OP-ED

There’s No Choice but Change

The outrageous distortions about the Ryan Medicare reform plan are coming from people who are accelerating the program’s path to insolvency.

Medicare is being used as a piggy bank by Democrats, with $575 billion in payment cuts used to finance two massive new entitlement programs in Obamacare. And this April, the president proposed taking another $480 billion out of the program to lower the deficit.

Payments to providers will be cut so deeply that seniors will find it harder and harder to get care. Doctors will stop taking Medicare or go bankrupt. A whopping 87 percent of doctors say they will stop seeing or will restrict the number of Medicare patients they see, further shrinking the pool of providers and further restricting access to care.

The powerful, 15-member Independent Payment Advisory Board will use price controls to meet ever-elusive spending targets. Rationing is inevitable, especially of newer medicines and technologies.

House Energy and Commerce chairman Fred Upton explained, “Last year, Medicare expenditures reached $523 billion, but the income was only $486 billion — leaving a $37 billion deficit in just one year. And with 10,000 new individuals becoming eligible each day, it’s only going to get worse.”

Medicare is $38 trillion in the red, and it accelerated five years toward insolvency in just the last year, according to the Medicare Trustees’ latest report.

Sen. Marco Rubio captured it best in a new video, saying, “Medicare will go broke in as little as nine years … and anyone who is in favor of doing nothing to deal with this fact is in favor of bankrupting it.”

House Budget chairman Paul Ryan recognized that reality with his plan to begin modernizing the program, starting ten years from now. He wants to give baby boomers the option of private coverage in a plan that works much like the one members of Congress have today.

Access to coverage would be guaranteed, and payments would be tailored to meet a person’s age, health status, and income level.

Medicare is a government-run, politically-driven health-care program with so many gaps that people have to buy supplementary coverage. Not surprisingly, one fourth of today’s seniors have voluntarily decided to opt out of traditional Medicare by joining private plans in Medicare Advantage. These plans are competing for their business, offering better benefits often at lower costs to beneficiaries.

Rather than slashing this popular program as Obamacare does, it should be put on an equal and sound financial footing to continue to give seniors choices in the future. This model of seniors selecting from competing private plans is what Paul Ryan is proposing ten years hence, with premium-support payments to help pay for the cost of that plan.

Here are the facts of the Ryan plan: Paul Ryan’s plan does keep the payment reductions in Medicare under current law for ten years; he doesn’t use them to create two massive new entitlement programs but to preserve Medicare.

Beginning in 2022, beneficiaries are guaranteed a choice among Medicare-approved private health options. As the Congressional Budget Office notes: “Plans would have to issue insurance to all people eligible for Medicare who applied.” In other words, all Medicare beneficiaries are guaranteed that a health plan will be available for them.

This is in stark contrast to what would happen to Medicare under current law. Without a serious course adjustment, Medicare will become a third-rate, price-controlled program that rations a lower quality of care through waiting lines and other restrictions. If the antiquated, open-ended, fee-for-service model isn’t reformed, then we will continue to pour deficit-funded dollars into the program or raise taxes to levels that would topple the economy as millions of baby boomers hit retirement.

The only way to save Medicare is to change it.

This post originally appeared at National Review Online.

Grace-Marie Turner is president of the Galen Institute, a public policy research organization that she founded in 1995 to promote an informed debate over free-market ideas for health reform. She is the editor of Empowering Health Care Consumers through Tax Reform and produces a widely-read weekly electronic newsletter, Health Policy Matters.

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52 replies »

  1. Change is the only thing constant in this world, if you stay still, life would pass with all the great opportunities you can be presented along with it. Awesome post!

  2. “TriCare and the Blues all help themselves to a hefty discount. This simply has to stop.”

    Wait a second, don’t you negotiate with TriCare and the Blues? Are they twisting your arm to sign their contracts? Why don’t you stop accepting Medicare/Medicaid if they’re so “unprofitable”?

