Gingrey Fails In Attempt To "Accurately" Describe Difference Between "Premium Support" And "Voucher"

July 14, 2011 2:23 pm ET — Meredith Kormes

Interestingly, much of yesterday's Energy and Commerce Committee hearing on the Independent Payment Advisory Board (IPAB) focused as much on the GOP Medicare plan as it did on IPAB. And during the testimony, there was much discussion on the mechanism the GOP budget uses to provide seniors with their health care coverage, with supporters of the GOP budget calling it "premium supports" and opponents describing it as "vouchers."

In questioning HHS Secretary Kathleen Sebelius, who was previously asked by Rep. Michael Burgess (R-TX) to explain the difference between vouchers and premium supports, Rep. Phil Gingrey (R-GA) gave his description of the difference between the two payment mechanisms, which proved to be incomplete.

GINGREY: I must say I'm a little bit surprised with the question in regard to the difference between is voucher and a premium support. You seemed to struggle just a tad over that.  A voucher, as I understand it, is sending someone a check on a monthly basis to spend on health care at their own volition. They could basically, I guess, sign up for holistic medicine, they could have an [inaudible] bag around their neck. They could essentially do anything they wanted to with that voucher, whereas premium support in the "Plan for Prosperity," the Republican plan to reform and save Medicare for our current seniors and our future generations, is talking about premium support where the Center for Medicare and Medicaid Services, basically where the senior designates they want to purchase their health insurance plan that best fits their needs that the premium is advanced to the insurance company as payment for those services. It doesn't go directly to the patient. So that's the big difference in a voucher versus premium support. And I think we should describe it accurately.


So with the goal of describing things accurately, it seems like we need to explain the real difference between vouchers and premium supports to Rep. Gingrey. As Rick Unger at writes, "there is a more important distinction between premium support plans and vouchers" than whether the payment is given to the beneficiary or to the insurance company. Unger explains:

In the plan that provides health care benefits for federal employees, on which Ryan relies to make his premium support case, if a government employee's premium costs go up — and they always do — the government increases the premium support in lockstep with the increased premium.

Not so with RyanCare.

Ryan's proposal, that would turn Medicare into a private insurance program with the government providing assistance to seniors on their premium payments, limits increases in that support to the cost of living index - an amount wholly insufficient to cover the extra costs as we know that rising costs of health care and premium charges always exceed annual cost of living increases. Thus, if premiums increase (and of course they will) the costs of these increases will be shifted to our senior citizens who, in most instances, would not appear to have the ability to take on these increased costs on their fixed retirement budgets.

This, by anyone's definition, is a voucher program.

Additionally, Henry Aaron, one of the people who coined the term "premium support," told the Washington Post's Ezra Klein:

If one does the arithmetic, income grows a few percentage points faster than prices. Health-care spending grows faster than income by a couple of percentage points. So we're looking at linking to an index that grows less rapidly than health-care costs by three to four percentage points a year. Piled up over 10 years, and that's a huge erosion of coverage. It's vouchers, not premium support.

Even Rep. Paul Ryan (R-WI) himself, author of the GOP budget, acknowledged on the very day he released his plan, that a premium support "from a budget savings standpoint...achieves the same result" as a voucher.

This manufactured fight over whether the GOP budget contains "vouchers" or "premium supports" is just another way for Republicans to try to shift the focus away from what the plan actually does, which is to shift the costs of Medicare onto the backs of seniors by providing them with inadequate funds to purchase their health insurance from private insurers.