What’s in a name? Everything, it would appear, when it comes to describing Rep. Paul Ryan’s plan to privatize Medicare, which the Republican-controlled House of Representatives backed in its budget resolution late last month. The plan would subsidize seniors’ purchase of private insurance plans instead of enrolling in traditional government-financed Medicare, although that would be preserved as an option. The government would finance a portion of the purchase.
Architects of the plan call it “premium support.” Opponents call it a voucher, which they say will over time lag behind medical inflation and force seniors to pay an ever-growing share of their health care bills.
Ten Republicans joined every Democrat in voting against the resolution, which passed 228-191. The Republican apostates abandoned their majority colleagues largely because they were afraid of being tarred with the voucher label during this fall’s re-election campaign.
And it was that label that Republicans on the House Ways and Means health subcommittee repeatedly attacked during Friday’s hearing on the Republican plan, which has not yet been introduced as legislation. Its details have not yet been scrutinized by health care experts or, more significantly, the Congressional Budget Office. “Premium support is not a voucher,” Ryan, R-Wis., said at the hearing.
The latest outline of the Ryan plan, which was co-authored with Sen. Ron Wyden, D-Ore., backtracked from the stringent caps on government support contained in the House Republicans’ original plan, which was released last year. The CBO said seniors would eventually pay 68 percent of their health care costs under the original Ryan plan.
Chairman Wally Herger, R-Cal., never used the “V” word in his opening comments in support of the latest Ryan plan. But in his printed statement and accompanying timeline showing bi-partisan support for the concept since the 1990s, his press office turned “Premium Support” into a proper noun.
Rep. Sam Johnson (R-Tex.), a returned Vietnam War prisoner now in his 11th term, demanded to know, “Is premium support a voucher?” The witness, the Brookings Institution’s Alice Rivlin – a former Congressional Budget Office chief, a centrist Democrat and co-author of a premium support plan with former Republican Sen. Pete Domenici that is similar to the Ryan-Wyden plan – said “no.”
However, she confirmed that the structure of her premium support proposal, like the Ryan-Wyden plan, would shift more of the risk for rising health care costs onto beneficiaries. “Our proposal would cap the per enrollee government premium contribution over time at the rate of growth of the per capita gross domestic product plus one percent,” she testified. Most years, although not recently, Medicare expenditures grow faster than that.
Rep. Ron Kind, a Democrat from western Wisconsin, whose district has some of the lowest Medicare costs in the country, was ready to stop quibbling over the wording. “Let’s not call it a voucher program,” he said. “I call it the ‘more out of your own pocket’ program. No one has denied that.”
The irony of Republicans complaining about the voucher label – the party has long backed vouchers for many public services, especially in public education – wasn’t lost on Kind, now in his eighth term. He recalled the bipartisan support for legislation he co-sponsored earlier in his career that would have allowed Medicare to reimburse physicians for providing counseling to seniors who wanted to write health care “end-of-life” directives. Republicans branded such counseling “death panels” in their attacks on Obamacare.
The Republicans had few questions for Brookings’ Henry Aaron other than to acknowledge his presence as evidence of bipartisan support for the concept. Aaron was one of the original inventors of the premium support approach to Medicare in the mid-1990s.
But, he explained during his opening comments, he doesn’t support it now. His earlier work was in the context of a health care reform effort under President Bill Clinton (dubbed Hillarycare after the First Lady, who led the effort) that failed. Health care costs were rising rapidly and nothing was on the horizon to hold them in check.
Today is very different, he said. The Affordable Care Act has numerous provisions aimed at holding down costs such as the creation of accountable care organizations and bundled payments. Congress should see if those reforms work before starting all over again with unproven private plans, especially since the existing private plans in Medicare – Medicare Advantage, which already cover a quarter of all Medicare beneficiaries – wound up costing more than traditional fee-for-service Medicare.
“If they (private plans) don’t work, who bears the risk if costs rise faster?” he asked. “Under premium support, those risks are shouldered by Medicare beneficiaries who will pay higher out-of-pocket costs. That is the fundamental choice” between the two approaches.
Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, The American Prospect, The Washington Post and The Fiscal Times. You can read more pieces by him at GoozNews, where this post first appeared.