Seniors Prefer Ryan’s Medicare Plan?
The new Washington Post-ABC News Poll show 50% of seniors view Paul Ryan’s Medicare plan favorably.
I’m not sure if they really understand what he proposes or if they just don’t care about making sure their kids and grandkids have the same benefits they have. Are they ignorant of what he really proposes, and which both Romney and House Republicans approved, or are they just selfish? I don’t know.
What I do know is that Ryan’s plan has been analyzed by dozens of non-partisan groups. All of them say the same thing. Under Ryan’s plan, people now 55 and under will be given a voucher – a premium support payment – based on nominal GDP growth plus .5% pegged to regular inflation. As we all know, health care inflation has been nearly 4 times higher than regular inflation. What that means is that health care delivery costs will rise faster than the value of the voucher. That’s where that $6,0000 number that’s been thrown around comes from. This number may not seem like much, but it gets worse when you look more closely at it. The Center for Economic and Policy Research/ (CEPR) summarized a CBO analysis, saying
In 2022, the projected cost of purchasing a Medicare equivalent plan is equal to 35 percent of the median 65-year-old’s income. By 2050 the cost is projected to rise to 68 percent of the median 65-year-old’s income…[The projected payment to buy a Medicare equivalent policy] would be equal to 200 percent of the income of the median 85-year-old.
What Ryan does is sift the costs for seniors’ health care expenses from the government to seniors. Yes, it will reduce the budget deficit because health care spending is huge, but his Medicare plan does not save any money in the health care delivery system, i.e. health care providers and suppliers. It does nothing to bend the cost curve, apart from expecting seniors to become more rational buyers of health care.
In other words, he’s telling future seniors to shop around more, or to tell doctors they won’t get that test the doctor wants done, or to question their doctor’s judgement. Good luck with that!
But that is not all. Ryan also sets up Medicare exchanges – exactly the same type of exchanges that the GOP rails against as part of the Affordable Care Act – from which seniors can review and pick their private insurance. Overall, that’s fine. Having been a shopper of private health insurance, I approve of exchanges where people can review different plans (apples to apples comparisons) and choose one that best suits their needs; but as we know, seniors oftentimes don’t choose the best plan for themselves, and evidence suggests from recent studies that some seniors are often misled on costs and benefits so that they ending up paying far more than they would under traditional Medicare.
As we all know, too, a private insurance market currently exists under the Medicare umbrella. It’s called Medicare Advantage. However, what too many don’t know is that Medicare Advantage costs the Medicare program 14% more than traditional Medicare for a variety of reasons. One of the biggest reasons for this differential is because of traditional Medicare’ size: the program’s size enables it to use its massive buying power to lower costs far more than a variety of private insurance companies can. In addition, Medicare’s administration costs are much lower, around 3% compared to 20% to 30% for Medicare Advantage.
So, here’s the point: health care, especially for seniors, costs all of us far too much. We all agree on that point. Currently, the U.S. spends 17% of GDP on health care while other developed countries spend between 3% to 11%. So, I’m not saying Medicare should not be reformed, but I believe any reforms must be targeted at reducing the overall costs inherent in the delivery system rather than just shifting ever increasing costs to seniors.
If current seniors believe this is a good deal for their kids and grandkids, then I have to wonder what they’re thinking. As a senior myself, if his plan were put in place next year, I’d be flat broke in a decade or so, rather than lasting 20 some years. Every dime I saved for 30 years for my retirement would be gone, forcing me to move in with my kids. Is that the scenario 50% of seniors today want for their kids?