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One of Medicare’s key strengths, compared with most other types of health insurance, is that its benefits are “defined.” The Medicare law, regulations and rules set out the minimum scope of benefits that the program must cover and outlines the out-of-pocket costs for which beneficiaries are responsible.

For example, as long as certain requirements are met, Medicare beneficiaries are eligible for hospital, skilled nursing facility, home health, and hospice benefits under Part A and a range of preventive benefits and services under Part B – including physician visits, lab tests, durable medical equipment and other items and services. In addition, beneficiaries can’t be charged more than certain designated deductibles, copays and coinsurance amounts.

One of the most prominent Medicare “reform” proposals, so-called “Premium Support,” would change Medicare from this kind of a defined benefit program, to a defined contribution program.  This means, instead of a clear set of guaranteed benefits, Medicare beneficiaries would essentially be given a voucher for a certain dollar amount (the defined contribution) with which they could shop around on the private market to find Medicare coverage.  While such proposals vary, and some purport to retain at least some guaranteed benefits, any voucher program would likely erode the scope of coverage – and protections related to out-of-pocket costs – that Medicare beneficiaries now have in both traditional Medicare and Medicare Advantage plans. 

Private insurance does not have a history of working well for older and disabled people. That’s why Medicare was enacted. We should resist calls to return Medicare enrollees to the whims of the private market. Been there … didn’t work.

Medicare’s guaranteed, defined benefits are a blessing for older people and people with disabilities. This key feature of Medicare must be protected.

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