ATR sent the following letter today to Senator Orrin Hatch (R-Utah):
On behalf of Americans for Tax Reform, I am pleased to support your five common-sense reforms to the Medicare and Medicaid systems. They represent a serious down payment on reform, and are the first steps Congress should take in a broader health entitlement overhaul. Your reforms include:
Allowing the Medicare eligibility age to grow with life expectancy. Under current law, the eligibility age for Medicare enrollment is 65. Your proposal would permit this level to reflect longer life expectancy by increasing the age 2 months every year until a new age of 67 is met. At that point, both Medicare and Social Security normal retirement ages would be aligned. Because the change is not abrupt, it’s a fair deal for current and near-retirees who have planned their retirements around Medicare.
Putting more market forces to work in Medigap policies. Many seniors purchase “Medigap” policies to wrap around the holes in their traditional Medicare plans. However, most of these Medigap plans provide first-dollar coverage, which means that seniors have little incentive to be smart about their heathcare purchases. Your plan would prohibit Medigap policies from covering initial out-of-pocket expenses for seniors when they receive care, giving seniors a motivation to ask their doctors how much medical services will cost.
Creating a simple, unified Medicare cost-sharing structure. Most people are unaware that Medicare has a confusing hodgepodge of deductibles, coinsurance limits, and caps which make planning healthcare nearly impossible for seniors. Your plan would create a simple system with one unified deductible, uniform coinsurance rates, and an annual catastrophic out-of-pocket cap.
Allowing for competitive bidding within Medicare. This is an idea whose time has come. It has a long, bi-partisan history. Its origins can be found in the 1999 Breaux-Thomas commission, but it also has roots in the Rivlin-Domenici plan, and most recently in the Ryan-Wyden agreement. Letting private companies compete to provide Medicare services will provide better Medicare choices for seniors at less cost than the status quo.
Putting a per-capita cap on Medicaid. Similar to block granting, this form of defined contribution Medicaid reform has its origins in the Clinton Administration. Spending limits would be set by beneficiary eligibility categories and adjusted for patient health condition. Whether done per-beneficiary or per-state, it’s time for Washington to get out of the way and let the states reform Medicaid the same way they reformed welfare in the 1990s.