AMA girds for "defined contribution" Medicare

The AMA House of Delegates looked at Medicare proposals at an interim meeting in Honolulu. (AP Photo/Ronen Zilberman) The AMA House of Delegates looked at Medicare proposals at an interim meeting in Honolulu. (AP Photo/Ronen Zilberman)

U.S. physicians want to have a say if Medicare ends up shifting to more of a "voucher-based" or "defined contribution" system.

Members of the House of Delegates of the American Medical Association (AMA) decided Tuesday at a meeting in Honolulu to adopt a set of Medicare defined contribution program principles.

The vote tally was not immediately available.

The AMA's Council on Medical Service developed a report that calls for the United States to replace its current Medicare program -- which combines a large, government-run program with some access to private Medicare Advantage plans -- with a new program that would put much more emphasis on use of private plans.

The government should be able to try to shore up the Medicare program's finances by using a fixed federal subsidy payment to encourage enrollees to shop for private-plan coverage based on price, the AMA House members agreed.

The AMA House said any defined contribution Medicare program should:

- Give enrollees the option of choosing a plan comparable to the traditional Medicare plan.

- Provide higher subsidies for low-income enrollees and enrollees with chronic health problems.

- Adjust the defined contribution amounts to reflect increases in health care and health insurance costs, not on changes in gross domestic product, overall inflation, or other indicators that are not directly tied to health care costs.

- Require participating health plans to meet guaranteed issue and guaranteed renewability requirements; prohibit those plans from rescinding coverage except in cases of fraudulent representation; and require the plans to meet uniform marketing standards.

- Be designed in such a way that private alternatives to the remaining traditional Medicare plan option would provide coverage that was at least actuarially equivalent to the traditional plan benefits package.

"The Council is aware that implementing a Medicare defined contribution program should be done gradually, using a phased-in approach," Dr. Donna Sweet, the chair of the council, said in a written report on the measure. "A complete transition will involve significant, coordinated efforts by all stakeholders, including the federal government, private insurers, patient advocacy groups, and the AMA."

Rep. Paul Ryan, R-Wis., Mitt Romney's running mate, has been a visible backer of efforts to set up a defined contribution Medicare program.

Alice Rivlin, a Democratic economist, also supports a defined contribution Medicare program.

Opponents of the defined contribution approach, including President Obama, have argued that opponents of Medicare could use the defined contribution approach to impose severe benefits cuts, and that such an approach would lead to antiselection pressure that eventually would kill the traditional Medicare plan option.

AMA members who oppose the AMA defined contribution plan measure persuaded the AMA House to include a provision calling for the AMA House to continue to study the possible effects of a shift.

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