This article first appeared in the St. Louis Beacon, Oct. 12, 2012 - Thanks to Medicare, Americans over age 64 have access to nearly every doctor and hospital in the country without having to look at insurance company lists. Medicare is not perfect – copays and deductibles can be high, and there are significant gaps in what it covers. However, most would agree that Medicare has slashed poverty among seniors, transforming their lives for the better.
Unfortunately, vice presidential candidate Paul Ryan would destroy Medicare while falsely claiming to protect it. He would compel most Americans under age 55 today to remain in the world of private health insurance for life. Instead of being automatically enrolled in Medicare at age 65, beneficiaries would receive a voucher, or “premium subsidy,” to apply toward their purchase of health insurance.
How would the financial value of that voucher be determined? Health plans would be rank-ordered by their prices. The voucher would be set to the price of the next-to-cheapest plan. So if Medicare costs more than that, seniors would have little choice. For all of the reasons spelled out below, Medicare would very likely cost more than that almost-rock-bottom plan. Tomorrow’s seniors would have no choice of traditional Medicare unless they can pay the difference.
This new program cannot in good faith still be called Medicare, or even “Medicare As We Know It." It should be called “Paul Ryan’s Health Care Food Stamps.” In other words, he would replace Medicare with an increasingly inadequate resource that is limited to those in the most desperate of straits. That’s just not Medicare.
The coming election promises to be a referendum on health care. The decision should be based on facts and evidence, not empty platitudes that distract from substantive issues.
Vouchers would decrease choice for seniors. Private plans with limited networks would dictate which physicians seniors may see and which hospitals they may use. Freedom of choice of physicians is something most Americans want; seniors would likely lose this if driven from Medicare into the skimpy networks of private insurance companies.
Vouchers would not reduce costs; they would shift them onto the patient. The nonpartisan Congressional Budget Office (CBO) has estimated that out-of-pocket costs for a typical 65 year old would be more than twice as large under Ryan’s original Medicare proposal ($12,500 annually) than under traditional Medicare. Estimates for the latest version of his plan are still pending.
Private insurers divert a lot of money to bureaucracy. Private health insurance requires marketing, underwriting, profits, multi-million dollar CEO salaries, and a host of other expenses that do not apply to Medicare. As a result, administrative costs for private insurers are a whopping 17 percent of revenues, compared to Medicare in which administrative costs are less than 2 percent of expenditures.
Medicare controls costs better than private insurance plans. According to the Centers for Medicaid and Medicare (CMS), Medicare spending rose by an average of 4.6 percent each year between 1997 and 2009, while private insurance premiums grew at a rate of 6.7 percent each year. Private plans already participate in Medicare Advantage and have been a spectacular failure, costing Medicare 12 percent more per beneficiary.
Vouchers do not end Medicare “as we know it”; they end Medicare. Period. If a bad chef took a cake, crushed it under a truck and mixed it with toxic sludge, it’s no longer a cake. The new mess cannot be served as “cake – just not as we know it.” Conservative proposals for Medicare vouchers have been defeated for more than three decades, and this terrible idea must be defeated again.
Over time, the value of the vouchers would likely shrink relative to the cost of ever-rising premiums. Seniors would have to decide between paying their insurance premiums or their utility bills. Some, no doubt, would prioritize gas, water, and electricity over health care The nation would see ever-increasing growth in poverty among the elderly, a trend Medicare helped reverse decades ago.
Shifting health-care costs onto seniors is bad health policy. Ultimately, the best way to preserve Medicare is to correct its flaws and provide it to all Americans. “Improved Medicare for All,” also known as a single-payer system, would combine comprehensive benefits with effective cost controls.
A single-payer system would slash administrative costs system-wide by $400 billion a year. It uses proven effective cost control tools such as streamlined administration, negotiated discounts, and separate budgets for hospital operating costs and capital investment to permit real health planning.
“Improved Medicare for All” would never become a marginalized safety-net program. Everybody in, nobody out.
Ed Weisbart, M.D., CPE, FAAFP, is chair of Physicians for a National Health Program – St. Louis.