Medicare Voucher Programs

July 15, 1999

The following alert was sent out to members of the Stewardship of Public Life Health Care network on July 6.

ISSUE:

Currently there is a push by some in Congress to transform Medicare into a "premium support" program, under which Medicare recipients would receive vouchers for a set amount to use toward the purchase of a health insurance policy. The proposal by Sen. John Breaux (D-La.) and Rep. Bill Thomas (R-Calif.) to overhaul the Medicare system includes such a voucher plan.

While the Breaux-Thomas plan is intended to save money and improve quality through market competition, critics predict that Medicare beneficiaries will be burdened with higher out-of-pocket costs. There will be increased cost-sharing requirements (co-payments and deductibles), and over time, premium increases will likely outpace voucher support. Private insurance plans will also pass on new costs for marketing, enrollment, administration, and profits. (Under the current Medicare program such costs average only 2 percent.)

People with incomes below 135 percent of the poverty level ($11,124 for an individual or $14,931 for a couple), would have their entire premium covered only if enrolled in the least expensive plans. These plans generally have higher cost-sharing requirements and the voucher support program would no longer provide the benefit of cost-sharing assistance to low-income Medicare beneficiaries.

People in rural areas are likely to be heavily impacted. These areas are not served by enough plans to gain the benefits of competition, and very few HMOs (often the least expensive plans) serve rural areas. Some insurance companies have stopped offering individual plans in certain areas. For example, in 18 rural counties of Washington state, not one insurance company offers access to individual plans.

Organizations that have raised concerns about the Breaux-Thomas voucher program include, among others, Families USA, National Coalition on Health Care, National Council of Senior Citizens, and the National Interreligious Health Care Working Group.

A grassroots effort recently delivered 100,000 signatures to Capitol Hill opposing the Breaux-Thomas Medicare voucher plan.

ACTION:

1) Write, phone, fax or visit your Representative and your two Senators. Urge them to oppose the Breaux-Thomas Medicare proposal. Remind them that it will likely increase costs to all Medicare beneficiaries and will have an especially adverse effect on low-income people and those in rural areas.

Honorable ________
U.S. Senate
Washington, DC 20510

Honorable ________
U.S. House of Representatives
Washington, DC 20515

Capitol switchboard: (202) 224-3121. You may obtain your Senator's or House member's Washington fax number or e-mail address by calling the state or district office, or search on-line through http://thomas.loc.gov.

2) While your legislators are home for the summer recess, Aug. 9 to Sept. 7, invite them to a town meeting to discuss the Breaux-Thomas proposal and other Medicare issues.

3) Write a letter to the editor of your local newspaper expressing your concerns about a voucher approach to Medicare. If possible, refer to an article that has appeared in that paper. In letters to the editor and to Congress, identify yourself as clergy or a member of the Presbyterian Church (U.S.A.). While you cannot speak for the church, you can go on record as concerned because you are a member of the church. Encourage people from your congregation or community to speak out on the issue as well.

BACKGROUND:

Currently there are legal limits to the amount beneficiaries pay in premiums and cost-sharing for Medicare benefit packages. Most Medicare beneficiaries pay an average of one-fifth of their incomes in out-of-pocket costs.

According to Families USA, "Under the Breaux-Thomas proposal, there is reason to expect that, over time, beneficiaries in both traditional Medicare and the new private plans will pay more in real dollars for premiums, cost-sharing, or both than they would pay for the same benefits they have today. This is because the proposal is likely to result in cost-shifting to beneficiaries."

Competition is key to the Breaux-Thomas proposal. In theory, the insurance companies would vie for Medicare dollars and thus produce a better system. A voucher system thus becomes a type of "deregulation" of Medicare. It trades a government-guaranteed medical program benefitting our senior population for one dependent on market forces. While this program may benefit some in the near term, most analysts predict the long-term effect will leave millions of elderly Americans with inadequate health insurance or none. Further, there is general agreement that any savings from competition alone will not be enough to sustain the program through the huge influx of "baby boom" retirees.

According to the National Coalition on Health Care, a nonprofit, nonpartisan organization, "a shift to a voucher program would have to be carefully designed to avoid devastating effects on Medicare beneficiaries." The current Breaux-Thomas proposal is not that careful design, and this attempt at a voucher program should be rejected.

GENERAL ASSEMBLY GUIDANCE:

The 203rd (1991) General Assembly resolution on "Christian Responsibility and a National Medical Plan" recommends that until a national medical plan is instituted, we must call upon the federal and state governments to "protect uninsured persons, especially those with low or fixed incomes, from erosion of health care benefits or an increase in cost of health care benefits."