Romney’s Medicare plan: vague and inconsistent

Mitt Romney released a budget-cutting plan today that called for a somewhat vague premium support prescription for Medicare and an increase in the Medicare eligibility age. (See Kaiser Health News for a roundup.)

The premium support plan is vague because it doesn’t specify how the level of support would be set or evolve. This, my friends, is the whole ballgame.

Moving on to raising the Medicare eligibility age, it’s clear why some are drawn to the idea. It would save some Federal spending. That sounds compelling until you recognize how small “some” really is. Very, very small. So small that health care inflation overcomes the savings in a few months.

Why so small? In part because younger Medicare beneficiaries are also cheaper Medicare beneficiaries. Kicking them off the program doesn’t save much. Worse, it increases per beneficiary program costs. That’s not a wonky detail, it’s vitally important to the whole idea of premium support. If per beneficiary program costs go up, so do premiums and, depending on how it works (details matter!), premium support costs do too.

In other words, premium support and increasing the Medicare eligibility age are at cross purposes. If you want lower premiums, you should keep the low risks in the pool, not kick them out. If you want to spend less on them, just offer them lower premium support. Of course, maybe you want something else.

I eagerly await further details from the candidate.

More on competitive bidding, a version of premium support, here. More on raising the Medicare eligibility age here.

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