NCPA - National Center for Policy Analysis

Why Liberals Should Support "Premium Support"

April 16, 1999

Liberals should support the reform plan pushed by the chairman of the National Bipartisan Commission on the Future of Medicare, Sen. John Breaux (D-La.), and backed by commission Republicans, says the New Republic's Matthew Miller.

Breaux's premium support plan is modeled on the Federal Employees Health Benefits Program. Instead of setting prices and directly reimbursing doctors and hospitals for a detailed menu of services, it would help Medicare beneficiaries buy an insurance policy.

Each year, local health plans would competitively bid to provide the same basic benefit package; seniors would choose among insurers; and the feds would pay 88 percent of the weighted average cost -- matching today's cost split between government and retirees.

Why should liberals endorse a premium support plan?

  • Miller says, "the 'premium support' Republicans fawn over today is just a different label for the 'managed competition' they spat on when Ira Magaziner and Hillary Clinton peddled it in 1993."
  • And unlike Republican proposals in 1995 to "voucherize" Medicare -- which liberals feared would leave low-income retirees paying more of their health care costs -- premium supporters want to ensure "the federal contribution can always buy a comprehensive benefit package."
  • The plan also "envisions a huge regulatory role for a powerful new Medicare Board to monitor health plans' marketing, finances, and quality."
  • Finally, "far from a threat to retirees, the drive to bring competition to Medicare could instead be the first step on the path to universal health coverage, American style."

However, says Miller, this requires giving up the idea of outlawing the insurance industry in favor of Candian-style national health.

Versions of premium support have been proposed by Robert Reischauer and Henry Aaron of the Brookings Institution, Stuart Butler of the Heritage Foundation and Robert Helms of the American Enterprise Institute.

Source: Matthew Miller, "Premium Idea," New Republic, April 12, 1999.


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