Wednesday, April 20, 2011

Not [my wife’s future] Medicare

Last week, the House GOP passed a budget framework, authored by budget committee chairman Paul Ryan, which would make fundamental structural changes in Medicare and Medicaid. Democrats already are running ads against potentially vulnerable Republicans saying that they “voted to end Medicare.”

This is a case where the Democrats are trying to do to Republicans what Republicans did to Democrats before the mid-term election — scare seniors. The House GOP’s pre-election Pledge to America stated that the Affordable Care Act’s “massive Medicare cuts will fall squarely on the backs of seniors, millions of whom will be forced off their current Medicare coverage;” this accusation was a staple of Republican ads against vulnerable Democrats.

But guess what? The Ryan budget would repeal just about everything in the Affordable Care Act except the law’s Medicare reductions. ABC news reports that “in a postelection reversal, House Republicans are supporting nearly $450 billion in Medicare cuts that they criticized vigorously last fall after Democrats and President Barack Obama passed them as part of their controversial health care law.” Included in the Ryan budget are the cuts in payments for Medicare Advantage plans that they had charged would cause “millions” to lose their current Medicare coverage. The GOP explains the turn-around on the grounds that the Democrats took money from seniors to expand entitlements for someone else, whereas they will use the savings to “strengthen Medicare” and lower the deficit. I am not sure that seniors will buy the distinction.

But what about the Democrats’ scare tactic that the Ryan plan will “end Medicare?” Well, I guess it depends on how old you are and the meaning of the word “end.”

I am 55 years old, my wife is 53. Under the Ryan plan, I would be able to enroll in the traditional Medicare program when I turn 65, and presumably, could stay in it for the rest of my life. My wife, though, wouldn’t have that option. Instead, she—and everyone else who is now younger than age 55 – would get a set amount of money from the federal government to go out and buy a “standard” package of benefits from a private insurance company. This would effectively “end” the government’s open-ended legal guarantee that Medicare will pay for all covered services, no matter what they cost.

Which is exactly the point of the Ryan plan: he wants to cap the government’s cost exposure as part of a long-term plan to reduce federal spending.

But it would fall to my wife, and others who fall on the wrong side of the age cut-off for traditional Medicare, to pay the difference between the government’s contribution and the actual cost of benefits. And the gap is big and would increase over time, according to the Congressional Budget Office. CBO estimates that in 2022, a typical 65-year-old would pay 61 percent of the cost—premiums and out of pocket costs—of the standard insurance package under the Ryan proposal, while the same 65-year-old would pay 27 percent under CBO’s baseline projections for traditional Medicare. In 2030, the beneficiary’s share would be 68 percent under the Ryan proposal, compared to 25 percent under traditional Medicare. The bottom-line, according to CBO, is that “a typical beneficiary would spend more for health care under the [Ryan] proposal than under CBO’s long-term scenarios for several reasons. First, private plans would cost more than traditional Medicare because of the net effect of differences in payment rates for providers, administrative costs, and utilization of health care services, as described above. Second, the government’s contribution would grow more slowly than health care costs, leaving more for beneficiaries to pay.”

I haven’t yet broken the news to my wife that I could get a better benefit than she.

So does the House-approved budget (Ryan plan) end Medicare, as the Democrats charge? Not for current seniors, not for me, not for anyone age 55 or older. Their effort to scare current seniors into thinking that they will lose their Medicare benefits is not supported by the facts, just as the GOP’s efforts to scare seniors before the mid-term elections was similarly misleading.

But when my (slightly younger than me) wife turns Medicare age, under the GOP plan, she would get a voucher that would require that she pay more at the outset, and progressively more over time. Republicans will argue that this cost-shift is necessary to prevent a fiscal train wreck and to “strengthen Medicare” so that it doesn’t go broke. Perhaps, but there is no question in my mind that for my wife, it would end Medicare’s open-ended guarantee that the government will pay for seniors’ covered benefits, and she’d pay more as a result.

Today’s question: Do you think the Ryan plan would “end” Medicare?


