Premium Support (health insurance)
The “premium support” plan to reform Medicare was outlined by Henry Aaron, an economist at the Brookings institution, and Robert Reischauer, president of the Urban Institute, in their 1995 Health Affairs journal article “The Medicare reform debate: What is the next step?” Under “premium support,” a defined benefit is given to help pay for insurance premiums, with free market competition used to help lower costs.
The term “premium support” became a political issue in April 2011, when Congressman Paul Ryan introduced a budget plan called “The Path to Prosperity.” Henry Aaron, however, has said that Ryan’s plan offers Medicare vouchers and not true “premium support.”
Health Affairs
Health Affairs, Vol 14, Issue 4, 8-30
Copyright © 1995 by Project HOPE
Journal Article
The Medicare reform debate: what is the next step?
H J Aaron and R D Reischauer
Medicare costs are rising faster than projected revenues. Action to close the emerging deficit is inescapable. We propose converting Medicare from a “service reimbursement” system to a “premium support” system. These changes would resemble many that are now reshaping private employer-based insurance. Our reform would encompass not just the “public” Medicare program but also the “real” Medicare, which includes the supplemental plans to which most Medicare beneficiaries have access. Approved plans would have to offer stipulated services. We review numerous technical issues in moving to a new system that cannot be solved quickly and that preclude quick budget savings.
Google Books
Medicare Prospective Payment and the Shaping of U.S. Health Care
By Rick Mayes andRobert A Berenson
Baltimore, MD: Johns Hopkins University Press
2006
Pg. 127:
Breaux and Thomas led a subgroup of eight commission members who were strongly committed to swtiching Medicare to a defined contribution approach (or “premium support”). In other words, instead of providing Medicare as a defined benefit, the program would provide its beneficiaries with a defined contribution—something akin to a voucher—that they could use to purchase a private health insurance policy. The premium support model was intended to make Medicare more closely resemble the Federal Employees Health Benefits Program (FEHBP), in which government employees purchase their health insurance from a number of private plans that compete fortheir enrollment; and the federal government provides them with a financial contribution that covers most of the premium for a standard health plan.
PBS Nightly Business Report
What is “Premium Support” for Medicare?
posted by Darren Gersh, Washington Bureau Chief at 4:39 PM on 04/05/11
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Alice Rivlin, a good Democrat, was OMB Director under Bill Clinton. She also worked with Ryan to refine the premium support concept. I asked her to describe how the ideas works. Here’s what she said:
“Under premium support, the beneficiary gets a choice of plans. you go to an exchange and you choose a plan and then the government pays the plan. They don’t pay you, they pay the plan. And they pay a risk adjusted amount—adjusted for your age and how healthy you are. So if you are older and sicker, the plan gets paid more for taking care of you. . . . And you would hope that in such a marketplace, the more efficient, the more effective plans would get more people.”
Washington (DC) Post: Ezra Klein’s Wonkblog
Creator of premium support says Ryan has ‘vouchers, not premium support’
Posted by Ezra Klein at 02:47 PM ET, 04/11/2011
Brookings’ Henry Aaron is one of Washington’s most respected social policy experts. He’s served as a Social Security trustee, vice president of the American Economic Association and much more. It was Aaron, alongside the Urban Institute’s Bob Reischauer, who coined the term “premium support” to describe a model in which you’d open Medicare to competition but install certain safeguards to protect beneficiaries from cost shifting. Now, Paul Ryan has adopted that model and included it in his budget. There’s only one problem, according to Aaron. Ryan may be calling his reforms “premium support,” but that’s not what they are.
Washington (DC) Post
GOP plan to change Medicare is rooted in bipartisan history
By Amy Goldstein, Published: May 1, 2011 | Updated: Tuesday, April 26, 5:35 PM
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The term “premium support” was coined in 1995 by two respected health policy experts, neither a conservative: Henry Aaron, a Brookings economist, and Robert Reischauer, president of the Urban Institute. “The idea of vouchers was abroad in the land,” Aaron recalled. “We thought there was sort of a free-market-will-cure-all mentality.”
Their idea was to marry market competition in Medicare with regulation to ensure proper benefits and enough financial help. The Medicare commission’s work was an heir to their ideas. Proponents point out that the popular Medicare drug benefit created in 2003 relies on a such a model.
The Root
Cain Turns Tough Question Over to Gingrich
By: Jenée Desmond-Harris | Posted: November 7, 2011
During this weekend’s debate between Herman Cain and former House Speaker Newt Gingrich, Americans for Prosperity Texas chairman Ben Streusand asked Cain whether he favored a “defined benefit plan” or “premium support” when it comes to Medicare. Cain slowly repeated the question to himself before tossing it to his opponent (“You go first, Newt”), much to the entertainment of the audience.