- Associated Press - Thursday, February 16, 2012

WASHINGTON (AP) — Two Republican senators unveiled a Medicare rescue plan Thursday that features an accelerated transition to private health insurance for many seniors, a gradual increase in the eligibility age, and higher premiums for middle-class and upper-income retirees.

Sens. Tom Coburn of Oklahoma and Richard Burr of North Carolina say they’re not out to win a political popularity contest. Instead, they want to engage fellow policymakers and the public in a “grown-up” conversation about the scope of changes needed to preserve Medicare in some form for future generations.

“All of us in Congress are running around fixing everything except our biggest problem,” Mr. Coburn said in an interview. “If you don’t start fixing Medicare now, you can’t save it.”

The senators’ plan is unlikely to advance in Congress during an election year, but it will help define the debate for presidential and congressional candidates.

Medicare covers health care for 49 million seniors and disabled people, providing essential protection against unpredictable medical costs in retirement. But the program is widely acknowledged to be in serious trouble. Its giant trust fund for inpatient care is projected to become insolvent in 2024, meaning that payroll taxes collected will not be enough to cover the full cost of expected benefits.

Many pieces of the Coburn-Burr plan received bipartisan support in proposals last year from two commissions on the national debt; Rep. Paul Ryan, Wisconsin Republican, who is chairman of the House Budget Committee; and even President Obama. Those include limiting the use of private supplemental insurance by seniors, raising premiums for upper-income beneficiaries and revamping Medicare’s copayments to provide better protection against catastrophic costs while requiring greater financial responsibility for routine medical bills.

Like Mr. Ryan, Mr. Coburn and Mr. Burr would gradually raise the eligibility age to 67.

But their plan also differs in several important ways.

It would start the transition to a system dominated by private insurance plans in 2016 instead of waiting a decade, as Mr. Ryan has proposed. Private plans would compete with a government-sponsored program, a retooled version of today’s Medicare. Seniors would get a fixed amount from the government that they could apply toward a private plan or the government plan modeled on Medicare. Benefits would not be spelled out, but all plans would have to meet a test of basic insurance value.

“We have created a competitive-bid model much like Part D — the Medicare prescription benefit,” Mr. Burr said. “Across the spectrum, some seniors would go for lower premiums and some for higher premiums and richer benefits.”

Another key difference with proposals from Mr. Ryan and Mr. Obama is that the new plan would not attempt to cap the future growth of Medicare spending, relying instead on competition to hold costs down.

The proposal has not been reviewed by the nonpartisan Congressional Budget Office, but Mr. Coburn and Mr. Burr say it could save $200 billion to $500 billion over a decade.

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