All of U.S. Rep. Paul Ryan's Medicare reform proposals include a premium support option. Premium support contributions reduce uncertainty in federal government spending on health services; however, they do so by transferring the uncertainty and responsibility onto beneficiaries. This could be either positive or negative for beneficiaries, depending on how much health care services cost in the future. Specifically, “If the volume, complexity, and costs of medical services turned out to be greater than expected, future beneficiaries would pay higher premiums and cost-sharing amounts than are currently projected. Alternatively, beneficiaries’ costs would be less than currently projected if the volume, complexity, and costs of medical services turned out to be less than expected,” according to the Congressional Budget Office (CBO).
Nevertheless, with the government’s contribution strictly capped, beneficiaries participating in the new premium support program would undoubtedly bear a much larger share of their health care costs. The CBO’s analysis of Chairman Paul Ryan’s (R-Wis.) budget found that under his premium support plan, beneficiaries would pay 61 percent of their health care costs in 2022, versus only 27-30 percent of their cost if Medicare remained unchanged. Specifically, it estimated that the total cost of providing benefits to a typical 65 year old in 2022 would be $20,500, and under Ryan’s proposal the government would contribute $8,000 of that amount, with beneficiaries paying the remaining $12,500 — more than twice what they would pay under traditional Medicare (which consists of hospital insurance (Part A) and medical insurance (Part B)).
Another potential consequence of fixed premium support payments could be an increase in the number of uninsured. With the elderly facing higher insurance costs on the Medicare exchange, and without traditional Medicare as a default option, some individuals may choose not to purchase insurance. If this were to happen, the CBO projects that “costs for the premium support program would be lower than shown in this analysis, and the number of older Americans without health insurance would be higher."
