OP-ED

Ready For O’Ryancare?

This is how sexy the chatter gets over cocktails at health policy wonk-ins in Washington. This is how sexy the chatter gets over cocktails at health policy wonk-ins in Washington.

“No pre-ex’s, community rating, guaranteed issue.”

“No, that’s Obamacare stuff,” I said to my colleague, as she read a summary of Congressman Paul Ryan’s House Republican budget plan released on Tuesday. “Everyone in Medicare already has those. You must have the wrong memo.”

She scrolled to the top of her iPhone and pointed at the screen. “Summary of the Ryan Budget Plan – Medicare.”

“Maybe just a gimme for popular support?” I speculated, knowing from headline coverage earlier in the day that the Ryan plan sought to repeal Obamacare, not strengthen its most popular consumer protections. “Guaranteed issue but no mandate — that would sure hang the insurers out to dry. But why would you put that in a budget?”

“Here’s why,” she read. “‘Seniors buy coverage through new Medicare Exchange.'”

“Oh.”

Consumers need protections only when they are turned into consumers. And that is what Congressman Paul Ryan’s budget seeks to do for — or do to, depending on your feelings about medical capitalism — future Medicare beneficiaries.

The latest version of the Ryan budget — really his old budget, for three years running now – came out this week. The document generated near universal dismissal by the mainstream media as an act of pointless political grandstanding – to the Right, a courageous statement of fiscal responsibility, to the Left, a defiant display of Randian cruelty.

And so the budget will go nowhere politically, except onto the bonfire raging in Washington where there used to be discourse.

But the actual details of Ryan’s controversial proposal to remake Medicare – into what he and conservative economists call a “premium support” plan, and what defenders of the Medicare status quo deride as the program’s “voucherization” – are oddly familiar in non-partisan health policy circles, and not for reasons the Congressman will appreciate.

Sure, the document excoriates the President’s health reform law, as one might expect. The Ryan budget curtails Obamacare’s funding and calls for its outright repeal – while preserving its cuts to Medicare, retaining its tax increases, and re-architecting the future of Medicare along nearly its exact same design principles. Really.

Under the Ryan plan: Medicare recipients would choose from among competing private health insurance plans on a new government-run health insurance exchange. Insurers would offer plans at emerging market prices and seniors would be covered at the level of the second cheapest. Well-off seniors who want richer plans pay more, and the government subsidizes those less-well-off. Private insurers would not be able to discriminate against seniors for their pre-existing medical conditions and would have to charge all seniors the same premiums for the same plans.

Under Obamacare, Americans will choose from among competing private health insurance plans on new government-run health insurance exchanges. Insurers will offer plans at emerging market prices. Well-off Americans who want richer plans will choose the platinum or gold plans — versus the silver or bronze versions — and the government will subsidize those less-well-off. Insurers will not be able to discriminate against anyone for their pre-existing medical condition and will have to charge all people in the same broad age groups the same premiums for the same plans.

Premium support, voucherization, to-ma-to, to-mah-to, whatever. Let’s just call it what it is: Oryancare — Obamacare for Seniors.

The Ryan plan pushes Medicare from a dysfunctional program — where everything is always sort of paid for — into a transparent, competitive marketplace, using premium vouchers and co-payments. The health reform law pushes individuals, small businesses and the uninsured from a dysfunctional non-system — where too many are priced or kicked out and no one is ever sure what will be paid for — into a transparent, competitive marketplace, using premium subsidies and co-payments.

If only because it really is an act of political grandstanding, the same budget creating an Obamacare-like apparatus for seniors also calls for the repeal of Obamacare. The document reminds us one more time that Obamacare is a “government takeover” of health care (page 40) and repeats the bogus assertion that the law is 2,700 pages long (page 54) – even though the consensus erroneous figure is that the law is 2,400 pages. (The actual law as legislated – not originally drafted – is 955 pages.)

Because Congressman Ryan apparently thinks people will take his budget seriously, he makes provisions for the possibility that President Obama might not sign a bill overturning his signature domestic achievement, a law now bearing his name if only, at first, for the purpose of ridicule. Hedging against a scenario where no such repeal is forthcoming, the Ryan budget simultaneously starves Obamacare out of existence in two ways: by defunding its expansion of Medicaid — always help the neediest first! — and by defunding those overwrought bureaucratic contraptions needed for the implementation of the Obamacare, namely, government-run health insurance exchanges.

