Tag: fixed contribution

Mitt Romney Treads Carefully

Presidential candidate Mitt Romney’s reform plan for Medicare is just as cautious―and carefully vague on some key details―as might be expected from an politician famously sensitive to the winds of public opinion.

Romney’s proposal looks a lot like those offered by last year’s Rivlin-Domenici Debt Reduction Task Force and the 1999 National Bipartisan Commission on the Future of Medicare. Like those proposals, and also the plan offered by House Budget Chair Paul Ryan, Romney’s would convert Medicare into a premium support program in which beneficiaries would receive a fixed contribution towards the cost of coverage. However, unlike Ryan’s plan―received so negatively by seniors that it cost Republicans a House seat―beneficiaries would still have traditional fee-for-service Medicare as an option.

Under the Romney proposal, commercial insurers would compete with traditional Medicare in offering a basic set of benefits. Beneficiaries would choose from a “menu” of plans, paying out-of-pocket for any difference between the premium and the federal support contribution. Lower-income individuals would receive larger premium support amounts, while beneficiaries selecting options with premiums below the support amount would keep the savings. Also, as with the other similar proposals, there would be a gradual increase in the Medicare eligibility age from today’s 65 years.

Although it was immediately attacked by various liberal commentators, the Romney proposal seems on the surface to be a reasonable approach to a program that otherwise is headed for bankruptcy. How reasonable, however, will depend on numerous details that have been carefully left vague. (Interestingly, the proposal is nowhere mentioned on candidate Romney’s campaign web site.)

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