With the Medicare trust fund expected to run dry by 2024, Congress is considering structural changes to the federal health insurance program that covers nearly 50 million elderly and disabled beneficiaries, including more than 210,000 in Hawaii.

Former Gov. Linda Lingle, the Republican candidate for U.S. Senate, favors a premium-support option in which seniors would receive a voucher-like payment they could use to buy private insurance as an alternative to traditional Medicare. A private option could increase competition among insurers, improve efficiency and lower costs, while capping annual payments could help contain Medicare’s growth.

U.S. Rep. Mazie Hirono, the Democratic candidate, opposes a premium-support option because the annual payments may not keep up with rising health care costs, which could drive up premiums and force seniors to pay more out of pocket. Private competition could also lure healthier seniors away from traditional Medicare, leaving sicker — and more costly — seniors in a traditional Medicare program that could collapse under the burden.

Hirono instead supports the federal health care reform law approved by President Barack Obama and Congress that lowers the growth in Medicare costs by $716 billion over the next decade, mostly through reduced payments to hospitals and insurers. The law uses some of those savings to expand preventive care and prescription drug coverage in Medicare.

Both Lingle and Hirono oppose increasing the Medicare eligibility age of 65.

Medicare trustees have said that some type of congressional action is necessary because the $550 billion-a-year program is unsustainable as people live longer, the large baby boomer generation retires and Medicare costs exceed economic growth.

The disagreement over a premium-support option — which would be a fundamental change to Medicare — is among the most substantive public-policy differences between the candidates.

Hirono called the option a voucher that would not keep pace with the rising cost of medical care for most seniors. "There are other things that we can do that will continue to keep the commitment that we have to our kupuna," the congresswoman said.

Hirono believes Medicare can be sustained without moving toward privatization. "It’s always harder to find those answers that do not involve just making cuts on programs that hurt the very people that we intend to support," she said.

Lingle said she would preserve traditional Medicare but offer seniors the opportunity to choose private health plans from regulated exchanges. "This improvement, the theory is that — because of the competition on these transparent national exchanges — it will drive down the cost over time," she said.

Lingle said she would insist on protections against private insurers "cherry-picking" the healthiest seniors. She also said that if annual payments — adjusted by 1 percentage point faster than growth in the economy — do not keep up with health care costs, she would consider turning to higher-income seniors to help make up the difference.

"We know one thing for sure: The existing model over time is going to take up a larger and larger part of the federal budget," she said. "And it’s going to crowd out any spending we can do on education or on other issues. We know that. We know that mathematically that’s true.

"So we have to find new models."

While the premium-support option is mostly associated with U.S. Rep. Paul Ryan, R-Wis., the Republican vice presidential nominee, some Democrats have backed variations of the concept over the past two decades. U.S. Sen. Ron Wyden, D-Ore., authored a policy paper with Ryan on the subject last year, although he has since disagreed with Ryan’s approach. The Bipartisan Policy Center’s deficit reduction task force recommended a premium-support plan last year that reflects what Lingle supports.

Cheryl Matheis, the AARP’s senior vice president for policy strategy and international affairs, who was in Hawaii last week as part of an outreach campaign on potential changes to Medicare and Social Security, said the advocacy group wants a defined benefit package in Medicare preserved.

"But the question is, ‘Can you design a premium-support proposal that will be fair and will be able to have a guaranteed benefit package that will be sufficient for people that they can afford?’" she asked. "I don’t know."

Seniors in Medicare already have private options to the government’s traditional fee-for-service program.

Nationally, 25 percent — or about 12 million people — have chosen Medicare Advantage, in which private insurers such as the Hawaii Medical Service Association contract with the government to offer health plans with extra benefits. According to the Kaiser Family Foundation, 42.6 percent — or about 88,900 — in Hawaii opted for Medicare Advantage in 2011, among the highest enrollment rates in the nation.

The government, however, pays more per beneficiary under Medicare Advantage than under traditional Medicare, an inequity the federal health care reform law closes. A large portion — at least $156 billion — of the $716 billion in Medicare reductions in the law comes from Medicare Advantage.

Republican presidential nominee Mitt Romney and Ryan have criticized Obama for the Medicare reductions, yet Ryan’s House budget proposal presumed those cuts would take effect and built the savings into his Medicare plan. Romney has said he would repeal the health care reform law.

Lingle has also said she would repeal the health care reform law unless significant changes are made. She believes the higher payments to private insurers in Medicare Advantage are due to the additional benefits and the lack of transparent national exchanges, not a flaw in private competition. She said a premium-support model has worked for seniors who use Medicare’s prescription drug benefit.

"Anybody who says we can’t consider a new approach, I think they’re in denial, I think they’re putting their political career ahead of protecting Medicare, or they just don’t get it," she said.

Hirono said higher payments to private insurers in Medicare Advantage "could not be justified." She said the changes in the health care reform law will help strengthen Medicare, while a premium-support option would put the entitlement program at risk.

"Clearly the Ryan plan changes Medicare as we know it. They’ll voucher Medicare," she said. "And it also — while they’re eliminating the (health care reform law) — it’s going to have a big impact on Medicare costs."