What remains from Obamacare in the Ryan budget, down to the dollar, are its cuts to Medicare — $716 billion to be precise. Yes, these are the very same cuts trotted out by Governor Romney and Congressman Ryan in their criticism of President Obama on the campaign trail, when the audience was sufficiently senior. With the new Ryan budget in hand, spotting such er – inconsistencies – does not require time-lapse photography: the budget retains many of the taxes included in Obamacare — as reported by even the Wall Street Journal — as the document itself criticizes those very same taxes.

Finally, the Ryan budget repeals the Independent Payment Advisory Board, or IPAB, the provision included in Obamacare to — guess what — control Medicare spending growth. As discussed here in January, IPAB is a black box, not a blueprint. No one is sure exactly what it will do or how, one of the more legitimate reasons it has become the biggest punching bag in Obamacare. All we know about IPAB is its goal: gather evidence for what Medicare should and should not be paying for, and use this to eliminate payment for medical treatment that is not only wasteful and unnecessary, but potentially dangerous.

The Ryan plan repeals IPAB and instead lets the market decide what medical treatments Medicare should and should not pay for. Because that works so well today. Medicare reform indeed.

But forget sore thumbs like IPAB. At their cores, the functional similarities between Oryancare and Obamacare are not all that different — once you power-wash the political rhetoric off both and recognize that both are voucher-like programs, with the same consumer protections and with the well-off subsidizing the not-so-well-off.

How is that possible? Because the two plans are actually adjacent to each other along the broad spectrum of health reform models developed and debated since the 1980s, which I discusesd here a few weeks ago. Premium support and voucher plans, as formulated by conservative economists, fit into the second box from the right.

Back at the health policy wonk-in, the talk all turns, inevitably, away from policy and back to politics.

“Charm offensive? Grand bargain? The President should call Ryan’s bluff on Medicare!”

Indeed, the President should call Ryan’s bluff on Medicare.

As they work on their “grand bargain,” President Obama should encourage Congressman Ryan and his fellow House Republicans to lay out and pitch their plan for reforming Medicare to those whom it will affect, even if the “reform” part of the plan cleverly does not affect them at all, but the next generation of Medicare beneficiaries.

During the summer recess, while talking up their fervor to “cut entitlement spending” at any political cost, they should explain at town hall meetings across the country how the plan will actually work. Especially the $716 billion in cuts that were so potentially dangerous a year ago, when they were included in Obamacare.

In between screams from those in attendance who love Medicare, hate government, and resent moochers, they should describe how Oryancare will let future seniors shop on a new government-run exchange for coverage from competing health plans, without worrying about medical or economic discrimination.

A few months later, those implementing Obamacare will also be rolling out new government-run health insurance exchanges – which will allow small businesses and individuals to shop for coverage from competing health plans, without worrying about medical or economic discrimination.

No doubt they will appreciate having the ground ready.

J.D. Kleinke is a pioneering health care information entrepreneur, medical economist, author, policy expert, and business strategist.

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JohnAquiferAurthurMary Smith, PhDCurly Harrison, MD Recent comment authors
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John
Guest

Has anyone discussed the principle that there should be differential treatment for those who choose to be high risk for health problems ie smokers / overweight.

An emotive debate!

Dennis Byron
Guest

Peter1 FYI, somewhere way above in this thread you referred me to an Urban Institute report that purported to estimate lifetime tax contributions to SS and Medicare vs lifetime benefits paid by those programs to people turning 65 in certain years at various wage levels and couples/singles status. When you made that reference, I pointed out some of the known issues with the Urban Institute’s methodology (e.g., did not do analysis from the point of view year people were born, used very low rate of return, etc.). But your reference to it prompted me to go back and look at… Read more »

Peter1
Guest
Peter1

“But it is not the case for those of us born between 1940 and 1960 (we probably break even, particularly those born in the 1940s).”

