Medicare Reform Outlook: Uncertain

With a new administration in the nation’s highest office, there is growing debate about Medicare reform.

The federal program, which helps provide health insurance to those over 65 and certain younger people with disabilities, is partially funded by participant premiums and a 1.45 percent payroll tax, matched by employers. Yet, it routinely exceeds its funding sources, according to researcher Philip Moeller.1

Lawmakers, lobbyists and entities have set forth various proposals to modernize Medicare into a program that could essentially pay for itself. One recommendation is a premium support system, in which the federal government would pay a set amount for each Medicare beneficiary toward the purchase of a health insurance plan; this is often referred to as a defined contribution or voucher approach.2

Whether the Medicare program changes, we’re prepared to help you make adjustments to your retirement income strategy to help with future health care expenses; give us a call.

Yet, the outlook on possible Medicare changes is uncertain as different voices compete on how to fix the program. One of the most prominent advocates of Medicare reform, House Speaker Paul Ryan, has set forth a plan that provides premium support, guaranteed coverage options, competitive bidding among plans and higher assistance for seniors with lower incomes or greater health care needs.3

The Committee for Economic Development has proposed similar reform incentives to expand competition among Medicare Advantage plans. Under the committee plan, seniors would receive a geographically benchmarked premium subsidy and pay for the balance of Advantage plans based on the coverage they prefer among a range of competitive options.4

As Congress considers reforming health care for the entire nation, some of the latest proposals include many of the Medicare provisions already in force through the Affordable Care Act. These include preventative screenings for certain conditions and penalizing hospitals for poor-quality care while rewarding providers for care that results in improved health outcomes.5

Despite increasing calls for Medicare reform by the Republican party, the newly installed president campaigned on a platform to leave the program as is.6 Moving forward, whether this issue heats up as a party divider remains to be seen.

Content prepared by Kara Stefan Communications

1 Philip Moeller. PBS. Nov. 16, 2016. “Column: Who’s paying the true cost of Medicare?” http://www.pbs.org/newshour/making-sense/column-whos-paying-the-true-cost-of-medicare/. Accessed Feb. 5, 2017.

2 Gretchen Jacobson and Tricia Neuman. Kaiser Family Foundation. Jul. 19, 2016. “Turning Medicare Into a Premium Support System: Frequently Asked Questions.” http://kff.org/medicare/issue-brief/turning-medicare-into-a-premium-support-system-frequently-asked-questions/. Accessed Feb. 5, 2017.

3 Paul Ryan. PaulRyan.house.gov. Jan. 30, 2017. “Medicare.” http://paulryan.house.gov/issues/issue/?IssueID=9969\. Accessed Feb. 5, 2017.

4 Committee for Economic Development. Oct. 2016. “Modernizing Medicare.” https://www.ced.org/reports/single/modernizing-medicare. Accessed Feb. 5, 2017.

5 Bruce Japsen. Forbes. Jan. 29, 2017. “As GOP Backs Off ACA Repeal, Obama’s Medicare Reforms Remain.” http://www.forbes.com/sites/brucejapsen/2017/01/29/as-gop-backs-off-full-aca-repeal-obamas-medicare-reforms-stand/print/. Accessed Feb. 5, 2017.

6 Eric Pianin. The Fiscal Times. Dec. 4, 2016. “Pence Dampens Ryan’s Call for Major Medicare Overhaul Next Year.” http://www.thefiscaltimes.com/2016/12/04/Pence-Dampens-Ryan-s-Call-Major-Medicare-Overhaul-Next-Year. Accessed Feb. 5, 2017.

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