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New Budget, New Name, Same Old Ryan Medicare Rationing

March 12, 2013

When Congressman Paul Ryan first rolled out his plan three years ago to replace Medicare with a voucher system, he acknowledged the inescapable conclusion that his massive cost-shifting to seniors constituted rationing. "Rationing happens today!" Ryan protested, "The question is who will do it? The government? Or you, your doctor and your family?" But then as now, he omits the real culprit: private insurers who can deny coverage, jack up premiums and cherry-pick healthier customers. Three years , three budget plans and two name changes later, Paul Ryan's Medicare privatization scheme will still lead to de facto rationing of health care for tens of millions of future elderly Americans.
Of course, you'd never know that reading Ryan's latest "Path to Prosperity" document. In the House Budget Committee Chairman's Orwellian dystopia, policies determined by Americans' elected government represent rationing, while private insurers are not "unaccountable" (p. 41). But whether or not the GOP's never-ending war on Medicare continues to offer a traditional "public option" and whether or not Republicans call it a "voucher", "premium support" or "competitive bidding," the resulting burden for the elderly is only a small difference of degree..
Past assessments by the Congressional Budget Office (CBO) of previous Ryan budget proposals reveal the GOP's Vietnamization of Medicare. Far from ""strengthening the program for future seniors [and protecting] the Medicare guarantee" (p. 41), Paul Ryan would destroy Medicare in order to save it.
In April 2011, 235 House Republicans and 40 GOP Senators voted for Ryan's budget and its inevitable rationing of Medicare. To be sure, the 2011 version of the Ryan budget blessed meant de facto rationing for the system that today serves almost 50 million American seniors. As the CBO documented on April 5, 2011, Ryan's plan to replace public insurance provided by the government with vouchers for the elderly to buy their own coverage in the private market means getting less care for more money. The CBO analysis concluded that "a typical beneficiary would spend more for health care under the proposal." At $6,500 a year, make that, as Director Douglas Elmendorf explained, a lot more.

Under the 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.

That dismal math and even grimmer poll numbers prompted Chairman Ryan in December 2011 to offer a new version of his privatization scheme. But that warmed-over version included the 2012 GOP budget which garnered the support of 98 percent of Republicans in Congress would still dramatically shift the costs for health care onto seniors themselves.
Looking at the CBO's March 2012 assessment of the revised House GOP budget, ThinkProgress explained why version 2.0 of Ryan's voucher program was little better than the first:

Beginning in 2023, the guaranteed Medicare benefit would be transformed into a government-financed "premium support" system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or--unlike Ryan's original budget--traditional fee-for-service Medicare...
But the budget does not take sufficient precautions to prevent insurers from cherry-picking the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $2,200 more by 2030 and up to $8,000 more by 2050. Finally, the budget would also raise Medicare's age of eligibility to 67.

Even maintaining the eligibility age at 65 and means-testing seniors, the dynamic at work in the 2013 edition of Ryan's budget released Tuesday is unchanged:

The benchmark plan would be either the second-least-expensive private plan or fee-for-service Medicare, whichever cost less. If a senior chose a more expensive plan than the benchmark, he or she would pay the difference between the subsidy and the monthly premium. And if a senior chose a plan less expensive than the benchmark, he or she would receive a rebate for the difference

But over time, traditional Medicare itself would become more expensive, as private insurers shun the sicker, older seniors the federal government would be forced to accept. The result is that more and more Americans would be left to the tender mercies of the private insurance market. As Paul Krugman explained two years ago:

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.

Three years since Paul Ryan decried that "rationing happens today," his Medicare privatization proposal remains no less dangerous. As Krugman warned:

"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."

To put it another way, Paul Ryan's privatization passion play has assumed Shakespearean dimensions: a turd by any other name would smell just as awful.


About

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

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