Peering through the rhetorical fog on Medicare
The Kansas City Star
For almost 50 years, the concept of Medicare has been fairly simple. Americans pay for it out of their paychecks. Beginning at age 65 — or earlier, in the case of a permanent disability — they are eligible for a range of medical services.
One way or another, the program is going to get more complex. It has become too large and too expensive to exist solely as a fee-for-service model in which patients receive services, and the federal government reimburses health providers for procedures and hospital stays.
The Affordable Care Act signed into law by President Barack Obama has begun to change Medicare and will continue to do so. Republican vice presidential candidate Paul Ryan’s 2013 budget proposal contemplates even more far-reaching alterations.
The Medicare constituency is vast and potent, so it is not surprising the potential changes have become talking points in the presidential race.
Two claims in particular require a look.
The first is an allegation by presumptive presidential nominee Mitt Romney that Obama’s health care law would remove $716 billion from Medicare over a decade’s time and transfer the funds to “a massive new government program that’s not for you,” as a GOP campaign ad recently informed seniors.
This is a scare tactic, and very much off base. Nothing in the Affordable Care Act would affect any of the basic benefits that seniors currently receive from Medicare.
It does capture $716 billion in future spending projections in the Medicare program, mostly by reducing payments to hospitals, doctors and other providers. About $156 billion would be cut from Medicare Advantage plans, which seniors purchase to obtain coverage for services not provided by basic Medicare.
Some of the $716 billion in savings would be returned to the Medicare program to help seniors who fall into the “donut hole” of the prescription drug program. The rest would be used to help younger people afford health insurance.
The GOP contention that “Obamacare” raids the Medicare program is complicated by the fact that Ryan’s budget proposal also cuts about $700 billion from future expenses. Romney’s pledge to restore the money raises the question of how he would keep Medicare solvent.
Democrats, for their part, allege that Ryan’s plan — and Romney’s too, by default — would “end Medicare as we know it.”
That’s an exaggeration, in the sense it implies government would no longer provide health care for seniors. But the Ryan plan would change Medicare as we know it.
The vice presidential candidate would phase in a voucher program that Medicare beneficiaries could use to purchase plans either from traditional Medicare or private insurers. (People currently 55 or older would not be affected.) Seniors would pay out of pocket if the government’s “premium support” payments don’t cover all the services they want.
Essentially, Ryan is talking about a system of regulated private insurance plans with a public option. That makes more sense for a younger population; many Democrats wanted to move to just such a system as part of health reform.
For an older population, though, Ryan’s idea is problematic.
Many experts believe it would bisect the Medicare population, with healthier and wealthier recipients opting for private plans, and sicker and poorer beneficiaries relying on an increasingly depleted public plan. Everyone could end up paying more.
There’s no debate we must find a way to control costs in Medicare. Ryan has yet to show that competition among private insurers would drive down costs as much as he says.
Campaign rhetoric is to be expected. But what Americans really need is sound information about potential changes to a compact between citizens and government that has existed for half a century.