WASHINGTON -- Though it reached no agreement, the special congressional committee on deficit reduction built a case for major structural changes in Medicare that would limit the government's open-ended financial commitment to the program, lawmakers and health policy experts say.
Members of both parties told the panel that Medicare should offer a fixed amount of money to each beneficiary to buy coverage from competing private plans, whose costs and benefits would be tightly regulated by the government.
Republicans have long been enamored of that idea. In the past few weeks, Republican presidential candidates Mitt Romney and Newt Gingrich have endorsed variations of it.
The idea faces opposition from many Democrats, who say it would shift costs to beneficiaries and eliminate the guarantee of affordable health insurance for older Americans. But some Democrats say that if it were carefully designed, with enough protections for beneficiaries, it might work.
The idea is sometimes known as premium support, because Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.
"This is an idea that could easily resurface in the future as Congress seeks additional Medicare savings for deficit reduction," said Patricia Neuman, senior vice president of the Kaiser Family Foundation.
Even though the deficit committee failed, its work could frame the debate over Medicare, taxes and other issues in the 2012 election year and beyond.
John Rother, president of the National Coalition on Health Care, which represents consumers, employers and providers, said, "The supercommittee may have laid the groundwork for future reductions in the growth of Medicare."
Alice Rivlin, who was budget director for President Bill Clinton, had urged the deficit panel to establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide at least the same benefits. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.
Obama's health care law provides "premium support" for people younger than 65. The government will offer subsidies, in the form of tax credits, to help people buy coverage marketed by private carriers on an insurance exchange.
If this approach works for commercial insurance under the new law, it could allay concerns about similar changes to Medicare.
Balancing cuts, taxes
Throughout the deficit reduction talks, Democrats insisted that any package be balanced. They entertained the idea of restructuring Medicare as part of a large deficit reduction package that also included tax increases. They repeatedly described the budget as a moral document and said they would not balance the budget on the backs of older Americans, children and poor people.
Democrats gave no indication that they would accept major Medicare changes in the absence of tax increases.
But other ways of reining in Medicare costs carry their own political risks. Obama discussed one such proposal - gradually increasing the age of eligibility for Medicare - as part of a budget deal he tried to negotiate over the summer with House Speaker John Boehner, R-Ohio.
Obama is counting on a new agency, the Independent Payment Advisory Board, to ensure a sharp reduction in the growth of Medicare spending per beneficiary. But he has not nominated anyone to run the agency, which Republicans denounce as a tool for rationing care.
Various proposals
Democrats sharply criticized the budget blueprint approved in April by the House, under which new beneficiaries would receive a fixed amount of money from Medicare to help pay premiums for private insurance policies.
A report on that proposal by the Congressional Budget Office provided ammunition to its critics. "Under the proposal," the report says, "most elderly people would pay more for their health care than they would pay under the current Medicare system," and some would choose not to buy coverage, so "the number of older Americans without health insurance would be higher."
Health policy experts said these problems resulted from specific features of the House Republican plan and were not necessarily inherent in the idea of "premium support." The House Republicans' budget plan would eventually eliminate traditional Medicare as an option for new beneficiaries.
Under the House Republican plan, the federal contribution would be increased each year to reflect the age of a beneficiary and general inflation, measured by the Consumer Price Index.
As an alternative, the federal contribution could be set at a percentage of the premium charged by a private plan, or the lowest-cost plans, or it could reflect the average premium for all plans in an area.
