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Killing Medicare in Pictures

June 12, 2011

"We want to save Medicare," a senior GOP aide put it, "while Democrats would let it die." Sadly for him, it appears that Republicans spouting that talking point are about to be mugged by reality. For starters, recent polling shows the American people are overwhelmingly opposed to the Ryan plan to privatize and ration the government insurance program for 46 million seniors even as Republican presidential primary voters demand fidelity to it. Worse still for the 235 House Republicans and 40 GOP Senators who voted for the Ryan scheme, a few pictures show that privatizing health care for the elderly is just about the very worst thing America could do to Medicare.
On Sunday, Nobel Prize-winning economist Paul Krugman summed up the dynamic with one simple chart:

As Krugman explained,

The larger point is that we don't have a Medicare problem, we have a health care cost problem. And Medicare actually does a better job of controlling costs than private insurers -- not remotely good enough, but better...
If Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does. If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper.

Back in March, Ezra Klein of the Washington Post made much the same point. "The private health-insurance market has exacerbated cost growth in Medicare," he corrected noted, adding, "Medicare's costs have grown more slowly than private health insurance and Medicare's premiums are about 20 percent lower than private health-care insurance." And that gap has grown even more pronounced in recent years:

Last week, Klein recounted the sad history of Republicans' recent efforts to privatize the delivery of Medicare benefits:

What they've got in mind already exists in Medicare. "Our premium-support plan is modeled after the Medicare Part D prescription-drug program," Paul Ryan (R-Wis.) told me. But Part D hasn't controlled costs. Instead, premiums have risen by 57 percent since 2006, and the program is expected to see nearly 10 percent growth in annual costs over the next decade.
Moreover, this isn't the first time we've tried to let private insurers into Medicare to work their magic. The Medicare Advantage program, which invited private insurers to offer managed-care options to Medicare beneficiaries, was expected to save money, but it ended up costing about 120 percent of what Medicare costs.

(Despite Paul Ryan's bogus claim that "Obamacare itself that ends Medicare as we know it" by cutting the Medicare Advantage program, Ryan's budget includes the very same reductions.)
But you don't have to take Ezra Klein's word for it that "the GOP outsources Medicare to private insurers and gives senior citizens checks that cover less and less of the cost of insurance every year." In words and pictures, the nonpartisan Congressional Budget Office issued the same dire warning.

By leaving beneficiaries at the whim of private insurers whose policies cost more and are padded by substantially higher overhead, and by capping the value of their vouchers, Ryan's budget proposal would produce dire consequences. As the CBO concluded in April, "A typical beneficiary would spend more for health care under the proposal." Make that, as Director Douglas Elmendorf explained, a lot more.

Under the [Ryan] proposal, most elderly people who would be entitled to premium support payments would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary's spending on premiums and out-of-pocket expenditures as a share of a benchmark amount: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary's share would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario.

It's no wonder President Obama responded by promising, "I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs." The President's own plan calls for $200 billion in savings from Medicare over the next decade by reducing "excessive spending on prescription drugs" and "holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018, through strengthening the Independent Payment Advisory Board (IPAB)."
Given the proven inability of private insurers to control costs while maintaining benefits for Medicare recipients, Republicans and their right-wing media megaphones who decried "pulling the plug on grandma" have once again revved up the demagoguery machine. While George Will protested about "government by the 'experts,'" David Brooks warned "if 15 Washington-based experts really can save a system as vast as Medicare through a process of top-down control, then this will be the only realm of human endeavor where that sort of engineering actually works." (As Klein and Matthew Yglesias pointed out, in addition to the current government-run Medicare program, the public health care systems in the UK and Canada show exactly "where that sort of engineering actually works.") As for the IPAB, the Republicans now accusing Democrats of demagoguery and "letting Medicare die" have a term you may heard before: "The Real Death Panel."
Looking over the data regarding Medicare's superior costs performance compared to private insurance, Paul Krugman concluded:

"It's a mystery why anyone claims that shifting more people into private insurance is a good idea. Actually, no, it isn't a mystery; it's an outrage."

While Republicans want to destroy the program in order to save it, Democrats have a simple picture for providing health insurance for the elderly today and tomorrow. As Nancy Pelosi put it, "it's called Medicare."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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