Turning Medicare Into a Premium Support System: Frequently Asked Questions

Premium support is a general term used to describe an approach to reform Medicare that aims to reduce the growth in Medicare spending by increasing competition among health plans and providing a stronger incentive for beneficiaries to be cost-conscious in their plan selection.  On June 22, 2016, the House Republicans included in their health care reform plan a proposal to gradually transform Medicare into a system of premium supports, building on proposals of the Speaker of the House, Paul Ryan, when he was Chair of the House Committee on Budget, as well as the proposals of many other policymakers.1

These FAQs raise and discuss basic questions about the possible effects of a premium support system.  Many proposals advance the concept of premium support without providing all of the details needed to assess the possible effects of the proposal on key stakeholders.  Other proposals are more detailed, although they differ markedly in their specific policy features, and these differences have important implications for Medicare beneficiaries, the federal budget, health care providers, and private health plans.2   This issue brief is intended to highlight some of the key questions that could be considered once proposals’ details emerge.

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