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Premium Support: A Timeline

April 27, 2012

If you listen to any of the Democrat attacks on Medicare Premium Support, you may think that the idea was a partisan plan crafted behind closed doors.  But when you look at the true history behind Premium Support, the facts reveal long-standing bipartisan support for this plan to save Medicare.

1993 – Alain Enthoven the “father of managed competition” and former health care consultant to President Jimmy Carter, publishes The History of Principles of Managed Competition, which outlined the concept and value of premium support.  In writing on the topic, Enthoven recognized the value of injecting value into the health care system:

“To offset the expenditure-increasing effects of an aging population and an expanding array of medical technologies, we need to foster a process of continuing productivity improvement and of development of cost-reducing technologies. Only ongoing competition to provide value for money can do this.”

1995 – Henry Aaron, former staff of Council of Economic Advisers for President Lyndon Johnson and former Assistant Secretary for Planning and Evaluation for the Department of Health, Education, and Welfare under President Carter, released a study with Robert Reischauer, The Medicare reform debate: what is the next step?, in which he coined the term “Premium Support,” writing:

“The [Premium Support] approach we have presented represents a middle ground. It builds on the strengths of the current program while converting it into a system similar to the employer-sponsored insurance now available to most Americans.”

1999 – National Bipartisan Commission on the Future of Medicare, co-chaired by former Senator John Breaux (D-LA) included a robust Premium Support proposal.  In his opening statement at the final Commission meeting, Sen. Breaux stated:

“The reason I have long supported the premium support concept is that I believe it offers the best hope of giving our nation’s seniors the best health care delivery system.”

Former Senator Bob Kerrey (D-NE) supported the Commission’s work to promote a Premium Support plan by saying:

“What’s happened is, premium support, I think, could be an enormous improvement in the way that Medicare currently operates. It’s modernizing the Medicare Program and making it a program that I think works better for the beneficiaries themselves.”

2003 – Medicare Modernization Act (P.L. 108-173), included the Comparative Cost Adjustment (CCA) program, that sought to test competition between private plans and Fee-For-Service (FFS) Medicare.  A broader Premium Support model was included in the House-passed version of the bill, which was supported by Rep. Steve Israel (D-NY) who, in speaking in support of the bill, noted that he wanted to ensure the 85,000 seniors in his district had access to a choice of Medicare plans, calling the lack of choice and competition in Medicare a “health care crisis.”

2011 – Former CBO and Clinton Administration OMB Director Alice Rivlin and former Senator Domenici (R-NM) released their Protect Medicare Act, which contained a comprehensive Premium Support plan to control Medicare spending.  In releasing their plan, they stated:

“Simply put, there can be no lasting solution to the U.S. debt crisis without structural changes in the Medicare program to slow its cost growth.  This can be accomplished through our proposal to transition Medicare to a ‘defined support’ plan in 2016.  Such a system would provide strong incentives to increase the efficiency and effectiveness of health care delivery to seniors, without abolishing current Medicare, or forcing any beneficiary to move to a different plan.”

2011 – Senator Ron Wyden (D-OR) joined with Representative Paul Ryan (R-WI) in releasing the Plan to Strengthen Medicare and Health Security for All, proposed moving Medicare to a Premium Support system for future seniors.   In calling for action on Medicare reform, Sen. Wyden wrote:

“But don’t let that number confuse what’s at stake: unless Congress enacts meaningful Medicare reform in the near future, seniors with be faced with inevitable cost-shifting and eventual benefit cuts until Medicare doesn’t look anything like the program does today.  …Wyden-Ryan doesn’t privatize Medicare because Medicare beneficiaries already have the option of enrolling in private health insurance plans. Wyden-Ryan makes those private plans more robust and accountable by forcing them to — for the first time — compete directly with traditional Medicare.”