Then why is Medicare in trouble?

bob hertz
Guest

If Peter is right, and I think he is, then Houston we have a big problem. A large bloc of people are alive at age 55 or 60 that used to be dead from heart disease or lung cancer or kidney failure. These peiople have been working in low wage jobs largely since they were 20 years old. 35 or 40 years is enough! We have never (god forbid!) forced restaurants or janitorial services to fund pension plans. The very few union plans like for bakers have been savaged. The labor markets as a whole do not want these workers.… Read more »

Aquifer
Guest
Aquifer

i agree – we need to fortify both SS and Medicare benefits. At this point we have the lowest level of corporate tax and the least progressive income tax in decades. This nonsense about the need to “balance the budget” on the backs of SS and Medicare recipients is one of the most cynical political ploys I have seen in a very long time. The deficit was caused by unfunded wars, Bush/Obama tax cuts, and bank bailouts – the rich are indeed getting richer, and the poor poorer. And there is nothing ‘inevitable” or “necessary” about that – it is… Read more »

Peter1
Guest
Peter1

“If Peter is right, and I think he is, then Houston we have a big problem.”

Bob, and everyone, you need to see this!

http://apps.npr.org/unfit-for-work/

bob hertz
Guest

To Aquifer:

No matter how much we lower average costs, as you imply, at least 20 million more persons will come onto Medicare in the next 10 years.

This is a combination of those turning 65, plus disability beneficiiaries, less deaths.

Too many reformers underestimate pure demographics,

Ask me for more detaisl!

Peter1
Guest
Peter1

“plus disability beneficiiaries”

The big medical scam. People move from unemployment to disability. States move people from welfare (state paid) to disability (fed paid).

Aquifer
Guest
Aquifer

Well, bob, if i had my way 300 million more would come into Medicare in the next few years ,,,

bob hertz
Guest

Just to clarify my last statistic………

Medicare will absorb about 30% of federal revenues.

Mediare in 2021 will cost close to $1 trillion a year, assuming the existing demographics and annual medical inflation of 3%.

Federal revenues in 2010 were $2.1 trillkon. Revenues are growing now but may not exceed $3 trillion a year in 2021

Aquifer
Guest
Aquifer

bob –

As you say, those numbers assume that costs will rise at their current rate – an assumption that seems to me unwarranted if one introduces the cost control mechanisms that SP makes possible …

bob hertz
Guest

I am afraid I am on Dennis’s side in not blaming insurance companies. The worst insurance rates I ever saw were from a co-op non-profit insurance federation that was set up for school districts. The rates were high because many years of seniority rights had produced a very old work force. There were no commissions, no CEO’s , and certainly no profits. Insurane in an expensive pool will be expensive. Insurance for a pool of younger men will be cheap. On a purely actuarial basis, insurance rates for someone over 60 would be 6 times as large as for someone… Read more »

Aquifer
Guest
Aquifer

bob – As you point out, your example argues for a single payer solution – the larger the pool the more spread out the risk and the lower the cost per person. But the other really important aspect, dealing with total cost, is the ability of the insurer to “bargain” (or “price fix” as Dennis would say) with providers – the larger the insurer the more leverage it has. As for “blaming insurance companies”, perhaps it would be more accurate to lay blame on a system that uses private insurers – that, no matter their “intent”, ipso facto, introduce unnecessary… Read more »

Dennis Byron
Guest

that should say “$85,000 a year” up there somewhere, not month

Dennis Byron
Guest

I don’t think I ever used the word “failure” but maybe I did? What you describe is Original 1965 uncoordinated-care Fee for Service Medicare. Its Part A is not “free.” Depending on how old you are, you paid payroll taxes for 45-50 years (and may still be paying them if you did not retire at 65) for your “free” Part A. Part A actually costs about $400 a month, which is being taken from the Trust Fund where your Medicare payroll taxes went. If you are in your mid-60s, you are part of the first age cohort to have paid… Read more »

Aquifer
Guest
Aquifer

Dennois – no matter how many times you say it – methinks a majority of folks don’t consider Medicare a “failure” …. needs improvement and expansion …

Aquifer
Guest
Aquifer

oops – “Dennois” – looks like i made you a Frenchman …

Peter1
Guest
Peter1
Bob Hertz
Guest

When health care and health insurance are paid for with private voluntary dollars, then wealthy persons will receive better health care on average, and poor people will depend mainly on the charity of doctors and hospitals (and of church hospitals). That was roughly the situation of the elderly in America before 1965. (I was a teenage then, so my comment is from research.) The achievement of Medicare has been to run elderly health care through the tax system, which makes things far more equal. As Dennis notes above, this is a value judgement the country has made and by and… Read more »

Aquifer
Guest
Aquifer

I agree – my experience is similar, i have made a decision to get a supplemental policy – at $168/mo for payment of deductibles and co-pays, i figured it was worth it – between that and the SS deduction for part B – my insurance is considerably cheaper than before …

Peter1
Guest
Peter1

“At age 65 I received Medicare Part A for free, with a $1300 deductible, and I pay $99 a month for Part B, with a $150 deductible and 20% coinsurance.”

