House GOP Looks Ahead to Huge Medicare Overhaul in 2016

For years, Republicans have openly pined for pushing Medicare further into the private sector. But they have been restrained by the practical realities of divided government and the political risks of a plan that Democrats have said would turn the popular insurance program into a voucher system.

Conservatives on Capitol Hill, however, have not surrendered the dream and now are planning to undertake the dirty work to make it a legislative reality. House Republicans will start working next year on drafting a Medicare "premium-support" bill, according to Ways and Means Health Subcommittee Chairman Kevin Brady.

It is the most ambitious item on the upcoming legislative agenda that the Texas Republican laid out in an interview with National Journal.

Brady said his panel wants to start the laborious work of creating actual legislative text, likely in preparation for 2017 under a new Congress and president at the earliest. This year's House budget endorsed the policy, as it has for several years under Republican control.

It would follow the first two of Brady's self-described steps to saving Medicare. The first was the "doc fix" deal reforming physician payments, passed this spring. He also hopes to advance in the fall a package of reforms that would, among other things, simplify Medicare hospital payments and introduce pay-for-performance to post-acute care.

Then comes premium support.

"Next year, what we hope to turn to is the third and final step for saving Medicare in the long term, which is offering better and smarter personalized Medicare options for seniors," Brady said. He specifically named combining Medicare's hospital and physician coverage, with an out-of-pocket spending cap, and "providing a personalized Medicare option that most call premium support."

The details of how the policy would actually work are what Brady and his staff plan to start crafting next year. Premium support generally means that Medicare would provide seniors with a set amount of money to purchase a private health plan. In some iterations, the traditional Medicare program would continue as an option.

"It is doing the legislative work, getting the [Congressional Budget Office] scores, making sure those plan options work both from a budget standpoint and a health care standpoint," Brady said.

It could be politically fraught: Just 26 percent of Americans favor moving to premium support, according to a July poll by the Kaiser Family Foundation. President Obama repeatedly attacked 2012 Republican presidential nominee Mitt Romney over the policy, linking him to past House budgets that included it, which had been produced by then-vice presidential candidate and now-Ways and Means Chairman Paul Ryan.

Asked about any political risk in a presidential election year, Brady emphasized that the bill wouldn't necessarily move in 2016, just that the "hard work" of putting together legislative language would begin.

"There is an awful lot of groundwork that needs to be done on that," he said.

The other longer-term project that Brady plans to undertake is combining Medicare's hospital and physician coverage (known as Part A and Part B). Details are still to be determined, but the concept, which has been floated for some time, would streamline the program by having seniors pay one deductible for both kinds of care. There would also be a cap on out-of-pocket costs that they would have to pay, Brady said.

Obama reportedly expressed an openness to the idea during the 2011 budget negotiations. But the proposal has also been criticized by others who allege that, by combining the two deductibles, it would increase costs for seniors who don't use hospital care.

Before the work on those more expansive proposals starts, however, Brady wants to press forward with some Medicare hospital-payment reforms that have been in the works for a while. In the lame-duck session last year, he released a discussion draft with a litany of proposals, and his panel held a hearing last month on the issue.

He said he expects a number of smaller bills to move this fall in tandem, rather than as a larger bill, and for them to earn bipartisan support. Before Congress left for its August recess, four bills were introduced. But the clock of presidential and congressional politics is ticking.

"Before things start to close down next year with the Senate election and the presidential elections and all that," Brady said, "we think this fall may be the last real chance to move health policy through both bodies."