Steve Lucas said...

No. The vouchers would become the new base line for a, possible limited, but still viable insurance policy. Currently eye and dental coverage are extra cost items and we would see other limitations based on total cost.

For me the whole problem with Medicare is the do more, make more nature of the policy. The incentives are for over use of the system. A case in point is a friend who had avoided interacting with the medical system until he needed cataract surgery.

Fist came the physical. The doctor did not like the spots on his face so off to a dermatologist and many appointments later all the spots are gone. Sore hip, we have a surgery for that, so a hip replacement. Hands are sore, more surgery. The hip does not seem to have healed, x-rays. Ah, here is the problem, arthritis in the back. The only solution is more surgery and we do not like the looks of those x-rays. First a CT scan, not conclusive, then a MRI and yes there is a mass, but we will have you in every six months for the rest of your life to monitor that situation.

Now about those droopy eye lids, we have a surgery for that and you are sure you do not want that back surgery?

He was able to get his cataract surgery, but only with all of these other medical “interventions.”

The two most expensive parts of medicine are the doctor’s prescription pads and the patient’s expectations. This has morphed into a do all and damn the cost attitude that is driving medical cost. Add payment for things, not thinking, and we have a system that is completely out of control.

As long as patients expect unlimited medical testing and coverage, and doctors are paid to fulfill this fantasy, the vouchers will not be enough to cover this expectation.

Throw in an aggressive drug/device industry pushing every new “discovery,” along with the politics of entitlement, and the voucher concept will have an uphill battle, but they by themselves are not the end of Medicare.

Steve Lucas

Joanne Lynn said...

Let's assume that Bob's wife lives the average 5 years longer than he does (sorry, Bob) so she gets 7-8 years of widowhood. Let's assume that she made the conventionally imprudent choices not to save or insure for long-term care, and that she ended up needing 24-hour care for many years at the end of life. And let's assume that, like most Americans, she and Bob did not have savings sufficient to cover those costs, so she spent down to Medicaid - becoming a middle-class dual eligible. Under Rep Ryan's bill, the state block grant would do something for her, but probably not much; and Medicare would cover whatever she had chosen within her limited voucher allotment. Here's the question to Rep Ryan and his followers - are we willing to let old women die on the street without adequate shelter, personal care, or medical care? Are we willing to claim that their situation is just their poor choices? American communities have always rallied to care for old women (and usually also for the smaller number of old men!). If we are unable to ignore the needs of our grandmothers, then we have to figure out how to provide reliable services at an affordable price, and pretending that we can let it rest on their shoulders is just fooling ourselves. Figuring out how to slim down Medicaid and Medicare is difficult, but not impossible. Figuring out how to abandon old women is a task we should not take up!

Steve Lucas said...

I find a great deal of fear mongering and logical fallacies involved in any discussion concerning Medicare, Medicaid, or Social Security reform.

Poor, poor dear Bob’s wife will be left to wander the streets without big governments protection does not speak well of her, or Bob’s, ability to plan for the future.

Those block grants will not be spent on grandma is a projection of an event yet to happen.

Here is what is happening in my rust belt state with a large budget deficit. New Medicaid programs are being funded to keep the elderly in their homes, as this is more cost effective than simply moving them into a care facility. This in turn leaves more money for those in need of 24 hour care.

This was driven home as a 91 year old friend passed away just a few short weeks ago. Various Medicaid programs not only provided home care, but also home delivery of meals. When home care was no longer viable, she was move to a care facility.

Today more than half of medical and law school students are women. There will be a ten year plus planning window for those who will need to work under the new rules. I will give Bob and his wife enough credit to plan for this issue.

Dragging out this old story of throwing grandma under the bus for financial gain does not hold water and does not further the debate. There will always be those unfortunate few who need assistance and we as a country have never abandoned them. At 53, and wishing Bob’s wife a long and healthy life, it could well be over 20 years before she would need these services

This is a far cry from the legions in dirty bath robes and slippers wondering the streets some would have us believe would be the result of limiting government payments in an effort to keep the program, as a whole, viable.

