Study: Premium-Support Model Would Raise Costs for Medicare Enrollees

A premium-support model similar to the one put forth by Republican presidential nominee Mitt Romney would have resulted in higher premiums for about six in 10 Medicare beneficiaries in 2010, unless they switched to a less-costly plan, according to a study by the Kaiser Family Foundation, the Washington Post's "Wonkblog" reports.

Under the proposal developed by House Budget Committee Chair Paul Ryan (R-Wis.), Romney's running mate, beneficiaries would receive a subsidy to help purchase either private coverage or traditional Medicare.

Study Details

For the study, researchers estimated what would have happened in 2010 if a similar proposal was in effect (Kliff, "Wonkblog," Washington Post, 10/15).

The report noted that it should not be interpreted as a specific analysis of the Romney-Ryan plan, in part because their proposal lacks details needed to conduct a thorough study. The report assumes the premium-support proposal already is in effect. In contrast, the Romney-Ryan proposal would allow current beneficiaries and individuals ages 55 and older to stay in the traditional system (Alonso-Zaldivar, AP/U-T San Diego, 10/15).

Instead, researchers used a generic version of premium support, in which the subsidy would be equal to the second-lowest cost plan offered in an area or traditional Medicare. They then examined whether the federal subsidy would cover the costs of providing Medicare benefits under traditional or private plans in different areas ("Wonkblog," Washington Post, 10/15).

The study found that 25 million, or 59% of, beneficiaries both in traditional Medicare and in private Medicare Advantage plans would have paid higher premiums in 2010 if they did not switch to a lower cost plan (Rau, Kaiser Health News, 10/15). If 25% of beneficiaries switched to the baseline, or second least costly plan, the percentage of those paying higher premiums declined to 35%, according to the study ("Wonkblog," Washington Post, 10/15).

Regional Disparities in Effect, Cost

The report found that the percentage of beneficiaries who would be subject to premium increases would vary greatly by state, "Wonkblog" reports.

The share of beneficiaries who would have to pay higher premiums would range from less than 2% in Alaska and the District of Columbia to more than 90% in Connecticut, Florida, Massachusetts and New Jersey, the report found ("Wonkblog," Washington Post, 10/15).

Further, the average extra premiums would be more than $100 monthly in California, Michigan, New Jersey, Nevada and New York. In Florida, a premium-support program would have raised monthly premiums for traditional Medicare by an average of more than $200 (Kaiser Health News, 10/15).

Obama, Romney Campaigns Respond to Study

President Obama's campaign was quick to use the findings to criticize Romney for favoring a premium-support plan for Medicare, The Hill's "Healthwatch" reports.

In a blog post, the Obama campaign wrote, "If Romney's plan had been in place this year for today's seniors, nearly 60% would have had to pay more to get the same coverage that they enjoy today." They added, "That means that under Romney's plan, millions of people -- especially those with complicated health needs who see a lot of different doctors -- would have to give up their doctors or pay extra to maintain access to their choices."

Romney campaign officials noted that the study specifically stated it did not address the Romney-Ryan plan.

"Our plan would always provide future beneficiaries guaranteed coverage options with no increase in out-of-pocket costs from today's Medicare," Amanda Henneberg, a Romney spokesperson, said (Viebeck, "Healthwatch," The Hill, 10/15).

Obama's Lead on Medicare Grows, Poll Finds

In related news, Obama has a 15-point advantage over Romney on the issue of Medicare among registered voters, up from a four-point lead one month ago, according to the latest Washington Post/ABC News poll released Monday, The Hill's "Healthwatch" reports.

The poll found 53% of registered voters believe Obama would do a better job handling Medicare, while 38% favor Romney. Among likely voters, Obama has a 13-point lead on the Medicare issue, according to the poll.

On health care overall, Obama leads Romney 47% to 46% among likely voters and 49% to 43% among registered voters, the poll found (Baker, "Healthwatch," The Hill, 10/15).