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For Cost Control, Vouchers and Medicare Don't Mix
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Contributor | ArmyDem |
Last Edited | ArmyDem Aug 20, 2010 12:02pm |
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Category | Commentary |
News Date | Thursday, August 19, 2010 06:00:00 PM UTC0:0 |
Description | Austin Frakt, Assistant Professor of Health Policy and Management
Boston University’s School of Public Health
Aug 19, 2010
With the ambition of reducing the federal debt, Congressman Paul Ryan has offered a proposal to convert Medicare to a voucher-based program. Under the plan, in time all Medicare beneficiaries would receive program benefits from private plans subsidized by government payments (vouchers). In principle, such a system could reduce federal Medicare costs if the subsidy grows more slowly than medical inflation, shifting more of the costs to care to individuals. The history of Medicare and its politics suggest it is unlikely to work out that way.
About Ryan's plan, economist Paul Krugman wrote in the New York Times, "[W]e already know, from experience with the Medicare Advantage program, that a voucher system would have higher, not lower, costs than our current system." Krugman is correct: When it comes to Medicare, vouchers and cost control, it seems you can't get all three.
Though rarely described this way, the private Medicare Advantage plans are a (voluntary) voucher system. When covering a beneficiary, an Advantage plan receives a fixed monthly payment from Medicare that depends on the beneficiary's county of residence and health status. That fixed monthly payment is tantamount to a voucher. With it, beneficiaries can select from any Advantage plan operating in their county. They can also stick with traditional fee-for-service Medicare--and about three in four beneficiaries do so.
But today, the market-based arm of the program costs more, not less, per beneficiary. |
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