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Paul Ryan's New Medicare Plan
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----Updates Updates----
1st Update:
Ryan-Wyden editorial in support of their plan.
WSJ Editorial in support.
Actual Ryan-Wyden white paper describing the plan. http://paulryan.house.gov/UploadedFiles/WydenRyan.pdf
----End Updates----
Just in time for the season, Paul Ryan is at it again. His new plan would give future seniors the option to, surprise, opt out of Medicare in favor of private plans. Naturally those changes would not affect current seniors. Because current seniors vote in elections right now, like all the time.
New bits include that the private plans would have to feature a federally mandated minimum level of benefits and that low income seniors would receive a full subsidy for those plans. Higher income seniors would receive a partial subsidy. Said subsidies are supposed to keep up with medical inflation, as opposed to the hard cap under his previous plan.
More details aren't known yet since he will unveil the plan tomorrow. Big questions that I'll want answered include:
1. Will the premiums be the same for all seniors?
2. Will all seniors have to be accepted?
3. Will there be a central marketplace?
4. Can seniors switch between Medicare and this thing at will?
Depending on the answers, a plan like this could result in private insurers sucking the healthiest, youngest seniors out of Medicare and bankrupting it in the process. But if that happened, I'm sure it would be a completely unintentional side effect.
On the plus side, Senator Ron Wyden (D - Oregon) is on board; who isn't stupid. So perhaps there's something positive to be had here. We won't know until tomorrow, but now we have a place to talk about it. In conclusion, I leave you with an article from the WSJ about the plan:
As well as a picture of Ryan's fabulous hair.
1st Update:
Ryan-Wyden editorial in support of their plan.
Ryan, Wyden wrote:A Bipartisan Way Forward on Medicare
Allowing private plans to compete with traditional Medicare will help lower costs and spur innovation.
December 15, 2011
By RON WYDEN AND PAUL RYAN
Few issues draw more heated partisan rhetoric than the future of Medicare. Seniors are a reliable and powerful voting bloc, and both Republicans and Democrats are guilty of exploiting Medicare to frighten and entice voters. But turning discussions of Medicare's future into the third rail of American politics does nothing to guarantee that Medicare will continue to be a lifeline for America's seniors.
So, before the partisan attacks begin to escalate and the 2012 election ads start to air, we are outlining a plan for how Democrats and Republicans can work together to ensure that American retirees—now and forever—have quality, affordable health insurance.
Our plan would strengthen traditional Medicare by permanently maintaining it as a guaranteed and viable option for all of our nation's retirees. At the same time, our plan would expand choice for seniors by allowing the private sector to compete with Medicare in an effort to offer seniors better-quality and more affordable health-care choices.
Under our plan, Americans currently over the age of 55 would see no changes to the Medicare system. For future retirees, starting in 2022, our plan would introduce a "premium support" system that would empower Medicare beneficiaries to choose either a traditional Medicare plan or a Medicare-approved private plan. Unlike Medicare Advantage, these private plans would compete head-to-head with traditional, fee-for-service Medicare on a federally regulated Medicare exchange.
Low-income seniors who qualify for both Medicare and Medicaid would continue to have Medicaid pay for their out-of-pocket expenses. Other lower-income seniors would receive fully funded savings accounts to help offset any increased out-of-pocket costs, while wealthier seniors would receive less help.
All health plans that participate in the Medicare exchange would be required to offer benefits that are at least as comprehensive as those covered by traditional Medicare, and participating plans would be forbidden to charge discriminatory premiums and would be required to cover everyone regardless of age, gender or health status.
The direct federal contribution to health plans that cover the sickest seniors would be higher than it would be for plans that cover healthier seniors, thus ensuring that more help goes to seniors with greater health-care needs.
Our plan wouldn't merely ensure that American retirees have more health-care options than they have today. By allowing private plans to compete directly with traditional Medicare, our plan would also spur a wave of innovation to lower health-care costs and provide higher-quality health care.