  3. Right now my collections bear little resemblance to my charges. Medicare, Medicaid, TriCare and the Blues all help themselves to a hefty discount. This simply has to stop. There is no honest price in all of medicine because of the feds and their theft by legislation.

    So when all must pay the real price, the real price will be a market price, and I will be competitive. Most ED patients have a choice of ED well ahead of any real emergency.

  4. “I will be competitive.”

    But aren’t you “competitive” now? And competitive to who, what, everyone else charging the same high prices? This is the hoax of “market driven heathcare”, it’s just a phrase, not intended to lower costs/prices, but just another false trail set up by the industry to pretend it wants to lower costs while keeping everything the same so it can keep calls for government control suppressed.

  5. Don’t you also accept Medicare and Medicaid and get to save in a tax deducted 401k as well as deduct expenses from before taxable income?

  6. “Each individual could save and grow a healthcare fund on their own ”

    Oh yeah, this is particularly true for small children of young parents just starting out….

    “Uncle sugar is not entitled to take what is mine and give it to someone else directly”

    Interesting…. do you feel the same way about Uncle Sugar paying for residencies?

  7. There are no healthy markets when the government is involved, such as wheat and food.

    Thre are plenty of nonconsumers of healthcare. To assume that the mandate is necessary because everyone will use healthcare sooner or later is a shallow arguement. Each individual could save and grow a healthcare fund on their own were it not stolen by Uncle Sugar for his own politically favored classes of voters. Uncle sugar is not entitled to take what is mine and give it to someone else directly. If he is, then kiss the country good-by.

  8. “You mindlessly infer that I am charging too much and paid too much.”

    But you also say:
    “Decrease the money chasing the services and the price per service will go down.”

    Which would infer that you also think we are paying too much for everything medical. Just who’s pocket do you want to cut costs with if yours is not included in the, “price per service will go down”.

  9. It’s not a question of emergency. It’s a question of “buy or die”, maybe not today, maybe not tomorrow, but soon and probably painfully too.
    Other markets, healthy markets, allow for the existence of non-consumers by choice. Health care does not. “Bread” does not either and many empires went down in smoke when people couldn’t afford “bread”.
    And no, health care is not exactly like “bread”, since last I’ve looked you don’t sell life preserving items for a dollar.

    MD as HELL, while I do sympathize with your perception that you are not paid enough, I am forced to view your plight on the background of millions of people being unable to pay the current rates, let alone what you believe the rates should be. The “market” cannot bear your expectations without creating large segments of non-consumers, and since you are not selling luxury cruises, this is not acceptable. You may call this socialism, I would rather call it vintage American fair play.

  10. Peter,

    It is you who get to use the hospital, nurses and equipment. I accept payments from the patients on Medicare and Medicaid, programs which steal a fortune every day from doctors and hospitals. As for 401k deductions, I hardly think that compares to the free money in a pension, public or private.

    You mindlessly infer that I am charging too much and paid too much. Do you want me there or do you want a nurse practitioner with 18 months experience?

  11. “I am not supported by either the hospital or the tax payor.”

    You work in the hospital ER don’t you? If you do don’t you get use of hospital purchased equipment, services and hospital administration and nursing, which may also get public support and maybe tax deducted donations? Don’t you also accept Medicare and Medicaid and get to save in a tax deducted 401k as well as deduct expenses from before taxable income?

    My point about firefighters was meant to show that what someone will pay during an emergency to survive is not a good judge of what the provider’s income and value is really worth – as you seem to prefer. No doubt you prefer negotiating the firefighters income/benefits at budget/tax time through your local government and not when they’re at your door on an emergency. I would gladly pay you out of my taxes and provide for retirement, negotiated at a non-emergency bargaining table with your doctor association.

  12. “Most health care does not involve emergencies.”

    Exactly. That’s why we COULD have a market for healthcare services with adequate price and quality transparency tools available to both referring doctors and patients. If needed, we could also have special rules that apply to hospitals and other out-of-network providers for care delivered under emergency conditions.

  13. Are you a fireman? If you are then you spend most of your time being ready to fight a fire. You train a lot and learn new techniques and use new equipment. You also work for the government. You are paid by my tax money.

