Medicare Premiums Would Rise for 59% With Ryan Plan

Photographer: Gerardo Mora/Getty Images

Rep. Paul Ryan speaks during the Victory Rally in Florida at Town Square, Lake Sumter Landing on August 18, 2012 in The Villages, Florida. Ryan spoke about his family's reliance on Medicare. Close

Rep. Paul Ryan speaks during the Victory Rally in Florida at Town Square, Lake Sumter... Read More

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Photographer: Gerardo Mora/Getty Images

Rep. Paul Ryan speaks during the Victory Rally in Florida at Town Square, Lake Sumter Landing on August 18, 2012 in The Villages, Florida. Ryan spoke about his family's reliance on Medicare.

Elderly people in Florida would have paid more than $200 extra for traditional Medicare if a system similar to Paul Ryan’s proposed overhaul of the program was in place in 2010, according to the Kaiser Family Foundation.

Ryan, the Republican vice presidential nominee, wants to transform Medicare into a “premium support” system in which beneficiaries get a fixed payment from the government for their insurance, rather than guaranteed benefits. Such a plan would lead to wide variations in Medicare costs across the country, according to the study today by the nonprofit Kaiser group.

Fifty-nine percent of beneficiaries would have paid more in 2010, unless they switched from traditional Medicare or their current private coverage to a lower-cost plan, the researchers found. In California, Florida, Michigan, New Jersey, Nevada and New York, it would cost more than $100 extra a month to maintain traditional coverage for Medicare.

The findings “underscore the potential for highly disparate effects of a premium support system for beneficiaries across the county,” said the authors, led by Gretchen Jacobson, a policy analyst at Kaiser.

Romney’s Plan

Mitt Romney, the Republican presidential nominee, has said he would enact a plan similar to Ryan’s if elected. A Romney spokeswoman, Andrea Saul, said the Kaiser study didn’t examine “the Romney-Ryan plan,” which Romney has not detailed.

“Our plan would always provide future beneficiaries guaranteed coverage options with no increase in out-of-pocket costs from today’s Medicare,” she said in an e-mail.

President Barack Obama’s campaign said in a blog post today 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”

Under the plan outlined by Ryan, who is also chairman of the House Budget Committee, the government’s Medicare contribution would be set by annual bids from plans participating in the system, including traditional Medicare. The stipend, which Democrats call a “voucher,” would equal the second lowest-cost bid in each county.

Varying Premiums

That mechanism would lead to varying premiums across the country because of differences in medical costs, Jacobson and her colleagues said. Medicare would likely be among the lowest- cost plans in parts of the country with low medical costs, while private plans would outbid the government elsewhere.

While Medicare beneficiaries may have to pay more, a premium support plan would probably save the government money, Jacobson and her colleagues said. The study didn’t measure the extent of those savings.

Medicare beneficiaries in a system like Ryan’s wouldn’t face higher premiums and might even lower their costs if they switch to lower-cost plans, the Kaiser researchers said. People may be unlikely to change plans, though, even to get a lower premium.

In Medicare’s prescription drug program, where beneficiaries choose among private plans to cover medicines, just 6 percent changed plans in 2008, “despite substantial variations in premiums, cost-sharing and other factors,” according to the U.S. Centers for Medicare and Medicaid Services. Only 7 percent of participants in Massachusetts’s government-run insurance exchange, the Connector, switched plans in 2011, the study said.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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