Much has been made of Rep. Paul Ryan’s budget proposals, drawing praise from the right and opprobrium from thinking, moral people.

However, even those on the right inclined to accept most of his plan, are vocal in their protests on how Medicare might be affected. Of course these folks largely consist of those already on Medicare or who might qualify for it in the near future. They are rightly concerned that, despite assurances to the contrary, their own medical care and the costs to them may be adversely treated.

I was not previously aware of this, but Ryan’s suggestion that Medicare be converted into a premium support program operating through private insurers is not a new idea.

In 1995 Henry Aaron—not the baseball great—devised this premium support plan with Robert Reischauer, former president of the Urban Institute. They did this as an alternative to the failed health care plan offered by Hillary Clinton that was rejected by Congress.

The basic idea is simple: let people pick their health insurers in the private market, subsidize the premiums, and competition will drive down costs. That’s the theory behind Ryan’s plan, recently endorsed by Sen. Ron Wyden (D-Ore.) in a white paper the two wrote.

It differs from Aaron’s original vision — in part because it has fewer protections for beneficiaries — but the essential concept is the same. Aaron said this isn’t the time to test it out.

In that article Aaron explains why he has changed his mind. A large part of his plan rested on the assumption that market pressures with some government influence would result in lower insurance costs to participants. But experience has demonstrated that is not happening.

The best example for this is Medicare Advantage. Many seniors opt for this coverage rather than regular Medicare. The “advantage” in these plans may well be the additional coverage for treatments not included in Medicare like vision and dental or bonuses such as health club memberships.

But in the case of Medicare Advantage, similar to premium support in that Medicare pays a private insurer to cover someone, the attempts at risk adjustment have raised costs by about 8 percent, Aaron noted. On top of that, although there are many Medicare Advantage plans in existence, they are not cheaper than traditional Medicare, and there’s little to suggest they will get cheaper.

“The evidence to date is not encouraging,” Aaron said, noting a recent study that isolated the effects of competition on Medicare Advantage costs from government-related influences. “After controlling for all those factors, Medicare Advantage plans are more expensive than is traditional Medicare.”

Aaron has not totally abandoned his original idea that premium support might be a workable solution. He warns about adoption for the citizenry as a whole since certain aspects of premium support are now in place for some through the health insurance exchanges established in the Affordable Care Act.

Aaron said. “The Medicare population is vastly more difficult to deal with than the population under the Affordable Care Act. We should prove that the health insurance exchanges work, get them up and running before we take seriously, in my view, calls to put the Medicare population through a similar system.”

Aaron believes two further problems exist with the plan set forth by Ryan, or any premium support plan for that matter.

The first is that the cap on Medicare inflation mandated by that plan is no more than 1% above GDP. But health care costs have soared far above the growth in GDP and such a cap would mean fewer and fewer benefits.

Furthermore to achieve the goals of premium support for Medicare requires strict regulatory controls. In light of the strong antiregulatory mood present in Ryan’s own party today, it is doubtful that those effective controls would be in place.

Aaron recently testified before Congress and the article I cited above includes both a link to that entire testimony and a video of Aaron on why he changed his mind.

I am on Medicare and have no complaints about my coverage or the program in any way. Since I became enrolled I have had six hospitalizations, an untold number of tests and doctors’ visits, and major heart surgery. I firmly believe any changes to Medicare as it exists would be detrimental, if not to me, to future beneficiaries.

But the most striking aspect of this story to me lies in its utter irony. I have often noted that the individual mandate contained in the Affordable Care Act, as well as other provisions, were originally a Republican proposal introduced in the Senate in 1993, also as an alternative to Hillary Clinton’s plan.

That mandate was touted as the way to go by large segments of conservatives and, of course, was the basis for the Massachusetts health care plan promulgated by Mitt Romney.

But, come noon on January 20, 2009, that plan was dropped like a hot potato by the right, with formerly enthusiastic supporters calling it socialistic and unconstitutional.

Now the OTHER option to Hillary Care has resurfaced only to be at least partially discredited by its own architect. Of note, however, is that his rationale for doing so is rational, unlike the illogical and lying screeds unleashed against the ACA.

That law is now before the Supreme Court, due to lawsuits filed by liars and hypocrites.

I guarantee you that if Ryan’s plan becomes law, the nearly 50 million current Medicare beneficiaries and the millions more on the cusp of eligibility will make the work of 26 states’ attorney generals resemble child’s play.


Post a comment or leave a trackback: Trackback URL.


  • Deke James  On May 3, 2012 at 7:34 PM

    I read this article in Huffpo and agree. I also read something about Nancy Pelosi willing to give in. I think it was in an email that Russ Feingold sent out to members of his org. Progressives United. I think it should be renamed Liberals United. In the words of Reg Progressive is kinda of squishy.

  • Deke James  On May 3, 2012 at 10:33 PM

    I think eventually Paul Ryan’s Ayn Rand fiasco will come apart. Ryan might not get re-elected.

Please give me your thoughts.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: