When Paul Ryan Gave the Game Away on Health Care Rationing
House Speaker Paul Ryan has just experienced two weeks from hell.
On Monday, the nonpartisan Congressional Budget Office (CBO) led by his hand-picked director mauled Ryan's so-called "replacement" for the Affordable Care Act. CBO forecast that over the next decade the "American Health Care Act" will cost 24 million Americans their insurance. The bill, which slashes $880 billion in Medicaid funding even as it delivers a massive tax cut windfall of the same size to the richest Americans, only lowers projected deficits because it continues Obamacare's $1.1 trillion in Medicare savings, something Ryan for years decried as a "raid on Medicare." Even the claim that Ryancare eventually "lowers premiums" is only made possible by forcing the older, sicker and less wealthy from the ranks of the insured altogether. Topping it all off, Congress' budget scorekeeper eviscerated Ryan's go-to talking point that Obamacare is "collapsing."
But it wasn't just the severe beating administered by the CBO (also known as the "Conservative Bullshit Obliterator") that left Speaker Ryan politically weakened. Ryan's carefully crafted reputation as a "serious thinker" and "policy wonk" was battered, too, by side-splitting statements that ranged from the comically pathetic to the desperately dissembling. After all, the notion that "the people who are healthy pay for the people who are sick" isn't "the fatal conceit of Obamacare," but instead the very basis of health insurance. Withdrawing coverage from tens of millions doesn't give those people "access" to health care, give them "choice" or enhance their "freedom," but only guarantees the exact opposite. And ushering millions to the brink of financial ruin and thousands annually to needless deaths isn't "an act of mercy." If he succeeds, at worst Paul Ryan's will be an act of murder. At best, Ryan is engaged in brutal exercise in cold-hearted rationing of health care.
As he has been all along. In February 2010, Paul Ryan gave the game away. At a time when over 50 million people lacked coverage, Ryan's fatal conceit then as now was to pretend that private insurers weren't the gatekeepers standing between them and their health care.
"Rationing happens today! The question is who will do it? The government? Or you, your doctor and your family?"
You read that right.
A month before President Obama signed the Affordable Care Act, insurers were discriminating against millions of people with pre-existing conditions, using the vile practice of "rescission" to drop coverage for hundreds of thousands more when they got sick, and bankrupting families with wholly inadequate caps on annual and lifetime benefits. Meanwhile, thanks to the worst U.S. economic calamity since the Great Depression, employers were shedding insurance coverage, raiding deductibles and shifting costs to their workers. Nevertheless, Paul Ryan began pushing the same doomed formula--insufficient and too-slow growing subsidies, underfunded block grants and toothless consumer protections--that led to his beclowning this week.
The context for Paul Ryan's first major foray into health care policy was his proposal to privatize Medicare, the government insurance system for 60 million American seniors. But as he soon learned, the politics of his voucher scheme were even worse than the math.
In April 2009, twenty-four months before all but four House Republicans voted for Ryan's plan to ration Medicare, the smaller GOP minority said yea on essentially the same plan. As Steve Benen detailed in the Washington Monthly in the fall of 2009:
In April, 137 Republicans voted in support of a GOP alternative budget. It didn't generate a lot of attention, but the plan, drafted by the House Budget Committee's Rep. Paul Ryan (R-Wis.) called for "replacing the traditional Medicare program with subsidies to help retirees enroll in private health care plans."
The AP noted at the time that Republican leaders were "clearly nervous that votes in favor of the GOP alternative have exposed their members to political danger."
In February 2010, Rep. Ryan unveiled his "Roadmap for America's Future" and its "slash and privatize" agenda for Social Security and Medicare. Because the value of Ryan's vouchers fails to keep up with the out-of-control rise in premiums in the private health insurance market, America's elderly would be forced to pay more out of pocket or accept less coverage. The Washington Post's Ezra Klein described the inexorable Republican rationing of Medicare which would then ensue:
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.
That was certainly the conclusion of the nonpartisan Congressional Budget Office. As the CBO warned in April 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.
Paul Krugman summed up the problem at the heart of Ryan's gambit. "If Medicare costs had risen as fast as private insurance premiums, it would cost around 40 percent more than it does," Krugman explained, "If private insurers had done as well as Medicare at controlling costs, insurance would be a lot cheaper."
All of which is why Rep. Ryan went back to the drawing board and came with up with a new version of his Medicare overhaul. This time, Ryan introduced the idea of keeping traditional fee-for-service government Medicare as a "public option" on his new exchanges. Based on a 2010 proposal from Pete Domenici and Alice Rivlin, the New York Times described Ryan v2.0 this way:
Congress would establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide benefits of the same or greater value. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.
In addition, the growth of Medicare would be capped. In general, spending would not be allowed to increase more than the growth of the economy, plus one percentage point -- a slower rate of increase than Medicare has historically experienced.
