Is the Romney/Ryan plan for Medicare really that bad? This is a question that has been bothering me lately. It's easy to quote the standard talking points in opposition--the end of Medicare as we know it, thousands more in medical costs shifted to seniors, and have I mentioned VOUCHERS???
But consider: the cafeteria-style plan offerings that that the R/R proposal envisions are not much different from the insurance exchange model that the Affordable Care Act (Obamacare) calls for. And, the R/R team swears that if you want old-style Medicare, you can keep it! How bad can that be, really?
But it's probably not the ACA we should thinking about when trying to get a handle on the R/R Medicare changes. After all, the ACA is basically trying to expand the current, mostly-for-profit health insurance system to the uninsured population. The R/R proposals for Medicare, on the other hand, would shift people already with health coverage from a single-payer system to a new, private system with multiple choices of payers.
It does remind me a little of Medicare Advantage. Medicare Advantage (also known as Medicare Plus) was an effort to bring free-market efficiency to the Medicare health system by giving private health plans subsidies if they would offer HMO-type insurance products to Medicare enrollees.
With Medicare Advantage, plans could get higher reimbursements from the federal government. Suddenly, new plans were springing up everywhere, offering exercise classes and free hearing aids, adding the preventive services you find with HMOs—really it was a pretty good deal for the seniors who had that option. But some areas—especially rural or poor areas—simply did not get Medicare Advantage options.
The Medicare Advantage approach was really a bonanza for the insurance plans. Their Medicare book of business became one of their most profitable. In places like Florida and New York, where Medicare reimbursements were already higher, the plans did really, really well.
(As a sidenote, this is where the controversy over the Medicare cuts under the ACA come in. The Obama team, when looking at how to pay for the ACA, recognized that the “incentives” offered to the plans, along with some other reimbursements, looked a lot like the wasteful, bloated government spending that certain tea-partiers and deficit hawks are always complaining about. It really was a prime example of where budgets could be cut without seriously affecting the care given. So they did it. They negotiated cuts with both hospitals and health plans and found $500 billion in savings, partly by reducing those generous Medicare Advantage payments.)
So how does this relate to Romney and Ryan’s plan for Medicare? Well, it may be that the R/R team will come up with some incentives for private plans to participate in this voucher system they envision, and we’ll see another boom just like the Medicare Advantage one.
But maybe as time goes on and medical costs go up, private plans will find it better for their bottom lines to drop out of the Medicare business. Or they may start raising copays and deductibles, just as they have been in the regular marketplace.
And almost certainly, there will be Medicare enrollees who are not attractive to the private system. Those from rural, poor areas may have not choice but to stick to the traditional fee-for-service, just as in the Medicare Advantage example. And since all the wealthier, healthier seniors will now be on private plans, what will that do to traditional Medicare?
There are a lot of questions, not the least is how will R/R make all this attractive to private plans. After all, higher reimbursements would be a sure budget-buster, and they’re trying to CUT government spending.
So, we have a choice. We can stick to a proven, successful model, Medicare, cut some waste, and still have some tough choices to make down the road to ensure the system’s finances remain sound as the baby boomers retire.
Or we can try a new, untested system. One that has many unanswered questions and unclear consequences. The Medicare Advantage experiment generates mixed reviews—it hasn’t worked for everyone, and it hasn’t held down costs.
Changing a system as big and important as this one is a gamble.
I guess the question is, do you feel lucky, Gramps?
Well, do ya?
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