Hey, what a great idea

Let’s make the best government program we have into an inefficient cash cow for the insurance industry! Dean Baker:

The NYT claims that plans that could raise the cost of Medicare equivalent policies for seniors by $34 trillion are gaining increasing support in Congress. These plans involve replacing Medicare with a voucher. This leads to higher costs both because the administrative costs of private plans are far higher than Medicare and they are likely to be less effective in controlling costs.

The Congressional Budget Official projected that a Republican plan along these lines, that was approved by House earlier in this year, would raise the cost of Medicare equivalent polices by $34 trillion over the program’s 75-year planning horizon. While this plan would save the government money by reducing its payments for Medicare, it would mean that future generations of workers would pay far more for health care in their retirement. The cost of Medicare equivalent policies would far exceed the typical retiree’s income by 2050.

It would have been helpful if this article had pointed out that these proposals imply both a huge increase in health care costs to beneficiaries and an increase in costs to the country as whole. Virtually all research shows that these sorts of plans will make the country’s health care system considerably less efficient.

3 thoughts on “Hey, what a great idea

  1. The Medicare as voucher deal has been the Republican option since the 1950’s when they first started talking about it. Its just that now they have accumulated enough power (and co-opted enough democrats) that they can push back on this as they have on every other social advance we have made since 1964. Hell they are pushing back to go back to before 1900 if they can. And they may well do it. The only thing in their way at the present moment is the Occupy movement.

  2. Just a reminder that Sen. Joe Lieberman, with Sen. Tom Coburn, offered this suggestion to “change” Medicare last summer; Trudy Lieberman, no relation whatsoever, wrote about it in the Columbia Journalism Review on July 11, 2011.

    You might want to bookmark this since Obama has included language which seems to include these Lieberman/Coburn ideas in his deficit reduction plan from last fall.

    The plan is deceptively referred to as “Medicare benefit simplification,” says Joe Baker, who heads the Medicare Rights Center, a New York City advocacy group. “What they are proposing is not simplifying the benefit to help consumers but to save the federal government money, and they do that by increasing costs to consumers and providing a disincentive to use medical services.” Lieberman et al want to create a single deductible of $550 for all Medicare services, replacing the separate hospital deductible—this year $1132—and the separate medical deductible of $162. They also want to cap out-of-pocket spending for people with low to middling incomes at $7500.

    Those with higher incomes would have to pay more out-of-pocket in a further effort to means-test the program. There’s already some means testing in Medicare, but Lieberman’s proposal would add more. For example, under his plan, people with an income of $85,000 would have to pay $12,500 out-of-pocket, or about 15 percent of their income before collecting benefits. ….

    Baker says a lower, combined deductible is not a good idea. It would raise out-of-pocket costs for millions of beneficiaries who don’t use hospital services during the year. But nearly all seniors go to the doctor, often several times a year, and Lieberman’s plan would require them to pay a $550 deductible instead of the $162 deductible they pay now for physician services. Under current law, they also pay 20 percent of the bills for doctor services, but Medigap policies, the popular ones at least, cover that amount.

    That brings up another goal of Lieberman’s plan—to reduce the amount of coverage Medigap insurance can provide. His plan would forbid Medigap policies, which are owned by some ten million seniors, from paying that deductible. All Medigap policies now cover the hospital deductible, and two of them—Plans F and C—cover the medical deductible. Two-thirds of seniors who have Medigaps buy these plans because they want to reduce their risk of out-of-pocket expenses. Over the last few years, under the guise of consumer choice, Congress has authorized insurers to sell new Medigap plans that cost less but don’t cover as many of the holes. Guess what? Older people don’t seem to buy them. “Seniors are very risk averse,” says Bonnie Burns, a policy specialist with California Health Advocates.

    It’s worth noting that Congress also pulled a fast one during the health reform debate. It slipped into the law a provision that will make seniors who buy Plans C and F assume more costs for their medical services. The law calls on the National Association of Insurance Commissioners to draft rules that would make seniors who choose Plans C and F pay a greater percentage of the Part B coinsurance. So, for example, instead of policies paying the entire 20 percent coinsurance as they now do, they may cover only a fraction of it. ….

    Under Lieberman’s bill, Medigap policies could cover only half of a senior’s out-of-pocket costs up to the $7500. In other words, they would have to pay $3750 right off the bat before any insurance would be allowed to kick in. And if they have an existing Medigap plan that does pay those costs, the government would slap them with an excise tax. ….

    Making people pay a lot more is precisely what Lieberman and other pols want. He cites studies showing that when people have to pay more for their care, they will use less of it, and claims his proposal will reduce the debt and “save more than $600 billion over 10 years.” ….

    What will it take to keep seniors alive? That’s a good question for the press to explore. Half have annual incomes under $22,000, and the median income for older women on Social Security is only about $15,000. A recent RAND study, also missed by the press, found consumers with high-deductible insurance and lots of cost sharing did economize on going to the doctor even for preventive care covered by their policies.

    Having seniors go to the doctor less is what Lieberman, Coburn, and Obama want to achieve. It’s the only way they can see to lower the Federal costs of Medicare. And that is because they believe they must keep the big insurance companies well and truly profitable. They cannot see single payer as the necessary solution to the nation’s overall healthCARE needs.

    “This has a perverse effect,” says Burns. “The older you are the more likely you’ll pay those high out-of-pocket expenses. They would hit women the hardest and shift more of them into Medicaid.”

    Obama also included another idea floated by Lieberman and Coburn (it seems Lieberman is a favorite stalking horse for Obama’s more conservative proposals): He recommended raising the SocSec regular eligibility age to 67. Will raising the Medicare age to 67 be far behind?

    Where will Obama stop if he gains a second term, with no need to try to win votes from the 99% for reelection? Scary thought.

    Dems might fight a Romney or other Repub president’s plans similar to these or the same, but will not fight Obama’s, it seems.

  3. Correction: The WH said that Obama is considering the utterly stupid and useless, dumbass idea of raising the MEDICARE age to 67.

    We are talking seriously stupid presidentin’ here.

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