Dennis would call that Medicare failure.

Dennis Byron
Guest

You ask: “I wonder what you would consider making everyone a winner in Medicare would take? Pay more of your health costs while taking less tax?” I don’t use this terminology. That is the implicit (maybe even explicit) terminology of the Urban Institute study you referenced. That’s why I put “winners” in quotes. And again it applies to all government programs, not just Medicare. That being said, I’d say the guy in my example would be a “winner” in life (as opposed to Medicare). What could you add to my example other than that he died in his own bed… Read more »

Peter1
Guest
Peter1

“Pay the tax?” I might. I won’t qualify for a subsidy and I don’t have any faith that the “exchanges” will offer less costly insurance. The individual pools will really determine the cost. With pre-exist not rated I think my pool will be unfairly loaded with high risk. Insurance and providers are not taking a shave in the ACA so guess who will – other than the taxpayer. I could also sign on to my wife’s policy at work but up to now its been way too expensive even compared to individual policy. Here in NC we really only get… Read more »

Peter1
Guest
Peter1

“No one analyzes insurance that way.” It sounds like you’re an insurance guy. For one I don’t agree that determining who gets health care and who doesn’t be based on an insurance mind set (pre-exist, max lifetime, affordability), although everything needs to be paid for. On that I’m a proud “lefty”, except for I guess the “paid for” part. “The Urban Institute document to which you refer does not take that approach; it takes the weird approach of only talking about the “winners”” If by winners you mean those who got sick and needed Medicare against those losers who did… Read more »

Dennis Byron
Guest

No, I am not an “insurance guy.” I am just a senior citizen on Medicare who gets really PO’d when demagogues or goo goos like the author of this blog post (not sure which he is; he does not seem to know which he is) totally misrepresent Medicare. With their Medicare misinformation, people like the author of this post do a disservice to my fellow seniors (but most of us know Medicare is lousy and 95% of us make other arrangements) and he does an even bigger disservice to the public debate about the national debt because those not yet… Read more »

Dennis Byron
Guest

By the way, I did not say those that “died” got screwed (they did but I would hope not to be that crass). I said middle income people born after 1960 get scrwed by Medicare under current law.

Dennis Byron
Guest

Peter 1. Your observation about house and car insurance is a very good point and you illustrate one of the two major faults with the Urban Institute research you reference (anything from Urban Institute has a total left-wng bias to the point of intellectual dishonesty). Notice in my wording, using the approach that any insurance — social or otherwise — analysis would take, that I said people “born between 1945 and 1960,” or “people born after 1960.” I took it from the point of who is in the insurance pool. The Urban Institute document to which you refer does not… Read more »

Peter1
Guest
Peter1

” No “taxpayer funded Medicare” pays for the private insurance that seniors use”

Dennis, my point was that without taxpayer funded Medicare there would not be enough senior income left to buy private for most seniors. Private insurance benefits from the supported income seniors receive from not paying the full cost of their senior health care through Medicare. Just as private insurers will profit from subsidies through Obamacare.

Dennis Byron
Guest

Peter You seem to be a guy that likes to deal in facts rather than ideology. Here are some facts: — Not all seniors are the same when it comes to the question “Did you pay for your Medicare or did “the taxpayer?” — For starters, you have to separate seniors as a group between those born before 1945 and those born in or after 1945. — Then you have to divide them among low income, middle income and high income (which the law defines as making more tan $85,000 with no inflation adjustment; this will take in 20% of… Read more »

Peter1
Guest
Peter1

Dennis, this seems to support the fact that we (all) get more than we put in, maybe other than “super rich”. I don’t think they’re suffering. http://www.urban.org/UploadedPDF/412660-Social-Security-and-Medicare-Taxes-and-Benefits-Over-a-Lifetime.pdf I don’t know how high in income you want to go to calculate when the “rich” get less than they pay, but if $85,000 is it the above chart does seem to support your contention. I’ll look at your link. To say that those who die get screwed is to say that those who do not collect on house and car insurance also get screwed. These programs should be treated as social “insurance”… Read more »