The reason is simple: In order to offer better benefits and lower costs than traditional Medicare, private plans will have to develop better delivery models and design better ways to care for patients with chronic illnesses. Imagine health plans tailored to help patients manage diabetes, prevent heart disease, or combat high blood pressure.
In the event that these efforts did not stem the rising tide of Medicare spending, there would be a cap on the program's rate of growth. But unlike other proposals, spending that exceeds the cap would neither be addressed through bureaucratic cuts nor passed on to seniors by default as higher premiums.
Instead, Congress would be required to do its job: Determine why the costs exceeded the cap and—when the evidence merits—reduce payments to providers, drug companies, or others who may be responsible for escalating costs.
By giving seniors the power to choose among competing plans, our plan would add a level of cost control, customization and quality to the health security of older Americans that today's Medicare is not in a position to achieve.
Our plan would also expand health-care options for working Americans by giving smaller businesses the opportunity to empower their employees to make their own health-care choices. Under this "free choice option," employees take the amount that their employer was contributing toward their employer-provided health coverage and use it to purchase their own health insurance instead. The cost to the employer—and the tax-free benefit to the worker—would remain the same.
Combined with expanded choices for Medicare beneficiaries, this would also make it possible for more and more Americans to transfer into Medicare without having to change doctors and insurance.
Taken together, these reforms would ensure that Medicare remains the guaranteed, affordable lifeline that its creators envisioned, both for older Americans and for young families paying into the system.
Yes, these are ambitious reforms, and while we are hopeful for the future, we are under no illusions that they will pass tomorrow. Nevertheless, we offer this plan as proof that Democrats and Republicans don't have to spend next year making Medicare reform more difficult. Instead, our parties can work together on bipartisan reforms to save and strengthen Medicare.
Mr. Wyden, a Democrat, is a U.S. senator from Oregon. Mr. Ryan, a Republican, is a U.S. representative from Wisconsin.
WSJ Editorial in support.
WSJ Editorial Board wrote:The Wyden-Ryan Breakthrough
A better, bipartisan Medicare future
December 15, 2011
An editorial by the Wall Street Journal
Democrats are running on Mediscare in 2012 and President Obama has all but called the "premium support" reform un-American, if not the decline and fall of Western civilization. That would seem to put the issue in Newt Gingrich's wheelhouse, but the GOP candidate also claimed in a recent interview that the Paul Ryan reform model is "politically impossible" and "suicide." Well, not so fast.
Today Senator Ron Wyden and Mr. Ryan are releasing a bipartisan defined-contribution health-care plan, as the Oregon Democrat and Wisconsin Republican explain nearby. This is an important moment because it shows that the serious entitlement debate is taking place within the camp of choice and incentives, not the Obama status quo.
Wyden-Ryan shares the same architecture as the House budget. It would replace today's open-ended Medicare with a fixed-dollar subsidy for seniors to choose from a menu of private plans. Costs would fall as insurers and providers innovate to compete for patient market share, rather than responding to fee-for-service price controls.
But there are several key changes. Most of the substantive argument turns on how the premium supports should grow over time. Wyden-Ryan would dispose of a predetermined rate—GDP plus 1%, medical inflation, etc.—and instead use competitive bidding. Insurers and traditional Medicare, which would remain intact, would essentially participate in a reverse auction and the second lowest bid would set the benchmark for a given region. Seniors would pay at the margin for more expensive options.
As a practical matter, competitive bidding may be an improvement over a set formula because it relies on local information and adjusts with the behavioral and organizational responses that will vary from region to region. Medicare as centrally planned from Washington will never be able to keep pace with the market if subject to the same defined payments. In any case, the growth rate to-and-fro is largely an artifact of the Congressional Budget Office, which has admitted there is a "gap in the toolkit" when predicting market-based savings. It knows this first hand from having grossly overestimated the costs of the 2003 prescription drug benefit.
Messrs. Wyden and Ryan also sneak in a reform of the larger employer market, which would allow businesses with fewer than 100 workers to move to a defined-contribution model without tax penalties. Mr. Wyden has been campaigning for such a reform for years from the Democratic backbenches.
