to subsidize the cost of the plan. This is not a voucher – it is a payment that flows through to whatever plan recipients choose. The program would operate in a similar manner as the health insurance that Members of Congress receive and Medicare’s prescription drug benefit program, which are also not “vouchers.” Former Clinton Budget Director Alice Rivlin has made it clear that premium support would not be vouchers with the following statement in testimony before the House Ways and Means Committee: “premium support as we define it is definitely not a voucher.”

Q: Does this budget reinstate the so-called Medicare “donut hole”?

A: This budget repeals the Democrats’ health-care law, including provisions that increase prescription-drug prices for everyone. In fact, the CBO confirmed that the law’s new requirements will drive up health-care costs, at odds with claims made by its proponents. In a letter to Chairman Ryan last fall, CBO stated that “[The] increase in prices would make federal costs for Medicare’s drug benefit and the costs faced by some beneficiaries higher than they would be in the absence of those provisions,” and that “the premiums of drug plans will increase along with the increase in net drug prices, so the premiums paid by beneficiaries will increase slightly.” Like the rest of this costly new entitlement, provisions that increase prescription-drug prices should be repealed.

The real threat to seniors’ health care is the fact that Medicare is going bankrupt. The current trajectory of government spending on health care is unsustainable. As noted above, without changes, according to the Medicare trustees, the Medicare program collapses in 2024. Comparing any plan to save Medicare with the status quo means comparing real solutions to a false reality. This budget protects Medicare for current seniors by averting any disruptions and saves the program for future generations by providing a personalized Medicare program – like the one members of Congress now enjoy – with more support for low-income beneficiaries and those with higher health costs and reduced subsidies for high-income beneficiaries.

Q: What about the Medicare “Doc Fix” that our nation’s physicians have been promised so they can continue serving seniors?

A: The Path to Prosperity recommends a ten-year “Doc Fix” in the form of a deficit-neutral reserve fund. Washington must stop spending money it doesn’t have, and this proposal will ensure Medicare physicians do not experience sharp reductions in their reimbursement rates – protecting seniors’ access to critical care – without adding to the nation’s debt.