Mitt Romney, the GOP nominee for the presidency, laid out the details of his vision for Medicare reform in an address at the Americans for Prosperity, “Defending the American Dream Summit,” in Washington, DC on November 4, 2011, stating:
“First, Medicare should not change for anyone in the program or soon to be in it. We should honor our commitments to our seniors. Second, as with Social Security, tax hikes are not the solution. We couldn’t tax our way out of unfunded liabilities so large, even if we wanted to. Third, tomorrow’s seniors should have the freedom to choose what their health coverage looks like. Younger Americans today, when they turn 65, should have a choice between traditional Medicare and other private healthcare plans that provide at least the same level of benefits.”
Traditional Medicare
Romney supported maintaining Traditional Medicare as an option for seniors.
Premium Support
With a premium support structure, Medicare beneficiaries would receive payments, or subsidies, to buy private insurance on a health care exchange, instead of participating in the traditional Medicare fee-for-service model that is paid for almost entirely by the government. Romney endorsed this model for Medicare reform as well, stating:
“The federal government will help seniors pay for the option they choose, with a level of support that ensures all can obtain the coverage they need. Those with lower incomes will receive more generous assistance. Beneficiaries can keep the savings from less expensive options, or they can choose to pay more for a costlier plan.”
Medicare Beneficiary Age
Romney repeatedly stated that he did not intend to change Medicare for current retirees. But he told future generations that the program will look different for them, declaring that, “For younger people coming up they have to recognize that in the future higher income people will receive less payments in the premium support program.” Romney also believes that in order to ensure the future solvency of Medicare, “the eligibility age should slowly increase to keep pace with increases in longevity.”
Competitive Bidding
Competitive bidding is the process by which the government would determine its payment, or subsidy to insurers, on behalf of Medicare beneficiaries in a premium support system. Private insurers would offer bids to provide benefits to Medicare beneficiaries at the lowest cost. The level of the premium-support payment would then be determined based on the bids and the insurers’ geographic location. The premium support payment benchmark would then be determined by the government, depending on the mechanism it chooses—for example, the payment could be set at the second-lowest of the bids or the average of all the bids. This payment would then be applied towards the purchase of private insurance by Medicare beneficiaries. Advocates of competitive bidding, including Romney, believe that this process will benefit seniors based on the theory that, “Competition will lower costs and increase the quality of health care for tomorrow’s seniors.”
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