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Medicare plan suggests use of vouchers

The Heritage Foundation gave a peek Monday at a way in which congressional Republicans might overhaul the Medicare system _ using vouchers to buy private health insurance.

Medicare now entitles virtually all seniors to a specific package of health benefits. Under the voucher system, Medicare would become a "defined contributions" system.

That means it would guarantee a minimum voucher that seniors could use to buy their own coverage from a variety of private health plans, according to the proposal by the conservative foundation.

The reform is much like the system used by federal workers and retirees for the past 35 years, said Stuart Butler, director of domestic and economic policy studies at the Heritage Foundation.

Under the foundation's plan, an annual voucher worth around $5,000 would be issued for each recipient to purchase a Medicare-approved health plan. The value of the vouchers would not increase by more than 6 percent a year, less than Medicare's current 10 percent growth rate.

The exact amount of the voucher _ and the premiums each plan would charge _ would be adjusted for age, sex, whether beneficiaries are elderly or disabled, whether they are institutionalized or living at home, and for geographic location.