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ACP-ASIM Pressroom

February 24, 1999

Internists Oppose Converting Medicare To A Defined Contribution Program

Increasing Eligibility Age Also Opposed

WASHINGTON, D.C.--Converting Medicare from a defined benefit to a defined contribution program would price many lower-income elderly and disabled Americans out of the market for health insurance, charges the American College of Physicians-American Society of Internal Medicine (ACP-ASIM) in a position paper released today.

A defined contribution program, the paper explains, would create a two-tiered system with the less wealthy being forced into plans with less coverage and benefits than the plans available to affluent retirees. The only plans that lower income beneficiaries might be able to afford would have high deductibles and co-payments, thereby imposing a harsh financial barrier on their access to care.

The College also argues that a defined contribution plan places too much faith in the ability of frail beneficiaries to "shop" for coverage and make a wise choice among competing plans.

Converting Medicare to a defined contribution program is one of the options currently under examination by the Bipartisan Commission on the Future of Medicare. Under a defined contribution model, the federal government would issue vouchers to Medicare beneficiaries to help them purchase health insurance coverage. Congress would determine the amount of the vouchers, but there would be no guarantee that the voucher amounts would be enough to purchase coverage comparable to the existing Medicare benefits package.

ACP-ASIM also opposes advancing the age of eligibility for Medicare, arguing that retirees who do not have access to Medicare or coverage through their former employer could find themselves uninsured at a particularly vulnerable period in their lives.

The ACP-ASIM also urged that a defined benefit voucher program be tested on a demonstration project basis before a decision is made to implement it nationwide. Unlike a defined benefits plan, the government would guarantee that contributions would be sufficient for beneficiaries to purchase a plan with benefits equal to the current Medicare program.

To help shore up the Medicare program financially, the College suggests:

  • requiring higher income beneficiaries to pay higher premiums to remain in conventional Medicare;
  • mandating, if necessary, a modest increase in the Medicare payroll tax and/or an increase in general revenue contributions.

"ACP-ASIM believes that strengthening and preserving Medicare should be the highest priority for Congress," said ACP-ASIM President Harold C. Sox, MD, FACP. "Though reform is clearly needed, Congress must exercise caution to assure that a program that has contributed to improved health and quality of life for million is not harmed by the same measures that are intended to keep it solvent."

ACP-ASIM is the nation's largest medical specialty organization and the second largest physician group. Membership comprises more than 115,000 internal medicine physicians and medical students. Internists are the major providers of medical care to adults in America and treat more Medicare patients that any other medical specialist.


[ Note to Editors: A copy of this paper, as well as "Reforming Medicare: Adopting a Successful Program to Meet New Challenges" is available online. ]


Jack Pope, ACP-ASIM Washington Office

Jamie Winson Bass, ACP-ASIM Washington Office
202-261-4561, pad@acponline.org

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