Under Premium Support, People with Medicare Could Pay More for Less

Currently, people with Medicare are all entitled to the same set of basic benefits, and the program treats all people with Medicare equally. Some policymakers support changing Medicare into a premium support program, which would mean people with Medicare would receive a voucher to purchase health coverage through a private plan or Original Medicare.

Under premium support, people with Medicare could end up paying more for less as the value of the voucher is not likely to keep pace with rising health care costs. Additionally, over time, younger, healthier people with Medicare would likely opt for private plans, leaving older, sicker people in Original Medicare. This would potentially cause Original Medicare to wither away and costs to go up substantially.

The impact of premium support does not stop at out-of-pocket costs. People with Medicare may no longer be able to see the health care providers of their choice. Moreover, as more people opt for private plans over Original Medicare, fewer doctors may be willing to accept Original Medicare’s payment rates to care for those patients. By design, private health plans already include restricted provider networks.

Premium support could also end guaranteed benefits in Medicare. Today, people with Medicare are entitled to the same set of benefits, whether they choose Original Medicare or a private plan. Some premium support plans would allow private plans to use comparable—but not guaranteed—benefits. Most Americans—70 percent—prefer Medicare’s guaranteed benefits to vouchers.

At the end of the day, Medicare does a better job of controlling costs than private health plans. From 2010 to 2015, Medicare spending rose by an average of 1.4% per person per year—less than half the growth rate of private insurance. Medicare provides health coverage less expensively than private insurance and has lower administrative expenses than private health plans, which, by design, turn a profit.

Read Medicare Rights’ issue brief, “Paying More for Less: Premium Support,” and share key facts about premium support from the brief on social media.