Providing Seniors With Options

Earlier this year, the National Center for Policy Analysis advanced a proposal to address the Medicare financing crisis. Under this plan, retirees could stay in the current Medicare program, but the per capita share of Medicare spending would grow no faster than is permitted by the congressional budget targets. As a result, those who stayed in traditional Medicare would likely see their premiums and copayments rise over time.⁶

More importantly, the elderly could be given a voucher, in effect allowing them to withdraw their share of Medicare spending each year and purchase coverage from the full range of private sector managed care or fee-for-service options. For example, they could sign up with a Health Maintenance Organization (HMO) or other managed care program. Seniors also could use part of their Medicare funds to purchase a catastrophic health insurance policy with a deductible of, say, $3,000, and place the premium savings in a Medical Savings Account (MSA). A third option would permit seniors to purchase coverage from a present or former employer after retirement. Associations such as the American Association of Retired Persons (AARP) or labor unions also could sell health plans to their members.⁷

This study, which describes more fully how the MSA option would work, is based on a peer-reviewed analysis by the consulting firm of Milliman & Robertson.

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