Medicare Reform in the Republican Budget

BACKGROUND

• With the creation of Medicare in 1965, our country made a commitment to help fund the medical care of elderly Americans so they didn't exhaust their life savings or the assets and incomes of their working children and younger relatives.
• Unfortunately, years of neglect by policymakers unwilling to restructure Medicare have left the program threatened by out-of-control costs.
• The Medicare Trustees have determined that due to high health care costs and without any changes, Medicare will go bankrupt by 2024.  Unless we fix the problem, this bankruptcy will leave millions of American seniors without adequate health security and a younger generation saddled with enormous debts resulting from these unsustainable spending levels. 
• That's why we must protect and preserve Medicare through common sense reforms that help rein in expensive costs and extend the promise of Medicare to future seniors.
• The Medicare program attempts to do two things to make sure that all seniors have secure, affordable health insurance that works.
• First, it pools risk among all seniors to ensure that they enjoy secure access to care.
• Second, Medicare subsidizes coverage for seniors to ensure that coverage is affordable. But the current subsidy structure of Medicare is fundamentally broken and drives costs in the opposite direction.
• Today, Medicare spending is growing at a rate of 7.2% every year – more than twice as fast as this nation’s economy is growing!
• Left unchecked, the explosive growth of Medicare threatens not only the ability of government to keep its promises to beneficiaries, but also the solvency of the federal government and the health of the U.S. economy.
• Doing nothing guarantees the death of this program.
• Republicans refuse to jeopardize Medicare and remain committed to protecting and preserving Medicare by reforming it in a fiscally sound way.
• Current retirees (and seniors) deserve the benefits they planned for, which is why the Republican budget, the Path to Prosperity, MAKES NO CHANGES for people who are currently 55 and older.
• Republicans are committed to making gradual, structural improvements and reforms to Medicare to preserve America’s social contract with retired workers.
• We have explored careful reforms that will sustain the promise made to those who need help with health care costs.

 MAJOR PROPOSALS FOR SAVING MEDICARE

• The Republican budget saves Medicare for current (those 55 and up) and future generations while making NO changes for those in and near retirement.
• The Republican budget provides seniors with more health-care choices within the same stabilized risk pool.
• For younger workers, when they reach eligibility, Medicare will provide a payment and list of guaranteed coverage options from which recipients can choose a plan that best suits their needs.
• Importantly, Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks.
• The budget also prevents the government from raiding the Medicare trust fund that was going to be used to pay for ObamaCare.
• Finally, the budget would fix the Medicare physician payment formula for the next 10 years so that Medicare beneficiaries continue to have access to health care.

 SPECIFICS

• Future Medicare recipients will be able to choose from a list of guaranteed coverage options, and they will be given the ability to choose a plan that works best for them.
• This is NOT a voucher program, but rather a premium-support model.
• A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.
• The premium-support model would operate similar to the way the Medicare prescription-drug benefit program works today.
• The Medicare premium-support payment would be adjusted so that wealthier beneficiaries would receive a lower subsidy, the sick would receive a higher payment if their conditions worsened, and lower-income seniors would receive additional assistance to cover out-of-pocket costs.
• Our plan would set up a system for Medicare plans – where health plans that choose to participate in the Medicare exchange MUST agree to offer insurance to ALL Medicare beneficiaries, to avoid cherry-picking and ensure that Medicare’s sickest and highest-cost beneficiaries receive coverage.
• No disruptions in the current Medicare fee-for-service program for those currently enrolled or becoming eligible in the next ten years.
• ALL seniors would have the choice to opt into the new Medicare program once it begins in 2022
• No senior would be forced to stay in the old program.
• This budget gives seniors the freedom to choose a plan that works best for them and guarantees health security throughout their retirement years.