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August 27, 2012 11:23 AM Republican Platform Goes There-Would Make Medicare A Defined-Contribution Voucher Program

By Harold Pollack

The profusion of Ryan, Ryan-Wyden, House Republican, and Romney proposals on Medicare sparks legitimate debate regarding whether it’s fair to say that Republicans would “end Medicare as we know it.” Similar debate has raged over whether critics are right to say that Republicans would convert Medicare into a voucher program, and what that term really means given the variety of approaches to premium support. As the details have shifted, I’ve gone back and forth on these issues myself.

The Republican draft platform (h/t Politico) is therefore notable for its clarity. Regarding Medicare and Medicaid, it says: “The first step is to move the two programs away from their current unsustainable defined-benefit entitlement model to a fiscally sound defined-contribution model.”*

This is a textbook definition of a voucher program.

One can debate whether the Republican platform accurately reflects the views of the Republican nominee, but the wording here is unambiguous. Over time, it really would change Medicare’s basic goals and structure to limit the federal government’s financial exposure. The platform raises an obvious question, too: Who would bear the burdens and risks if the costs of medical care rise faster than the value of the vouchers?

(*The full paragraph is reproduced below.)

The first step is to move the two programs away from their current unsustainable defined-benefit entitlement model to a fiscally sound defined-contribution model This is the only way to limit costs and restore consumer choice for patients and introduce competition: for in healthcare, as in any other sector of the economy, genuine competition is the best guarantee of better care at lower cost. It is also the best guard against the fraud and abuse that have plagued Medicare in its isolation from free market forces, which in turn costs the taxpayers billions of dollars every year. We can do this without making any changes for those 55 and older. While retaining the option of traditional Medicare in competition with private plans, we call for a transition to a premium-support model for Medicare, with an income-adjusted contribution toward a health plan of the enrollee’s choice. This model will include private health insurance plans that provide catastrophic protection, to ensure the continuation of doctor-patient relationships. Without disadvantaging retirees or those nearing retirement, the age eligibility of Medicare must be made more realistic in terms of today’s longer life span.

[Cross-posted at The Incidental Economist]

Harold Pollack is the Helen Ross Professor at the School of Social Service Administration at the University of Chicago.
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Comments

  • Crissa on August 27, 2012 11:51 PM:

    No one in their right mind would trade a defined-benefit for one that did not assure a basic level of service.

    Would anyone trade their defined-benefit of 'housing' for a similar stipend only for 'rent'?

    And why doesn't anyone ever explain how this would, or has in the past, controlled costs?