What’s wrong with the premium voucher?


It’s a common conservative solution to the Medicare problem – one that’s included in the Ryan budget and has been introduced in Minnesota. Seniors born after a certain point will be switched to a new plan, which will give them a “support” that they can use towards a health insurance premium. They’d also be able to use the voucher to pay for traditional Medicare services, a new provision put in place to counter arguments that the voucher system will end Medicare as we know it.

And you know what? It does exactly that. Let’s take a look at the holes in voucher logic:

  • Health care costs grow faster than voucher worth, so over time, seniors will get less money to pay for coverage. Proponents say this will save Medicare by capping its cost—this is true, but it’s achieved by shifting that cost to seniors.
  • The voucher system is based on the idea that giving people control over their spending means that they will make better choices—but because of the complex and confusing nature of the insurance market, beneficiaries are more likely to choose cheaper plans that put them at higher financial risk. 
  • As younger, healthier beneficiaries choose private plans over traditional Medicare, its enrollees will be more likely to be older and in need of more care, making it more expensive.
  • The formula that determines the value of vouchers is designed to make them shrink over time, meaning seniors will get less support.

Implement a voucher system, and what do we get? Seniors who can’t afford coverage or health care. Is this the “solution” we want—tossing seniors into the complex insurance market without enough support?

We do need to fix Medicare, but the voucher system is not the answer. The Affordable Care Act makes important steps towards fixing the problem by introducing new payment schemes like bundling payments, encouraging the implementation of accountable care organizations and comparative effectiveness research, and creating an independent payment advisory board to look for the right ways to curb to Medicare’s soaring cost. We need smart, responsible solutions, not cuts that put our seniors at risk. What’s wrong with the voucher? Plenty.