    I am not a fireman. I spend most of my time being ready to save your bacon. While waiting for you and Margalit, I care for lots of arsonists and citizens alike with relatively less acute needs. I receive only money from bills that are paid. I am not supported by either the hospital or the tax payor. My income is about 40 cents on the dollar before taxes and insurance, thanks to five finger discounts and theft by legislation. I buy my own benefits, including retirement.

    As for Margalit’s comment, I am sure you can see the intent of my remark. If you can’t, than actually explains a lot.

    There really would be a market in health care. Most health care does not involve emergencies. Those of us in Emergency Medicine are not out to gouge anyone in a time of need. We just do not need to be abused either.

  14. I’ll be sure to go out for quotes and interview eager practitioners.

    How much are you willing to pay the local fire department to save your burning house and save your trapped kids? Care to go out for quotes?

  15. “How much are you willing to pay a 29 year ER doc for saving your bacon?”

    When put this way, it shows exactly why you cannot have a “market” in health care….

  16. As little as possible.

    I don’t have a PET scaner payment to make, but my fees have been stunted for two decades.

    My proposal will produce real market forces inhealthcare prices.

    How much are you willing to pay a 29 year ER doc for saving your bacon?

  17. “Decrease the money chasing the services and the price per service will go down.”

    How much will you lower your service cost by MD?

  18. Revamp Medicare.

    Eliminate employer-based health insurance.

    Decrease the money chasing the services and the price per service will go down.

  19. Agree with others that the level of ignorance/lying displayed in the original post is mind-boggling.

    Another important fact to consider:

    From 1969-2009:

    Medicare expenditures up 400% per beneficiary

    Private insurance premiums up 700% per beneficiary.

  20. Too many discussions of Medicare, by Turner but also by Democrats, seem to start with emotion and not with hard numbers.

    Bear with me for the following hard numbers.

    Medicare today covers about 45 million people, and spends about $11,000 per person. ($500 billion overall spending)

    The number of people eligible for Medicare will grow by about 20 million in the next decade. (netting out deaths from those turning 65)

    So if we performed an absolute miracle and froze the cost of comprehensive health care at $11,000 a person, the cost of medicare to the federal budget will rise from $500 billion to $700 billion no matter what.

    If the cost per person goes to $18,000, then the cost of Medicare to the federal budget will be about $1.2 trillion a year by 2020.

    So much for the spending side.

    On the income side:

    David Cay Johnston recently wrote that in the decade of 2000-2010, federal tax revenues as a whole were virtually flat, even though our GDP grew by at least 10-15% over the decade.

    Whether this is due to the Bush tax cuts, flat wages, capital losses vs capital gains, or corporations stashing profits overseas is a matter of debate.

    The relevant point is that Medicare costs are going up, and if we change nothing then tax revenues are not going up nearly as fast.

    Medicare itself will not go broke. The Treasury department can still the write the checks.

    The problem is that the government could go broke!

    Bob Hertz – The Health Care Crusade

  21. Agreed that this is pretty atrocious. I’m surprised no one commented on this head-swiveling combination:

    Medicare will go broke in as little as nine years … and anyone who is in favor of doing nothing to deal with this fact is in favor of bankrupting it.

    House Budget chairman Paul Ryan recognized that reality with his plan to begin modernizing the program, starting ten years from now.

    The second statement immediately follows the first! And the first is a quote she not only endorses, but says captures the situation “the best.”

  22. I would vote for this as the dumbest post ever on THCB. Has the author even read the Ryan plan? Would she deign to answer the criticisms of the plan? No way I am willing to bet. While this may fly with NRO, it will not elsewhere. It is actually kind of insulting to have it published here.

    Steve

  23. I only include SS because it is another direct benefit program. It is linked to health care through its disability provisions.

    As for the 1932 election, it is likely to be mirrored by the 2012 election: Wholesale rejection of the present party in the White House over severe economic conditions.

