Last week we saw two starkly different views of how to control future costs of Medicare. President Obama is seeking to use the negotiating and regulatory power of government, while Rep Ryan wants to abandon any pretense that government can control costs and cede responsibility to individuals and private industry.
The contrast strikes at the heart of the current political divide; what is the role of government in our society.
Rep Ryan’s approach is to get government out of the health insurance business entirely, passing responsibility along to private insurers. In 2022, Medicare recipients would get a check/voucher for $8,000, (based on CBO estimates of Medicare’s average per-beneficiary funding). They’d then have to buy insurance with the eight grand, probably from private or not-for-profit health plans. There’s no way that would cover the entire cost; the CBO estimates that under the GOP privatization plan, the average health insurance policy would be more than $20,000 per year, so the average senior would have to pony up the additional twelve grand.
There are a few other complicating factors not discussed in Rep Ryan’s proposal. Here are the most ‘complicating’ ones.
– What about seniors with pre-existing conditions? What insurance company would want to cover them? Sure, there’s a mild risk-share arrangement in Ryan’s plan, but I seriously doubt don’t know that any insurer would willingly enroll a senior with hypertension, history of melanoma, signs of memory loss, and osteoarthritis.
– Who’s going to help seniors understand their options and ensure they are treated fairly by their insurers? If there isn’t a government regulatory and watchdog function, are we to rely on private insurers to police themselves? Really?
– When costs go up faster than the overall rate of inflation, what’s to be done? Ryan’s plan caps annual increases at the overall inflation rate; medical inflation is usually two to several points higher. We’ve already seen private insurers can’t control costs (or at least haven’t been able to so far), so if anything costs may go up even faster.
To Ryan et al, these are beside the point. His plan is designed to get government out of the health insurance business, and let the chips fall where they may. His plan doesn’t address these issues, and I seriously doubt he or his fellow Republicans have any intention to address them.
President Obama’s strategy is markedly different. His vision is of a more energized and focused Federal approach using the government’s leverage and regulatory power to control cost and improve outcomes.
As a start, last week the President appeared to call for the Feds to negotiate drug prices with big pharma; strengthen, greatly increase the power, and enlarge the role of the Independent Payment Advisory Board; and speed up adoption of new models to deliver care.
Notably, the President’s IPAB would make significant cuts whenever Medicare spending rose more than the increase in gross domestic product plus one percent. And, if Congress failed to act to control costs, the Secretary of HHS could act independently to initiate changes in Medicare. Finally, the IPAB could sequester Medicare funds if neither Congress or the Secretary acted.
What does this mean?
Well, at the most simplistic level, both plans would control costs by limiting future cost increases by capping future spending.
But there are two markedly different ways to do that. Ryan gets government out of the insurance function, while Obama calls for a more activist, engaged, and assertive role for the Feds.
This will be interesting.
Apr
18
The other issue left unsaid in Rep. Ryan’s plan to end Medicare is that there is not now, nor has there ever been a health insurance market for seniors. I’m guessing this means a few things may happen.
1. If I’m employed, have employer based health insurance and pre-existing conditions I may work longer than I would otherwise in order to maintain my health insurance for as long as possible. Causing a negative impact on the labor market.
2. Health insurance companies will expand to fill the gap of this market, however they will still be for profit companies and as such would severely limit coverage in order to make a profit, cost shifting even greater amounts onto the individual.
3. Emergency care would rise dramatically as the number of uninsured or underinsured seniors rises. If a senior with limited health care coverage has heart disease not covered by his/her plan, no preventative measures are taken or preventative medications prescribed so when the inevitable occurs the senior will appear in an ER. What then? Are they turned away (let’s recall Rep. Ryan’s plan abolishes the ACA) and left to die on the street or in their home?
I think these are the questions we should all be asking our politicians as we move into the 2012 election cycle. Who will make those life or death decisions? Certainly not doctors or patients because those relationships will surely diminish as we have fewer and fewer resources to obtain any health care. Do we want to allow large health insurance companies to obtain more profits by limiting care? Rep. Ryan’s plan would effectively transfer a significant portion of those voucher dollars straight into the profits of big insurance. I for one would rather take my chances on Medicare…for all this time.
It will be interesting to hear the response from the insurance companies on Ryan’s proposal. It would be huge risk to cover the Medicare population, even at a premium of 20k a year. I’m in the ESRD care giving world, and there is a reason why Medicare becomes primary after 33 months. That 20k a year premium would be eaten up in two weeks of dialysis treatment and you can double that if there are any vascular complications.