The ACP Advocate Blog
by Bob Doherty
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?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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