Romney Reiterates Importance of Premium Support Model for Medicare in Tax Proposal

Former Massachusetts Governor Mitt Romney reiterated his support for reforming the Medicare program by changing it into one that is a premium support model in a press release issued on Wednesday February 22, 2012.  That press release mainly discussed Romney’s proposal to lower taxes, but in the proposal he stressed that his Medicare reform proposal is part of his pledge to reduce federal spending to 20 percent of Gross Domestic Product (GDP) by 2016.  The tax reform and the reform to government spending are both part of Gov. Romney’s larger economic growth proposal.

Romney proposes to take the current amount that is spent on Medicare and give it to beneficiaries so they can go out and purchase health insurance in the private market instead of making payment to providers.  “Instead of paying providers directly for medical services, the government’s role will be to help future seniors pay for an insurance option that provides coverage at least as good as today’s Medicare,” according a Romney statement on Medicare.  The proposal would provide support for the paying the premium of a health insurance whether it be a private plan or traditional fee-for-service Medicare.

The amount of the premium support would vary depending upon income. The premium support for lower income individuals would be larger to ensure that they can afford coverage.  Wealthier individuals would receive less support.

Beneficiaries could purchase the existing fee-for-service Medicare, but they would have to pay for it with the amount they would be granted or receive in a voucher.  The Romney proposal cautions though that if the existing fee-for-service Medicare coverage is more expensive than the premium support voucher, beneficiaries would have to pay the difference.

Under his proposal, all insurance plans would have to offer coverage at least comparable to what Medicare provides today.  If individuals choose more expensive plans, they would have to pay the difference between the premium support and the price of the insurance coverage.  If individuals choose less expensive plans, they could use any leftover amount to pay for other medical expenses including any co-pays or deductibles.

In December  2011, Congressman Paul Ryan and Senator Ron Wyden announced a new proposal that almost precisely mirrors the Romney proposal.  Those proposals are different from the original proposal introduced by Congressman Ryan earlier in 2011.

According to Romney, “with insurers competing against each other to provide the best value to customers, efficiency and quality will improve and cost will decline.”  In addition, “seniors would be allowed to keep the savings from less expensive options or choose to pay for more costlier plans,” Romney continued.

As election season continues to heat up this is an important topic to follow and see how it unfolds.