published Thursday, April 21st, 2011

The GOP Medicare shuffle

If tea party Republicans care about keeping Medicare intact, they are going to be surprised — and very angry — by what the deficit reduction plan approved by House Republicans would do to Medicare. What House Republicans have approved is nothing like what was promised by its architect, Republican House Budget Committee chairman Paul D. Ryan.

“Starting in 2002,” Ryan promised in a Wall Street Journal op-ed piece, “new Medicare beneficiaries will be enrolled in the same kind of health-care program that members of Congress enjoy.”

Ryan repeated that elevated promise on NBC’s “Meet the Press.” “For future generations,” he said, “what we are proposing is a personalized Medicare, a Medicare system that works exactly like the health care I have as a member of Congress and federal employees have.”

Based on an impartial analysis by the Congressional Budget Office and two other analyses, Ryan’s promise is not just empty — it’s a political hoax. Ryan’s plan would change Medicare from an entitlement program that provides fixed medical services to a voucher program that would offer government subsidies to seniors to help them purchase private insurance.

The CBO’s analysis shows that those subsidies would not come close to buying what Medicare now provides. Americans on Medicare under the Ryan plan would pay $6,400 to $7,000 more per year than they would pay under Medicare as it now exists. That margin of difference would continue to grow, shifting an ever larger portion of the cost from Medicare to the enrollees.

The Medicare voucher would decline in value because its annual increase would be tied to the Consumer Price Index, which lags the more rapid rate of inflation in health care costs. The government would save money — and Ryan’s deficit reduction plan would give it away in tax cuts to rich corporations and the wealthy. But Medicare enrollees themselves would spend a lot more than they’re now paying, and their uncontrolled insurance costs would rise rapidly.

That’s hugely different from the way the Federal Employee Health Benefit Plan works. The FEHBP actually works like a good employer-sponsored plan in which the employer — the federal government in this case — annually picks up most of the annual inflationary increase in the cost of employees’ premiums.

In 2009, for example, Medicare’s total expenditure per beneficiary increased by 5.8 percent, and FEHBP plans’ coverage increased by 6 percent in cost, rising in tandem with the annual increase in health care costs. The Consumer Price Index, however, decreased by 0.4 percent. Under the Ryan plan, that would mean that the Medicare voucher would go down by 0.4 percent, while federal employees’ health care coverage and provider payments rose by 6 percent.

Given a few years of such huge differences in Medicare vouchers under the Republican plan, many seniors would quickly find themselves in medical bankruptcy.

The Republican mantra of getting some “consumer skin in the game” to encourage “health-care consumers” to be smarter shoppers for their health care isn’t the answer, either. A Rand Corporation study discussed last month in the American Journal of Managed Care showed that the more seniors’ health insurance costs increased, the less they went to the doctor — and the more their number of days spent in a hospital rose. The conclusion was that patients with higher deductible policies simply sought fewer doctor visits and less preventive care, and ultimately got sicker and spent far more time in the hospital, at much greater costs to themselves and to insurers.

In fact, the only reason that the Republican proposal would reduce Medicare costs is that it would merely shift the cost differential to seniors — just when they could least afford it. There are many better methods to preserve Medicare and ramp down costs. They are intertwined with larger medical-industry reforms, model practices and best-treatment protocols, preventive care and higher Medicare contributions from the very affluent. The Ryan-House Republican plan is simply smoke and mirrors.

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