Ryan Plan Would “Essentially End” Medicare For Future Seniors…

Ryan Plan Transforms Medicare Into A “Premium Support System.” According to the Kaiser Family Foundation’s overview of the Ryan plan: “The proposal would gradually transform Medicare into what is described as a ‘premium support system.’  Beginning in 2022, all newly-eligible Medicare beneficiaries (i.e., individuals turning 65 as well as younger, disabled individuals becoming eligible for Medicare) would only have access to health coverage through private insurance plans, rather than through the current government-run Medicare program (i.e., traditional Medicare), or under a Medicare Advantage plan.  Under the new premium support system, Medicare beneficiaries would be entitled to a payment from the federal government to help defray premiums and other health care costs under the plan.  The government would make payments directly to private health plans on behalf of Medicare eligible enrollees, rather than pay hospitals, physicians, and other medical providers directly for the services provided to their Medicare-eligible patients, as is currently the case.   If the government payments to plans on behalf of enrollees were insufficient to cover premiums and/or other costs, beneficiaries would be responsible for additional costs.  In other words, Medicare would no longer provide coverage for medical care, but instead provide a ‘subsidy’ toward the purchase of a private health insurance plan.” [Kaiser Family Foundation, April 2011, emphasis added]

• WSJ: “The Plan Would Essentially End Medicare.” From the Wall Street Journal: “The plan would essentially end Medicare, which now pays most of the health-care bills for 48 million elderly and disabled Americans, as a program that directly pays those bills. Mr. Ryan and other conservatives say this is necessary because of the program’s soaring costs. […] Mr. Ryan’s proposal would apply to those currently under the age of 55, and for those Americans would convert Medicare into a ‘premium support’ system.” [Wall Street Journal, 4/4/11]

• National Review Writer: “It’s Fair…To Say It Ends The Program.” Writing for the conservative National Review Online, Robert VerBruggen declared, “I support Paul Ryan’s Medicare reforms.” He added: “The Ryan plan is a deep, serious reform — it ends some of the program’s major features, and if traditional-Medicare supporters see those features as the core of the program, it’s fair for them to say it ends the program.” [National Review Online, 12/20/11, emphasis added]

…Forcing Retirees To Pay More For Care

Government Contributions Would Increase More Slowly Than Health Care Costs. According to Time’s Swampland blog: “The subsidies seniors receive would be based on the value of Medicare at the start of the plan. The subsidies would increase at a rate indexed to inflation, which is growing much more slowly than health care costs. The upshot? Medicare beneficiaries would spend far more out of pocket under this system than in the current one.” [Time, 4/6/11]

CBO: “Most Elderly People Would Pay More For Their Health Care Than They Would Pay Under The Current Medicare System.” In its analysis of the Ryan plan, the nonpartisan Congressional Budget Office concluded: “Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary’s spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary’s spending would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario.” [CBO.gov, 4/5/11, emphasis original]

CBPP: “Out-Of-Pocket Spending Would Rise Dramatically.” According to the Center on Budget and Policy Priorities: “CBO estimates that the total health care costs attributable to Medicare beneficiaries would be considerably higher under the private insurance plans they would purchase under the Ryan plan than under a continuation of traditional Medicare, because private plans have higher administrative expenses and higher payment rates for providers.  Since the Ryan proposal would reduce the federal government’s contribution for beneficiaries’ health care costs even as it caused total costs to increase, beneficiaries’ out-of-pocket spending would rise dramatically. In 2022, the first year the voucher would apply, CBO estimates that total health care expenditures for a typical 65-year-old would be almost 40 percent higher with private coverage under the Ryan plan than they would be with a continuation of traditional Medicare.  (See graph.)  CBO also finds that this beneficiary’s annual out-of-pocket costs would more than double — from $6,150 to $12,500.  In later years, as the value of the voucher eroded, the increase in out-of-pocket costs would be even greater.” CBPP provided the following graph:

[Center on Budget and Policy Priorities, 4/7/11]

Ryan Plan Also Hurts Seniors Already Enrolled In Medicare

National Journal: “It’s Not True” That Ryan Plan Would Not Affect Current Seniors. As National Journal reported: “Republicans are convinced that burnishing the public’s view of their unpopular proposal to overhaul Medicare depends on assuring today’s seniors that they won’t be affected. […] There’s only one problem with the strategy: It’s not true.” [National Journal, 6/2/11]

Ryan Plan Would Reopen Medicare “Doughnut Hole.” As National Journal reported:

[T]he proposal would also repeal last year’s health care law, which means reopening a coverage gap in Medicare’s prescription-drug benefit that the statute closed. The gap, commonly called the “doughnut hole,” requires seniors to pay 100 percent of any prescription costs after the annual total reaches $2,840 and until it hits $4,550. Those who spend more or less have at least three-quarters of the costs covered. Under the 2010 health law, Medicare will pay 7 percent of the cost of generic drugs and 50 percent on name-brand pharmaceuticals; by 2020, the doughnut hole will be closed.

If Congress were to pass Ryan’s plan and repeal the law, as House Republicans want, the 3 million to 4 million seniors left in the doughnut hole each year would immediately face significant out-of-pocket costs. They and all other Medicare beneficiaries would also lose access to a host of preventive-care benefits in the health care law, including free wellness visits to physicians, mammograms, colonoscopies, and programs to help smokers quit. [National Journal, 6/2/11]

Third Way: Ryan Plan Turns Traditional Medicare Into “Second-Class Medicine.” According to a report by the centrist think tank Third Way:

Under the Republican proposal, traditional Medicare would quickly become second-class medicine. […]

The traditional Medicare plan, which covers three-fourths of today’s beneficiaries, relies on its huge size to keep costs down. Doctors and hospitals are not required to participate in it, but they have little choice if they wish to treat any seniors, who are the nation’s biggest health care consumers.

Fewer doctors would participate in the traditional Medicare plan if there were an alternative. The traditional plan pays physicians about 20% less than private health insurance plans. Today, that is essentially a discount for the large volume of Medicare patients. Under the Ryan budget, it would become a reason for doctors to leave the traditional plan.

By 2030, only 55% of Medicare beneficiaries would still be eligible for traditional Medicare according CBO. Actual enrollment would be less than half of Medicare beneficiaries because many seniors would continue to enroll in private health care coverage under Medicare Advantage. By 2040, traditional Medicare would have only about 20% of Medicare beneficiaries. [ThirdWay.org, 4/14/11, internal citations removed]

Ryan Plan Retains Maligned “Cuts” In Obama’s Affordable Care Act

AP: GOP Budget Contains “Cuts” That Republicans “Criticized Vigorously” In Health Care Debate. According to the Associated Press: “In a postelection reversal, House Republicans are supporting nearly $450 billion in Medicare cuts that they criticized vigorously last fall after Democrats and President Barack Obama passed them as part of their controversial health care law. The cuts are included in the 2012 budget that Rep. Paul Ryan, R-Wis., unveiled last week and account for a significant share of the $5.8 trillion in claimed savings over the next decade. […] If left in effect, they would retain smaller payments over the next decade for hospitals, nursing homes, hospices and other Medicare providers that Democrats put in effect. In addition, federal subsidies would decline for seniors who purchase coverage through private insurance plans under Medicare Advantage, although Ryan proposed a small partial restoration in that area.” [Associated Press via AOLNews.com, 4/13/11]