    As for controlling the government, it is not the Repugs in charge. It may be gridlock, but that leaves the President in a position in which he is uncomfortable, having to lead with no easy choices available, and he cannot blame Bush anymore. Maybe he will have a primary challenger with a Dem plan. That would be cool.

  24. ” It is simply the default for some liberals who still are fighting the 2000 election.”

    As opposed to some conservatives who are still fighting the 1932 election.

  25. “Iraq War was ALSO a bipartisan failure- broad support for resolutions authorizing war and the funding.”

    Agreed, both scoundrels and cowards. But based on administration lies of WMD, support our troops, and terror threat after 911, it would have been tough to vote against given everyone was backed into a corner and had contractors frothing at the mouth for tax dollars. Obama did vote against it but now we have not two but three wars if you count Libya.

  26. Iraq War was ALSO a bipartisan failure- broad support for resolutions authorizing war and the funding. War has continued for two plus years under Obama.

  27. “I don’t think the Iraq war has a damn thing to do with this discussion.”

    Why, because it’s not a convenient unfunded program (Trilllion $$) you can’t blame on the Dems? Or is it because it’s not healthcare related, because if that’s it then why does SS have anything to do with this discussion? As for SS it’s not even a near term potential problem as long as funding shortfalls are addressed relatively soon. As with all pensions it’s the contributions that cover future payouts. Anyway, Repugs control the government now so why aren’t they solving all our problems for us now? Where’s their “jobs” and healthcare legislation?

  28. Yes there is plenty of bipartisan blame.

    I don’t think the Iraq war has a damn thing to do with this discussion. It is simply the default for some liberals who still are fighting the 2000 election.

    SS and Medicare are Dem anchors.

    Fact is the Dems are in power now. They get to go first. They get to lead. They get to dismantle their babies. There is nothing in it for the Repubs to try to lead. They will simply get their heads shot off.

    With all the money gone, the Dems need to surrender, fall on their sword, roll over and go away. So to any Repubs who think they can be Dem-lite.

  29. Agree w/ Peter. This is a bipartisan failure, product of buying votes (and campaign contributions) with borrowed money.

  30. “The Dems should be bleeding to death from political wounds richly earned from decades of giving away unearned benefits.”

    Gee MD, not too biased are you. Did you forget about Medicare PartD under Bush and Repugs? How about the Iraq war that was also unfunded.

  31. Of course there is no choice but to change.

    Unfortunately Mr. Ryan is not a very good poker player. He should have checked to the President and the Dems, forcing them to deal with the mess they have inflicted on us. The Dems should be bleeding to death from political wounds richly earned from decades of giving away unearned benefits.

    Madoff is in jail for far less a Ponzi scheme than Medicare and Social Security.

    It is going to hurt.

  32. Obamacare has been blamed by trying to destroy Medicare but it could end up lowering overall health care costs for most Americans. It’s not just about creating two ”massive new entitlement programs.” Massive meaning horrible and devastating in this context.

    By using alternatives to Medicare, like telemedicine, Obamacare will end up providing health care to more Americans. People can get health care without even leaving their homes. Think of people who live in secluded areas, those who are too sick to move and wait for it, the elderly.

  33. Neither Ryan nor Obama have it right.

    But Obamacare is a start in the right direction. Ryan’s plan is downright dangerous.

    But until election and campaign finance reform happens in earnest politicians, being obsessed with election or re-election, can’t possibly make rational common good decisions.

    Also Americans must grow up about “more always being better” which is certainly not true at all in our US “disease care” system which often harms.

  34. ” then shaft the younger boomers”
    ___

    While, of course, having continued to take the Medicare taxes out of their paychecks.

  35. Ryan’s plan was a cynical gamble that blew up in the Republicans’ faces.
    He gambled that you could basically leave the program alone for ten years, then shaft the younger boomers, and because you gave the current geezers and geezerenes a pass, they’d get away with it because boomers are oblivious to their own financial interests.

