March 21, 2012

TWEAKING OBAMACARE:

Paul Ryan's New-and-Improved Plan for Medicare and Medicaid Reform (Avik Roy, 3/21/12, Forbes)

Ryan's proposal for Medicaid reform involves "converting the federal share of Medicaid spending into a block grant indexed for inflation and population growth." This contrasts meaningfully with a plan put forth by four House members on the conservative Republican Study Committee: Reps. Todd Rokita (Ind.), Tim Huelskamp (Kans.), Paul Broun (Ga.), and Jim Jordan (Ohio).  The RSC proposal aims to keep Medicaid spending flat, with no inflation adjustment, after block-granting it to the states.  [...]

The new GOP budget would create a "Medicare Exchange"--much like Obamacare's insurance exchanges but with a public option--for future retirees who are under the age of 55 today. Critically, the level of premium support would be determined by the second-least expensive plan in a region, or traditional fee-for-service Medicare, whichever was lower. Seniors would keep the savings if they chose a cheaper plan:

The second-least expensive approved plan or fee-for-service Medicare, whichever is least expensive, would establish the benchmark that determines the premium-support amount for the plan chosen by the senior. If a senior chose a costlier plan than the benchmark plan, he or she would be responsible for paying the difference between the premium subsidy and the monthly premium. Conversely, if that senior chose a plan that cost less than the benchmark, he or she would be given a rebate for the difference. Payments to plans would be risk-adjusted and geographically rated. Private health plans would be required to cover at least the actuarial equivalent of the benefit package provided by fee-for-service Medicare.

This is meaningfully different from PTP 1, in which seniors didn't gain any savings from choosing a plan cheaper than the premium support level, and where traditional Medicare was not an option.

Another key detail: Ryan's plausible assumption is that competitive bidding could drive Medicare spending down without hard spending caps. However, as a backstop, the proposal caps the growth of premium support levels to GDP plus 0.5 percent, which--not coincidentally--matches the targeted Medicare growth rate in President Obama's budget.

Posted by at March 21, 2012 6:44 AM
  

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