Which is why the Congressional Budget Office still found Ryan's revised plan still would shift health care costs to future seniors. Looking at the CBO's March 2012 assessment of the new 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.
But Ryan's plan didn't just embrace a public option for Medicare. As Ezra Klein explained, the privatization of Medicare contained in Ryan's "Path to Prosperity" blueprint and the GOP budget based on it also requires:
You'd get the health insurance from a "Medicare Exchange", and "health plans which choose to participate in the Medicare Exchange must agree to offer insurance to all Medicare beneficiaries, thereby preventing cherry picking and ensuring that Medicare's sickest and highest cost beneficiaries receive coverage."
Familiar, indeed. Alice Rivlin, the former Clinton OMB chief who worked on Ryan's first version of the voucher, later confirmed to Klein that the idea was almost identical to the Affordable Care Act:
If Ryan-Rivlin will unleash ferocious innovation that holds costs down, then so too should the Affordable Care Act. So at the end of our conversation, I asked Rivlin, who supported PPACA [Obamacare], if I was missing something. She laughed. "I keep talking to Paul and trying to convince him of that," she said. "But even if he agreed with me, he couldn't say so."
He still hasn't said so, even though his ever-evolving Medicare scheme resembles Obamacare more and more with each passing year. His "Better Way" for Medicare now features exchanges, navigators, subsidies that grow with medical inflation, a public option, federally-financed "risk corridors" and more--all features of Obamacare and then some. But the supposed "brain" of the Republican Party can never admit he wants for Americans over 65 what he would deny those under it.
And deny them he would.
Ryan's rationing starts as it always does with subsidies that are too small. Trumpcare's age-based tax credits start at $2,000 a year for those 18 to 29, and max out at $4,000 for Americans starting at age 60. As the CBO showed, a 64-year old person making $26,500 annually would see their share of his/her insurance premium jump from $1,700 to $14,500 a year. And as the Kaiser Family Foundation showed, the impact of the GOP's American Health Care Act would be staggering for lower income and older policyholders compared to the current subsidies provided by Obamacare.
But this picture understates the pain inflicted on current Obamacare beneficiaries. Deductibles and out-of-pocket costs would inevitably rise as well, in part because the GOP plan allows insurers to sell plans which pay out a smaller percentage of costs for physician visits, tests, prescription drugs, surgical procedures and hospitals. More damaging still, the Ryan/Trump plan eliminates "cost-sharing reductions" provided the Affordable Care Act that currently enable lower income individuals and families to get discounts on deductibles and out-of-pocket maximums. Worst of all, as Kaiser warned, the AHCA's limits on the growth of its tax credits over time means that gap with the ACA's subsidies will grow with each passing year:
While ACA tax credits grow as premiums increase over time, the tax credits in the American Health Care Act are indexed to inflation plus 1 percentage point. Based on CBO's projections of ACA tax credit increases and inflation, the disparity between the average credits under the ACA and the two replacement plans would widen over time. The average tax credit current marketplace enrollees would receive under the American Health Care Act would be 41% lower than under the ACA in 2022 and 44% lower in 2027.
As many have noted, the GOP's plan to "repeal and replace" Obamacare will hit Trump voters hardest. It's no mystery as to why. As the New York Times explained, "The Republican plan offers less assistance to older and lower income Americans, especially in rural areas." Due to the lack of competition for insurers and health care providers, as the Center on Budget and Policy Priorities (CBPP) documented, 12 of the 15 states hardest hit by the AHCA's shriveled tax credits are rural ones. Fourteen of the 15 voted for Donald Trump for President in 2016.
And as CBPP also explained, Ryancare won't protect people who benefitted from Medicaid expansion, either. The result of slash Medicaid funding and turning over what's left in the form of block grants to the states is knowable: states simply will choose to trim benefits and reduce eligibility, especially during times of economic recession. But the Ryan plan is even worse. As workers' incomes rise and fall, they may lose Medicaid and then become subject to the 30 percent "continuous coverage penalty" they must pay, not to Uncle Sam, but to a private insurer. Worse still, each state's block grant will have a per capita cap that only grows each year by the consumer price index plus one percent. As with the AHCA's insufficient tax subsidies, that simply won't keep up with the usually higher rate of medical inflation. The inevitable outcome, the CBO predicted this week, "in 14 million fewer Medicaid enrollees by 2026."
But for House Speaker Paul Ryan, that public health disaster is a feature, not a bug. As he enthusiastically boasted to right-wing radio host Hugh Hewitt:
"This is so much bigger, by orders of magnitude, than welfare reform."
"We are de-federalizing an entitlement, block granting it back to the states, and capping its growth rate. That's never been done before."
Of course, "de-federalizing an entitlement" is just another example of Ryanese. In English, it translates as "rationing."