The Oregonian voted for the Affordable Care Act, though his decision to join Mr. Ryan is another signal that the entitlement debate is moving in a more promising direction. Variations on defined contribution were also mulled by the "super committee," only to end up on the horns of liberal intransigence.
The brutal math is that Medicare spending has been growing about three percentage points faster every year than the overall economy for the last quarter-century and is now the main driver of the fiscal crisis. Mr. Obama has ruled out any structural reforms and his only fallback is the command-and-control technocracy that continues to fail and will ultimately harm patient care. The Wyden-Ryan deal shows that smart liberals prefer a different future.
Actual Ryan-Wyden white paper describing the plan. http://paulryan.house.gov/UploadedFiles/WydenRyan.pdf
----End Updates----
Just in time for the season, Paul Ryan is at it again. His new plan would give future seniors the option to, surprise, opt out of Medicare in favor of private plans. Naturally those changes would not affect current seniors. Because current seniors vote in elections right now, like all the time.
New bits include that the private plans would have to feature a federally mandated minimum level of benefits and that low income seniors would receive a full subsidy for those plans. Higher income seniors would receive a partial subsidy. Said subsidies are supposed to keep up with medical inflation, as opposed to the hard cap under his previous plan.
More details aren't known yet since he will unveil the plan tomorrow. Big questions that I'll want answered include:
1. Will the premiums be the same for all seniors?
2. Will all seniors have to be accepted?
3. Will there be a central marketplace?
4. Can seniors switch between Medicare and this thing at will?
Depending on the answers, a plan like this could result in private insurers sucking the healthiest, youngest seniors out of Medicare and bankrupting it in the process. But if that happened, I'm sure it would be a completely unintentional side effect.
On the plus side, Senator Ron Wyden (D - Oregon) is on board; who isn't stupid. So perhaps there's something positive to be had here. We won't know until tomorrow, but now we have a place to talk about it. In conclusion, I leave you with an article from the WSJ about the plan:
WSJ wrote:Ryan Revises Medicare Plan
Republican Rep. Paul Ryan plans to unveil a new Medicare proposal Thursday that would give future seniors the choice of purchasing private insurance coverage or staying in the traditional federal plan.
The concept, which is backed by Democratic Sen. Ron Wyden of Oregon, steps back from the House budget chairman's previous plan to end the traditional fee-for-service Medicare program for future retirees and replace it with subsidies starting at $8,000 that seniors would use to purchase private health plans.
That subsidy wasn't guaranteed to keep pace with the rate of health-care inflation, leaving beneficiaries potentially to face higher out-of-pocket costs.
Ryan's first plan had been attacked by Democrats, who were preparing to portray Republicans in 2012 elections as trying to do away with the popular program.
Messrs. Ryan and Wyden would allow private plans to compete alongside the traditional Medicare plan. Seniors could sign up for any of the plans offered through a Medicare exchange, which would have specific requirements for what the plans must cover.
The government would pay some or all of their premiums, with lower-income seniors receiving a full subsidy and higher-income seniors receiving less money. The proposals would only take effect in 2022 and wouldn't apply to seniors currently in the program.
"The more the national conversation about the future of Medicare deteriorates into partisan attacks that our opponents will 'cut Medicare' versus superficial campaign pledges to 'make no changes' to a 45-year-old program, the harder it gets to have a serious debate about the best way to ensure that seniors can rely on a strengthened Medicare program for decades to come," the two lawmakers wrote in the summary of their proposals.
This move could muddy Democratic plans to attack Republicans on Medicare next year. But it also promises to complicate the issue of Medicare in the 2012 presidential election.
Last week, former Massachusetts Gov. Mitt Romney launched an attack on his main rival for the Republican nomination by reminding GOP voters that Newt Gingrich had called Mr. Ryan's original plan "right wing social engineering."
Mr. Romney had been careful not to fully embrace Mr. Ryan's plan, instead proposing a hybrid system that would preserve traditional fee-for-service Medicare while creating an alternative system of government-subsidized vouchers for seniors who wished to purchase private health plans.
