The Nuts and Bolts of Medicare Premium Support Proposals

In April 2011, as part of its 2012 budget resolution, the U.S. House included a proposal to reduce Medicare spending by transforming the program into a system sometimes called “premium support” or vouchers. Such an approach also has been a central element of other proposals by national leaders seeking to reduce the federal deficit and national debt.

This Kaiser Family Foundation brief reviews the evolution of the premium support concept, examines key policy decisions and issues that would affect its impact, and considers the implications for both Medicare and beneficiaries’ out-of-pocket spending. It looks at several key issues, including how the government’s contributions would be set and adjusted over time; whether and how those payments would vary based on beneficiaries’ age, income, health status and geographic location, and the extent to which enrollees’ costs could vary accordingly; the role of the current traditional Medicare program, if any; and the core requirements for plans, such as whether they would be required to provide a defined set of benefits or whether they would be permitted to vary premiums based on age.

The brief was authored by researchers at the Health Policy Alternatives Inc. It is a product of the Kaiser Project on Medicare’s Future, which focuses on producing timely analysis of leading reforms affecting people on Medicare.

Issue Brief (.pdf)