Wednesday, October 27, 2010

qotd: Rep. Ryan's roadmap for Medicare

January 2010
A Roadmap for America's Future, Version 2.0
A plan to solve America's long-term economic and fiscal crisis
By Representative Paul D. Ryan, Ranking Member, Committee on the Budget

A Medicare Program for the 21st Century.

The entire methodology of the program must be converted away from a program that shelters providers and consumers from prices – and is therefore inefficient in restraining rising costs – into one in which beneficiaries choose the most affordable coverage that best suits their needs.

For future Medicare beneficiaries who are now under 55 or younger, the proposal creates a standard Medicare payment to be used for the purchase of private health coverage. The payment will be made directly to the health plan designated by the beneficiary (similar to the administration of the refundable health care tax credit), with the beneficiary receiving any leftover amount as a payment from the health plan, or assuming financial responsibility for any difference in the payment and the total cost of the premium.

Each Medicare beneficiary becomes eligible for the payment by enrolling in a health insurance plan. Medicare will publish an annual list of plans that are "Medicare certified." Medicare enrollees are able to use their payment to pay for one of the Medicare certified plans, or any other plan, such as those offered by former employers or available from the private market.

For affected beneficiaries, the payment replaces all components of the current Medicare Program (Medicare fee-for-service, Medicare Part B, Medicare Advantage, and Medicare Part D). Payment amounts are income-related and risk-adjusted.

For individuals now younger than 55 only, the proposal adapts Medicare's eligibility age to reflect Americans' improving lifespans, raising in gradually, and in modest steps, from the current 65 to 69 years and 6 months.

The proposal would establish a mechanism that would be activated if the Medicare trustees determined that the percentage of funding from general revenues exceeded 45 percent in the prior fiscal year. ...the mechanism would apply an automatic 1-percent reduction in payments for services provided in Medicare's fee-for-service sector.


June 30, 2010
Statement to the Commission on Deficit Reduction
by James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Governnment/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin

You are plainly not equipped by disposition or resources to take on the true cause of deficits now and in the future: the financial crisis. Recommendations based on CBO's unrealistic budget and economic outlooks are destined to collapse in failure. Specifically, if cuts are proposed and enacted in Social Security and Medicare, they will hurt millions, weaken the economy, and the deficits will not decline. It's a lose-lose proposition, with no gainers except a few predatory funds, insurance companies and such who would profit, for some time, from a chaotic private marketplace.

Comment:  If the Republicans regain control of the House of Representatives in the election next week, as some experts predict, Rep. Paul Ryan will likely become Chairman of the Committee on the Budget. This will coincide with the release of the report from the Commission on Deficit Reduction - a report that many fear will recommend changes that would make significant cuts in the Medicare program. Clearly, Medicare is under threat.

Rep. Ryan is being touted as a brilliant wonder boy who has crafted a budget proposal, "A Roadmap for America's Future," that would return the government to solvency. Not only is the fundamental premise incorrect, he has introduced no new concepts, but rather a rehash of old proposals to privatize programs which the government is better suited to deliver.

His proposal for Medicare is to eliminate the government program as a defined benefit and substitute vouchers for private health plans as a defined contribution that shifts more risks to Medicare beneficiaries. He would also postpone eligibility until age 69 and a half (even he choked on 70).

He claims that the problem is that Medicare "shelters consumers from prices," but that isn't true. Medicare has deductibles and coinsurance that can result in considerable out-of-pocket expenses. It is the private sector plans - Medigap, retirement plans, Medicare Advantage plans - that tend to reduce the out-of-pocket spending. Most Medicare beneficiaries have such coverage, especially the Medigap plans.

Rep. Ryan is not calling for more sensitivity to health care prices; he is calling for more sensitivity to insurance premiums. By holding down the government contribution, most Medicare beneficiaries will be forced to buy plans with fewer benefits because that is all that they can afford. What a cruel and inhumane approach to financing health care. As Prof. James Galbraith says, cuts in Medicare "will hurt millions."

Almost everyone recognizes that Medicare benefits are insufficient, and that is why so many purchase Medigap plans. But are Medigap plans a reasonable approach to expand coverage? They provide one of the worst values in private insurance coverage. They are terribly overpriced considering the benefits provided. It would be far better and overall less expensive to roll over the Medigap and Part D drug benefits into the traditional Medicare program, and then eliminate Medigap, Part D, and the Medicare Advantage plans.

We need to change the national dialogue. The current discussion is about pulling back on Medicare - the wrong discussion. We need to get the word out about what a rip-off the private sector plans are. We need to get rid of them by improving Medicare and making them unnecessary. Once we've done that then we need to get the word out about how our improved Medicare would be a better program for everyone.

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