His plan to convert Medicare to a “premium support” system, though less damaging than last year’s proposal, still weakens a guarantee to the elderly and risks driving up costs for future beneficiaries. He would still offer the elderly a fixed amount of money to shop for their own health insurance, but allow the option of enrolling in traditional Medicare.Unfortunately, that could lead to higher costs and premiums in traditional Medicare because it would attract older and sicker patients who would be expensive to cover, while healthier, cheaper patients flocked to private plans.
Seniors would be guaranteed a plan that is at least the value of the traditional fee-for‐service Medicare option. Health plans that participate alongside a traditional Medicare option in the Medicare Exchange would be required to offer insurance to all seniors — regardless of age and health status — thereby preventing insurers from cherry-picking only the healthiest seniors for coverage under their plans. These protections ensure that Medicare’s sickest and highest‐cost beneficiaries have access to affordable and quality coverage choices. The proposal requires all plans on the Exchange to include guaranteed issue (i.e., they cannot deny coverage based on pre‐existing conditions) and community rating (i.e., they cannot impose prohibitively disparate costs on seniors) to ensure that seniors are able to choose an affordable health plan that works best for them — without fear of denial or discrimination.
The federal contribution to seniors’ health plans would be risk‐adjusted so that the sickest seniors are protected from high premiums as well as adverse selection from insurers. Building on the risk‐adjustment tools currently used by the Centers for Medicare and Medicaid Services (CMS), proper risk adjustment would ensure that seniors with the highest health costs would still be able to find an affordable plan. Federal contributions would be increased to account for a senior’s health status and age.CMS would also conduct an annual risk review audit of all insurance plans participating in the Medicare Exchange. Insurance plans covering a higher‐than‐average number of low‐risk seniors would pay a fee. Conversely, insurance plans covering a higher-than‐average number of high‐risk seniors would receive an incentive payment. The fees and incentive payments would flow internally through the same fund, so that payments to plans that cover high-cost patients would be funded wholly by the fees from plans that cover low-cost patients.