Bipartisan plan to gut Medicare: Vouchers, Premium Support, and Competition
Democrat Ron Weiden and Republican Paul Ryan are pushing a plan to send the Medicare we know into a death spiral. Medicare would become voucher system, with recipients receiving checks based on the premiums of the second-cheapest Medicare-HMO in an area. Annual voucher increases would be limited to Gross National Product growth plus one percent, far less than the historical growth rates of Medicare costs. Medicare’s premiums would be higher than HMOs premiums, because Medicare would be forced to accept sicker, more expensive patients, who would not survive under HMOs managed care. Medicare recipients would have to pay the difference between Medicare’s higher premiums and the vouchers based on the 2nd-cheapest-HMO plan, out of their own pockets, which would steadily drive healthier patients out of Medicare. Medicare would fall into a death spiral of higher premiums, fewer, sicker patients, and less funding. This plan was also promoted in the 2003 Medicare Modernization Act. See http://tinyurl.com/7enm8eo .
New York Times, December 14, 2011
By ROBERT PEAR
WASHINGTON — A Democratic senator, Ron Wyden of Oregon, and a Republican member of the House, Paul D. Ryan of Wisconsin, unveiled a bipartisan plan on Wednesday to revamp Medicare and make a fixed federal contribution to the cost of coverage for each beneficiary.
The lawmakers aim to reshape the debate over the giant health insurance program by addressing concerns that have provoked fierce opposition to similar ideas in the past.
Just as important as the details of their proposal was the fact that the two were working together on an issue that both parties have exploited for political advantage.
In 2010, many Republicans won House seats — and the support of older voters — by arguing that President Obama’s health care law would damage Medicare. Democrats are hoping to retake the House by arguing that Mr. Ryan and other House Republicans are pushing for the privatization of Medicare, which they say could greatly increase costs for beneficiaries.
The new Wyden-Ryan proposal, by blurring the contrast between the parties on this issue, could make it more difficult for Democrats to win the argument.
The proposal would make major structural changes in Medicare and limit the government’s open-ended financial commitment to the program.
Under the proposal, known as premium support, Medicare would subsidize premiums charged by private insurers that care for beneficiaries under contract with the government.
Congress would establish an insurance exchange for Medicare beneficiaries. Private plans would compete with the traditional Medicare program and would have to provide benefits of the same or greater value. The federal contribution in each region would be based on the cost of the second-cheapest option, whether that was a private plan or traditional Medicare.
In addition, the growth of Medicare would be capped. In general, spending would not be allowed to increase more than the growth of the economy, plus one percentage point — a slower rate of increase than Medicare has historically experienced.
To stay under the limit, Congress could cut payments to providers and suppliers responsible for the overspending and could increase Medicare premiums for high-income beneficiaries, the lawmakers said.
The proposal is sure to come under fire from beneficiaries and Democratic lawmakers who see themselves as the pre-eminent defenders of Medicare.
For his part, Mr. Wyden said: “Medicare is the most important fiber in the social safety net. I would never do anything to shred it, weaken it or harm it in any way. Our proposal places traditional Medicare, long supported by progressives, alongside a menu of private alternatives that provide the choice and competition long supported by conservatives.”
Unlike the Ryan budget blueprint approved by the House in April, Mr. Ryan said, the new proposal would preserve the traditional fee-for-service Medicare program as an option for all beneficiaries. “Our proposal harnesses the power of competition to address the root cause of medical inflation,” said Mr. Ryan, the chairman of the House Budget Committee.
Democrats expressed concerns about the proposal based on policy and politics. A senior Democratic Congressional aide said, “This plan gives bipartisan political cover to Ryan and other Republicans against whom we have been waging a very successful political offensive.”
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