WASHINGTON — Though it reached no agreement, the special congressional committee on deficit reduction built a case for major structural changes in Medicare that would limit the government’s open-ended financial commitment to the program, lawmakers and health policy experts say.
Members of both parties told the panel that Medicare should offer a fixed amount of money to each beneficiary to buy coverage from competing private plans, whose costs and benefits would be tightly regulated by the government.
Republicans have long been enamored of that idea. In the past few weeks, two of the Republican candidates for president, Mitt Romney and Newt Gingrich, have endorsed variations of it.
The idea faces opposition from many Democrats, who say it would shift costs to beneficiaries and eliminate the guarantee of affordable health insurance for older Americans. But some Democrats say that — if carefully designed, with enough protections for beneficiaries — it might work.
The idea is sometimes known as premium support, because Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.
“This is an idea that could easily resurface in the future as Congress seeks additional Medicare savings for deficit reduction,” said Patricia Neuman, senior vice president of the Kaiser Family Foundation.
Even though the deficit committee failed, its work may frame the debate over Medicare, taxes and other issues in the 2012 election year and beyond.
John Rother, president of the National Coalition on Health Care, which represents consumers, employers and providers, said, “The supercommittee may have laid the groundwork for future reductions in the growth of Medicare.”
Alice Rivlin, who was budget director for President Bill Clinton, had urged the deficit panel to establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide at least the same benefits. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.
Obama’s health care law provides “premium support” for people younger than 65. The government will offer subsidies, in the form of tax credits, to help people buy coverage marketed by private carriers on an insurance exchange.
If this approach works for commercial insurance under the new law, it could allay concerns about similar changes to Medicare.
Throughout the deficit reduction talks, Democrats insisted that any package be balanced. They entertained the idea of restructuring Medicare as part of a large deficit reduction package that also included tax increases. They repeatedly described the budget as a moral document and said they would not balance the budget on the backs of older Americans, children and poor people.
Democrats gave no indication that they would accept major Medicare changes in the absence of tax increases.
