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Romney Pushes Privatization of Medicare, Veterans' Health

November 13, 2011

Suppose you are a candidate for President of the United States. Suppose further that you know that over the past 40 years, the per-beneficiary cost of Medicare rose 40% less than private health insurance. Say you also know that studies consistently show that the Veteran's Administration (VA) health care system provides "the best care anywhere," consistently outperforming its private sector counterparts.
And now for today's quiz: what reforms if any would you propose to the Medicare and VA systems that combined serve over 52 million Americans?
If you're Mitt Romney, the answer is you'd privatize both.

Governor Romney delivered that dangerous prescription for veterans on Veterans Day. As he explained over barbecue to a small gathering of veterans:

"Sometimes you wonder, would there be some way to introduce some private sector competition, somebody else that could come in and say, you know each soldier gets X thousand dollars attributed to them and then they can choose whether they want to go on the government system or the private system and then it follows them, like what happens with schools in Florida where they have a voucher that follows them, who knows."

Sadly for Romney, the VA already clobbers the private sector competition.
The turnaround at the VA isn't merely, as Paul Krugman explained, "one of the great policy success stories of the past two decades." Writing in the Washington Monthly, Steve Benen highlighted the 2005 findings of Phillip Longman in "The Best Care Anywhere":

As Longman explained at the time, "Who do you think receives higher-quality health care? Medicare patients who are free to pick their own doctors and specialists? Or aging veterans stuck in those presumably filthy VA hospitals with their antiquated equipment, uncaring administrators, and incompetent staff? An answer came in 2003, when the prestigious New England Journal of Medicine published a study that compared veterans health facilities on 11 measures of quality with fee-for-service Medicare. On all 11 measures, the quality of care in veterans facilities proved to be 'significantly better.' ... The Annals of Internal Medicine recently published a study that compared veterans health facilities with commercial managed-care systems in their treatment of diabetes patients. In seven out of seven measures of quality, the VA provided better care."

In June 2010, Elizabeth McGlynn, associate director of Rand Health, a division of the Rand Corp., concurred with the assessment that "it's hard to top veterans' health care."

"You're much better off in the VA than in a lot of the rest of the U.S. health-care system," she said. "You've got a fighting chance there's going to be some organized, thoughtful, evidence-based response to dealing effectively with the health problem that somebody brings to them."
The combination of its information system and support tools, routine performance reporting and financial incentives for managers who hit quality targets gives it an edge, said McGlynn, who co-authored a comparative study published in the Annals of Internal Medicine in 2004 that found the VA outperformed its community health-care counterparts by 20 percentage points in preventive care. It also performed significantly better on chronic disease care and in overall quality.

Just as telling, a June 2011 study by Amal Trivedi and Regina Grebla published in the journal Medical Care found that the VA delivered much better results than for elderly patients than private sector Medicare Advantage (MA) plans:

Among persons aged 65 years or older, the VA health-care system significantly outperformed private-sector MA plans and delivered care that was less variable by site, geographic region, and socioeconomic status.

Worse still, Romney's voucher scheme for the VA would inevitably lead to rationing. As a stunned Krugman summed it up:

You know what voucherization would mean in practice: the vouchers would be inadequate, and become more so over time, so that veterans who don't make enough money to top them up would fail to receive essential care. Patriotism!

It's no wonder the Veterans of Foreign Wars tersely responded to Romney's proposal by simply declaring, "The VFW doesn't support privatization of veterans health care"
Americans shouldn't support it for seniors, either. Because while privatization and de facto rationing of health care is the worst possible prescription for elderly Americans, that's just what Dr. Romney ordered.

A week before he told veterans they he would leave them to the tender mercies of the marketplace, Mitt Romney offered future Medicare recipients roughly the same deal. As the New York Times reported, Romney's Medicare vague voucher deal has similarities to the privatization of scheme featured in the Ryan budget supported by 98 percent of Republicans in Congress:

Mr. Romney's proposal would give beneficiaries the option of enrolling in private health care plans, using what he, like Mr. Ryan, called a "premium support system." But unlike the Ryan plan, Mr. Romney's would allow older people to keep traditional Medicare as an option. However, if the existing government program proved more expensive and charged higher premiums, the participants would be responsible for paying the difference.

Romney endorses a "public option" for Medicare along the lines originally proposed by Alice Rivlin and later abandoned by Paul Ryan. (Ironically, Romney once cited a public option as his reason for opposing "Obamacare.") Either way, as Ezra Klein of the Washington Post explained, Romney's scheme would necessarily shift costs to seniors and with them, ensure rationing of their health care. As Klein explained the Ryan plan backed by 235 House Republicans and 40 GOP Senators:

The proposal would shift risk from the federal government to seniors themselves. The money seniors would get to buy their own policies would grow more slowly than their health-care costs, and more slowly than their expected Medicare benefits, which means that they'd need to either cut back on how comprehensive their insurance is or how much health-care they purchase. Exacerbating the situation -- and this is important -- Medicare currently pays providers less and works more efficiently than private insurers, so seniors trying to purchase a plan equivalent to Medicare would pay more for it on the private market.
It's hard, given the constraints of our current debate, to call something "rationing" without being accused of slurring it. But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need.

And as Ron Pollack of Families USA warned, "seniors could end up with fewer benefits for the same or higher costs" under Romney's "defined contribution" approach, even with the government option maintained. Looking at the original Rivlin plan which it resembles, the Post's Klein explained why:

Ryan-Rivlin only survives if it holds cost growth to the rate of GDP growth plus one percentage point. If it doesn't, then the subsidies offered by Ryan-Rivlin quickly become inadequate."

Just how inadequate was documented by the nonpartisan Congressional Budget Office in its April analysis of the Ryan budget:

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.

Remember, too, that Mitt Romney wants to raise the Medicare eligibility age from 65 to 67. According to the Center on Budget and Policy Priorities, "Raising Medicare's Eligibility Age Would Increase Overall Health Spending and Shift Costs to Seniors, States, and Employers." The Kaiser Family Foundation forecast that two year increase would mean "65- and 66-year-olds would face higher out-of-pocket health care costs, on average. Two-thirds of this group -- 3.3 million people -- would face an average of $2,200 more each year in premiums and cost-sharing charges."
Assuming, that is, that 65 and 66 year olds under President Romney could even find health insurance at any price. After all, Romney like every Republican presidential candidate has called for the repeal of the Affordable Care Act. The dreaded Obamacare doesn't merely enable 32 million people to gain health insurance, but prevents insurers from using pre-existing conditions or lifetime payout caps from refusing to provide coverage to anyone. If the GOP is successful in Congress, in the White House and in the Courts, those 65 and 66 year olds would find themselves out of luck.
Today's veterans and tomorrow's elderly don't have to guess what the future holds under President Romney. As Ezra Klein pointed out in June:

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.

Sorry, Governor Romney. Apparently, the private sector just can't compete.


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

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