I am sure that if poor, poor, dear Bob’s wife suffers every possible catastrophe that can befall a person, someone will help.

Steve Lucas

Harrison said...

I could not agree more with this statement:
"As long as patients expect unlimited medical testing and coverage, and doctors are paid to fulfill this fantasy, the vouchers will not be enough to cover this expectation."

And that is why I do not understand the opposition to the ACA.
The ACA was a reasonable attempt to change the culture of medical care.
It would use market forces and payment structure and research into evidence based practice to change doctors interactions with patients and patient expectations.
It was far from perfect, but it was a valid start.
It is a valid start.
I keep forgetting that it is now U.S. law.

The voucher system does none of that.
It is based on the Republican philosophy of 'starving the beast.'
But that hasn't worked.
President Reagan did not successfully do that to the federal government. He talked that game but the government grew phenomenally under him.
It has consistently grown under every administration -- with the possible exception of the Clinton administration.

The vouchers will kill Medicare.
But the expectations will continue.
The politicians who stick to this plan will be voted out of office and replaced by those who will give back entitlements.
And the culture will continue and the politicians will be made afraid to try anything.

Please revisit the ACA.
It is not dramatic, but it covers almost everybody in the country for roughly the same financial outlay that we have now, and it works towards changing the whole system.
This will be a very slow process.
If it is not slow, it will not work.
And our economy will suffer if we don't change anything.


skatha said...

I'm continually stunned by the inability of doctors to see the rising influence of neoliberalism in the business model of medicine. The remainder of the public sector is well acquainted with it. First off, one needs to think beyond humanitarian concerns. That is a flaw the policymakers of Washington do not have. Secondly, one needs to think of the voucher system as the beginning of a process not the end of the story. Once Medicare is removed from consideration as an entitlement in the minds of Americans, the voucher system will disappear. Not dramatically, but as a series of "adjustments" made necessary by continuing high deficits and debts that are a hallmark of the Ryan plan. Remember, the US is slated to have a huge federal debt as late as 2080 under that plan. The question isn't whether your wife will have a voucher but whether my kids will. The other issue is whether the market will again fail to provide seniors coverage. That market failure was the reason Medicare was instituted in the first place and the main reason private insurers stayed away from the senior market until they received sizable subsidies from the government under the Bush administration

Steve Lucas said...


I think part of the negative ACA reaction was due to the way it was done and the mandates.

You made a good point about people wanting their entitlements. As long as someone else is paying give me all you got. One point of the early Obama tax plan was to set up a system where 52% of the population would not pay taxes and in many cases receive a check from the government. Today if we take all of the income over $100,000, doctors included, we still could not fund our federal spending.

The voucher system is clumsy and I am sure will change over time. The attempt is not to starve the beast, but control cost/spending.

Much of what we are debating here will wind its way through the courts. That will define the limits of what we can and cannot do.

Politics being politics I am afraid you will be right and this issue will not be dealt with in a positive manner. This is also probably the best debate going on this issue, I don’t see much in Washington other than posturing.

Steve Lucas

Unknown said...

Just an update and FYI. Prob won't see this mainstreamed.
The White House’s new deficit plan has the drug industry crying foul, and that means Big Pharma may now join Big Insurers to push back on health reform.

Drug industry sources tell FOX Business the Administration is backtracking on what is called the “PhRMA deal” in health reform, a deal that was struck behind closed doors in late 2009 and early 2010 in order to get the industry to support and endorse health-care reform.

Read more:

ryanjo said...

"the “PhRMA deal” in health reform, a deal that was struck behind closed get the industry to support and endorse health-care reform"

Wow, I hope that we physicians won't lose the deal that AMA & ACP cut with Obama for their support. Oh that's right -- the medical leadership didn't get anything for their support! Not the SGR rollback, not a meaningful tort reform, not onerous regulation reduction.

I'm so relieved; we've got nothing to lose.

John Collins said...

The new limitations will definitely be felt in the first couple of years, but look on the bright side - Medicare's services might get better in the future because of this development.

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