    Punt the Medicare cost problem to private insurers and put in a plug number for premium increases. Punt the Medicaid cost problem to states, and let ’em drown, and put down a plug number for the bloc grant increase.
    Man, that’s cold.

    Does this make my weep nostalgic tears for Dole, Packwood, Durenberger, even Bill Thomas- Republicans who actually gave a shit about the health system and its users. This present crew is both shameless and clueless,
    a terrible combination.

  36. Excellent! Keep these articles coming. Sooner or later the GOP magnificent seven (and whatever joins them in due course) should have to face the music and either say the Ryan plan is the cruel joke that it truly is, or embrace it. Either way, clarity is a very good thing 🙂

  37. Kill any change before the people learn what they are missing . Is it Just the Money that these professions piss and moan about? The Problem is Healthcare Has Performed poorly and profits have soared! It important to Note that HealthCare Associated Infections and Medical Errors are soaring ! The only thought is your shallow Charactor and your overpaid and under achieved performances.
    Enough of Ryan’s plans to enforce euthansia of Seniors ,to Die Quickly because they are No Longer Useful for Exploitation of Business. Im sick of big mouth insurance agents,Arrogant Doctors, and Hospital Administrators who put Profits foremost and patient safety dead Last!
    Health Insurance needs some strong reforms and the providers as well.If not now then when??
    The truth is The industry is penny wise but poud Foolish from Ignoring the Obvious issues that will collapse their Ivory towers.

  38. The logic seems to be, “because we don’t want to control the rising cost of medical care we’ll just declare Medicare a failure and disband it.”

  39. “Last year, Medicare expenditures reached $523 billion, but the income was only $486 billion — leaving a $37 billion deficit in just one year. And with 10,000 new individuals becoming eligible each day, it’s only going to get worse.”
    ___

    Fine. Figure out a better way to fund it — one NOT on the backs of the very people who need it.

  40. And if this wasn’t proof beyond proof that this blog takes all comers (and that the poor publisher has no influence) we actually have a post from the rambling and illogical GMT on THCB. Yes the same one who thinks that individuals will pay more out of their own pocket to join a group plan than to buy an underwritten one, and that disease management is a likely outcome of the invidual insurance market (Yes she really says those things).

    So the question is, what will the reform be of the insurance industry to make sure that the medicare recipient with their voucher is not going into the same market that the individual <65 today is when they buy insurance not in a group. on that Ryan and GMT are curiously silent

  41. “Access to coverage would be guaranteed, and payments would be tailored to meet a person’s age, health status, and income level.”
    ___

    Note “access” to “coverage. Not simply “guaranteed coverage.”

    Note also “payments would be tailored…”

    One word: “welfare” — administered via those swell for-profit 3rd party intermediaries.

  42. Wow, that’s a load all over my screen. Let me see if I can clean that up.

    Fact: Medicare is cheaper than private health insurance.
    http://krugman.blogs.nytimes.com/2011/06/12/its-the-health-care-costs-stupid/

    Fact: Taxes are not and should not be off the table, nor should increases in tax progressiveness, so that higher income and wealthy individuals pay their fair share.

    Fact: Medicare is being used as it should, as a piggy bank to pay for Grandmas healthcare, a piggy bank that we all drop coins in out of a sense of self interest and human decency. What has this author got against piggy banks? Or Grandma?

    Maybe when your heart is this cold, you don’t think you’ll live to 65 anyway.

  43. “Plans would have to issue insurance to all people eligible for Medicare who applied.” In other words, all Medicare beneficiaries are guaranteed that a health plan will be available for them.
    ___

    Y’see, what we all want is not “health care” but a “health plan.” We want guaranteed access to page after page of fine point legalese.

  44. Ryan: let’s transfer lots of public money to private insurance companies; meanwhile, retired ppl get their colds taken care of, but anything else they are on their own for. “Get the to hospice. You don’t need that CABG, anyway.”

  45. Short and quick translation – If you over 55, your fine. If your under 55, pucker up buttercup.

  46. The thing I am most interested in after reading this piece de merde and visiting the Galen website would be a disclosure of their funding sources.

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