Hate Obamacare? You’re Going to Love This [OPINION]
A regulated health insurance marketplace where citizens get reduced out of pocket costs thanks to a government transfer of wealth; sound familiar? No, I am not talking about the exchanges of the Affordable Care Act; this is the Paul Ryan plan for Medicare.
If the House version of the budget had been passed into law, nine years from now new seniors old enough to qualify for Medicare would not be getting the program current seniors know and love. Instead they would be getting a voucher to shop from approved plans with no guarantee that the voucher will fully cover the cost that the private insurers are charging. Doesn’t sound too hot, does it?
When people hear about voucher plans they are terribly unpopular, so Paul Ryan leaves out the word “voucher” when he talks about it; he calls it “premium support” instead. Note that it is merely “support”, i.e. it doesn’t fully cover the premiums.
He says that his plan allows you to continue to choose traditional Medicare, which seems nice, but is terribly misleading. The whole point of the vouchers is to reduce spending on Medicare, by putting a cap on how much is spent per person.
The people most likely to take the vouchers are going to be the relatively youngest and healthiest seniors, because they will find the best rates on the private market. When that money exits the system, the pool of people left in traditional Medicare will slowly, but surely, see less money available to cover their increasing medical bills.
Government reimbursements to providers will not keep up with rising costs and fewer providers will take Medicare patients, leading to more people opting for the vouchers. Voucher recipients will see a guaranteed amount of money, but the remnants of traditional Medicare will be even more threatened by financial insolvency. Before too long, it will seem financially prudent to just scrap the old system altogether and make vouchers the only choice.
All is not well for the voucher recipient either, though. What do you think the chances are that the voucher amount is going to keep pace with rising healthcare costs?
This isn’t some lark that Paul Ryan is floating out there. This has been in the last three House budget proposals. All but 10 Republicans voted for this. This is the Republican plan for Medicare.
Unless you have been living under a rock, you might have heard that some people have had trouble using the new Obamacare website to sign up for health insurance. Imagine replacing today’s Medicare with that, only everyone trying to find their way through the system is 65+.
At this point, you might be thinking “Wait, I heard Medicare is in trouble. We have to do something, right?” Yes we do, but not this; not vouchers. It is a move in exactly the wrong direction.
The problem with Medicare is that it is underfunded. Healthcare costs do nothing but increase, although the rate of that has been slowing recently, thanks to Obamacare. Unfortunately for the Medicare program, the only people in the pool are over 65, which means that they need a lot of healthcare, especially for those near the end.
One way to fix the problem is simply to raise the payroll taxes that people pay into the system. Right now, we pay 1.45% of our income to Medicare, unless your income is over $200,000, in which case you pay an additional .9% on anything above that. Changing the rates to ensure that the system always has the right amount coming in would do the job, but it isn’t going to get a lot of popular support. Nobody wants to pay more today for something you won’t get the benefit of until you are 65; that is, if you live that long.
Another approach is to expand the pool to include more healthy people. Those people would pay an additional fee beyond the normal payroll tax, something akin to what private insurance costs. The result is more money in the coffers and drastically lower per person expenditures; problem solved.
Medicare has overhead costs that are ridiculously below what private insurers incur, and freed from the profit motive, there is no built-in reason to charge more in premiums than what you pay out. Not only would this save Medicare, it is an opportunity to create competition for private insurers, forcing them to keep their own rates as low as possible. This win-win scenario, is the so-called public option.
There are problems with Obamacare, not just the website, but the system itself. It is unnecessarily complicated to have the government coordinating healthcare exchanges in which people buy private plans with a combination of their own and federal funds. What you have to consider though, is what the ACA is replacing; a completely dysfunctional individual market that leaves 45 million Americans with no insurance and millions more with a shoddy, fig leaf version of it. Obamacare is complicated, but better than the alternative.
This is why Paul Ryan’s plan is so impossibly bad. He is trying to replace a reasonably well-functioning single payer system, albeit one you can only benefit from when you are over 65, with another unnecessarily complicated federal handout to private insurers. Worse still, it does nothing but paper over the fact that healthcare for seniors is crazily expensive and then asks grandma to pay for more of it out of her own pocketbook.
Thankfully, the just reached budget compromise doesn’t include any of the Ryan plan for Medicare, but don’t think it is gone forever. We will see it again and again, so long as Republicans keep control of the House.
If we put people who actually want government to work back in charge of the House, we can get a public option that fixes both Medicare and the ACA with one fell swoop. It’s time to tell Republicans to keep their government hands off of our Medicare.