December 18, 2012

Rep. Wally Herger (R–CA) has introduced an important Medicare reform proposal, one that’s very similar to The Heritage Foundation’s Medicare reform outlined in our Saving the American Dream plan.

Medicare reform is long overdue. It has been a decade since any major Medicare reform proposal was introduced to Congress, and Obamacare did little to fix it. And while Heritage continues to push for Obamacare repeal, we also continue to advocate for fixes to strengthen Medicare and other programs.

Heritage expert Rea Herderman explains how Herger’s proposal would work:

Herger’s legislation would protect and enhance Medicare for low-income beneficiaries by offering them a more generous benefit, and it would protect future beneficiaries by making Medicare more financially sustainable. The act contains changes to traditional Medicare, but it also clearly lays out a transition to premium support with the federal contribution eventually based on the minimum bid from both private insurers and traditional fee-for-service.

The federal government is spending too much money, and this plan’s reforms would help curb that spending. Herger’s reform follow the model of the Federal Employee Health Benefits plan, which allows individuals to direct their benefit to their preferred health plan. Ultimately, Hederman explains, this premium support model “would save the government substantial money without endangering the future of Medicare.”

Here is a list of other benefits of Herger’s Medicare reform plan:

• The bill would use competition instead of failed price controls to reduce the future liabilities of Medicare.
• It would also maintain many consumer protections to make sure that beneficiaries will be protected and that the playing field between traditional fee-for-service and its new competitors is level.
• It would repeal some shortsighted provisions in Obamacare that would harm Medicare.
• The bill will dissolve the Independent Payment Advisory Board immediately, which would give more flexibility to doctors in treating patients.
• And finally, equally as important as the policy is the fact that Herger’s bill offers a real legislative proposal for the Congressional Budget Office (CBO) to estimate the bill’s savings. The CBO has admitted that scoring competition is difficult for them. The specificity of the provisions in the bill can give a clear roadmap for CBO to score.

While Herger will leave Congress and his position as chairman of the House Ways and Mean Health Care Subcommittee come January, his Medicare reform proposal is an important step towards Medicare reform.

Do you think it’s important for Medicare to be reformed?