The plan, projected by Republicans to save trillions of dollars, would according the Congressional Budget Office eliminate $5.8 trillion dollars of Medicare spending through 2021. How is this done?
I shall quote James Kwak a contributor to the Baseline Scenario:
… it converts Medicare into a voucher program. Beginning in 2022, 65-year-old beneficiaries would receive a voucher to spend on private health insurance. The value of that voucher would be set at the amount that the government is currently projected to contribute toward Medicare for a 65-year-old beneficiary in 2022. After that point, an individual beneficiary’s benefit would go up each year by the percentage by which health care becomes more expensive because of aging. All vouchers would also go up by the amount of the consumer price index.
If medical costs continue to increase at a rate greater than the inflation rate the difference between what the voucher covers and what the elderly pay is covered by elderly.
Again the Congressional Budget Office:
… by 2030, the average 65-year-old beneficiary would pay more than double for their health care than under traditional Medicare.
Paul Starr writing in the NYT draws similar conclusions. The Ryan Plan will save the federal government costs by forcing the elderly to absorb those costs.
Privatizing Medicare would enable the federal government to wash its hands of all the vexations of health-care cost containment and leave the elderly to deal with those vexations on their own.
Starr goes on to argue that privatizing Medicare and encouraging competition among insurers will not work to lower medical care costs.
But there is no reason to believe that turning Medicare entirely over to private insurers would contribute to a solution. Historically, the traditional Medicare program has matched — and by some measures exceeded — the performance of private insurers in controlling costs. Under the payment methods that Republicans introduced in 2003, the private Medicare Advantage plans have actually cost the federal government more than the same beneficiaries would have cost if they had enrolled in traditional Medicare. via No Controlling for Costs – Room for Debate – NYTimes.com.
Harold Meyerson makes a similar point. If this plan is adopted Medicare is converted from a government program with guaranteed services to a “right-to-purchase private insurance program, subsidized up to a point”. Government will no longer have a role in combating increasing medical costs as it could have by negotiating prices with drug companies , to give one example. “Ryan simply forces the elderly, their children and the poor to pick up more of those costs”.
Supporters of the Ryan Plan such as Grace-Marie Turner cite the alleged success of the Medicare Part D program:
A system of premium support, as Representative Paul Ryan, Republican of Wisconsin is proposing, would begin to transform Medicare on this model into a more patient-centered program with private plans competing to provide quality care and offer the best value in health coverage. This same concept already is at work in the Medicare Part D program, where private companies compete to offer prescription drug benefits. Created in 2003, this program provides a range of choices and a subsidy that works much like the proposed premium support, allowing people to select the plan that best suits their needs. And because plans are competing on both benefit design and price, the Part D program is costing taxpayers 30 percent less than projected.
The next step for me is to carefully examine these arguments in support of the Ryan Plan.