BIPARTISAN OPTIONS FOR THE FUTURE
Senator Ron Wyden (D-OR) and Representative Paul Ryan (R-WI)
December 15, 2011
Our plan would strengthen traditional Medicare by permanently maintaining it as a guaranteed and
viable option for all of our nation’s retirees. At the same time, our plan would expand choice for
seniors by allowing the private sector to compete with Medicare in an effort to offer seniors betterquality
and more-affordable health care choices.
We are a Democrat and Republican; a Senator and a Representative; senior members of our respective
Budget Committees; and members of the committees that have jurisdiction over Medicare and health
care costs. As budgeteers, we understand the difficulty presented by demographic changes over the
next several decades. As members with policy oversight, we recognize and encourage the potential for
innovation to improve care and hold down costs. And most important, as representatives of hardworking
Americans in Oregon and Southern Wisconsin, we realize our absolute responsibility to
preserve the Medicare guarantee of affordable, accessible health care for every one of the nation’s
seniors for decades to come.
Choice: Starting in 2022, a new Medicare program will begin offering seniors a choice among
Medicare-approved private plans and the traditional Medicare plan – much like the choice of plans
Members of Congress have. Any private plan that wishes to participate in this new program must
provide at least as comprehensive a benefit as traditional fee-for-service Medicare, and the traditional
program will be strengthened so that it can effectively compete in this new marketplace. This
marketplace will supplant Medicare Advantage. Any senior at or above age 55 today will see no
changes in the Medicare program.
Affordability: Coverage will be guaranteed through a new “premium support” system that encourages
plans to provide high-quality care more efficiently. Private plans will compete directly with traditional
Medicare based on their ability to provide quality coverage at an affordable lower cost. Premiumsupport
levels will be determined by the cost of the second-lowest-cost plan, as well as traditional
Medicare. For the first time, seniors will be protected from catastrophic health care costs with a new
limit on out-of-pocket costs for all seniors. Seniors who are eligible for Medicaid or other income
assistance will be guaranteed ongoing coverage without any additional costs.
Protecting the Guarantee: In the event that these efforts do not stem the rising tide of Medicare
spending, beginning in 2023 there will be a cap on cost growth of 1 percent over Gross Domestic
Product, plus inflation. Any increase over that cap will be reflected in reduced support for the sectors
most responsible for cost growth, including providers, drug companies, and means-tested premiums.
The consistent theme of our proposal emphasizes that “choice” and “reform” do not
have to mean “adverse selection” and “beneficiary cuts.” Instead, we draw from an ideal that
Americans should be able to choose from a variety of health care options just as Members of Congress
do, and that when people have control over their health care choices they begin to make different
decisions about how to spend their health care dollars.
Currently, however, when Americans turn 65, they often must relinquish any health insurance they
may have had and subsequently enroll in Medicare. Allowing individuals to keep one insurance product
as they transition from their working years to retirement would help ensure a smooth transition into
the Medicare program. In order to maximize the choices that individuals have prior to retirement, we
present a “free choice option” that would allow employers with 100 workers or fewer to offer their
employees the value of the employer contribution to health care – tax-free to the employee and
deductible to the employer – so that individuals may purchase health insurance that is not tied to their
workplace if they choose to do so.
Protecting Seniors: This reformed Medicare program will include the toughest consumer protections in
American government. The history of seniors’ programs has shown that whenever a new program is
created, fraudulent schemes spring up to exploit its participants. To ensure ample protection from
scam-artists and bad actors, the program will not only require insurance coverage protections such as
guaranteed issue and risk adjustment, but it will also require the Centers for Medicare and Medicaid
Services (CMS) to actively review marketing practices and benefit adequacy. For new private plans,
CMS will retain the authority it currently possesses to assess bids in order to weed out junk plans and
unqualified insurers. Seniors will be provided with simple, easy-to-understand information about the
plans that are available in their areas during their annual open-enrollment period, explaining options
and prices, and they will be told exactly how their current plan compares to the next-lowest-cost
option. Traditional Medicare will always be offered as a viable and robust choice.
Protecting The Safety Net: The creation of the Medicare program in 1965 came as the result of a call
to action on behalf of seniors. This age group – 65 and older – was seemingly uninsurable (only half of
this population had any form of health insurance). Yet seniors required more services than other
group. Since the creation of Medicare, the trend has changed, and now 98 percent of America’s seniors
are enrolled in Medicare and ensured health security. Looking at the history and progression of the
Medicare program, however, there is a glaring gap in the success story: care delivery to low-income
seniors. As of 2010, there were 9 million of these so-called “dual eligibles” (those who qualify for both
Medicare and Medicaid). Because of their low-income status, these individuals have been forced into a
fragmented system of care delivery, and yet they are the most likely to require medical attention and...
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