To separate himself from Mr. Gingrich and prove his conservative bona fides, Mr. Romney last week tossed aside that caution and more fully embraced Mr. Ryan's initial plan. Now Mr. Ryan, of Wisconsin, has jettisoned that plan and will unveil a proposal that is more like Mr. Romney's hybrid version.
As well as a picture of Ryan's fabulous hair.
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It sounds like this one is an opt-out. Although it's not clear to me who would opt out of one of the most popular and successful government programs ever created.
It's the same thing as the UK and their heating allowance thing.
I don't know, you might get to die sooner? My mom told me an interesting story about turning 65 -- it turns out that even if you want private insurance, no healthcare provider will sell you a primary care policy because the financial liability of insuring someone that old is too difficult to work out in a way that it's profitable. They'll sell you a supplemental plan if you really want one to cover things that Medicare might not, but generally speaking there's not some private sector primary care plan that's desperately seeking to insure people who are more likely to get a terminal illness within the next ten years of their lives.
Otherwise there's no incentive to opt out.
Hasn't it been shown that the costs of means testing Medicare recipients would be higher than the savings gained by doing so?
Also, the "something that needs to be done" about Medicare (and Social Security, etc.) can simply be raising taxes to pay for the increased expenses they'll incur until the Boomers die off.
Or you could go single player for the populace, expand the risk pool and kill off a big drain on all your businesses.
So you choose at 18 whether you want more money now or healthcare when youre 65?
Adding teeth to means-testing, really adding teeth, entails being prepared to seize someone's house to make the payments (or, equivalently, denying them the subsidies if they have a sufficiently valuable house). That accounts for much of the wealth of the middle-to-rich elderly, after all. This allows the state to offload much more of the population from the state healthcare bill (although healthcare spending in total only declines insofar as one believes in individual demand elasticity). Otherwise means-testing catches only the rather smaller segment of the rich and very-rich and then you have this point that Krugman made.
In short; means testing is a well intentioned, but flawed proposition.
Do you really believe this? If so, nobody would opt out if allowed to, because there'd be no plans for them to buy?
Generally there are included changes to Medicare (or SS, in privatization-of-SS proposals) that change how your contributions are taken into account, and then you can choose what to contribute towards as you work. AFAIK.
There's an alternate timeline where Paul Ryan's plan is to replace the USA Single payer network with this opt out plan. AlteRyan is proposing this near the underpass where he sleeps, because he doesn't want no commie housing assistance for indigent crazy people.
I am mad jelly of that timeline
It depends on when and how any "opt out" would be implemented. I'm sure private insurance companies would trot out some horrible high-deductible plans if a pool of old folks ineligible for Medicare because they opted out in their 20s became available.
In a free market, who the hell would cover an 85 year old man at any price?
For a sufficiently high price, etc.
I'm nitpicking, if you like. You said: regardless of their wealth. That's not actually true.
So the wealthy would be disqualified from Medicare, but also unable to purchase private insurance? Or it would be terribly expensive? So we'd basically be taking wealthy seniors, and either confiscating their wealth or killing them off?
I mean, I guess it's all in where you draw the line for "wealthy," but I'm seeing some serious upside potential here. We get to either legally kill rich people, or make them poor.
But then I do that thing where I realize it would almost certainly wind up applying to either myself or my parents, and I feel a little bad.
Well, once you hit a sufficiently high price the insurance is no longer worth purchasing. Because your risk is so high, that you basically can't mitigate it. Unlike a lot of other risks (like home fires, or natural disasters), where the probability approaches one over a long period of time, once you hit a certain age the probability approaches one over a rather short period of time. Your insurer would basically just be giving you a slight discount on your care on the off chance that you're hit by a bus and killed instantly on impact.
On the flipside, NY prevents companies from doing any medical/demographic based pricing and it is so insanely expensive you'd be shocked.
The population of geriatric Americans that could afford free market health care is so absurdly small the means testing office would probably spend a lot more than it could hope to save.
Edit: I left out the part that explained why the those state regs were important. Bleh. I mention them mainly to illustrayouth at if you aren't young and healthy or on an employer sponsored plan, you're getting double deep fried fucked on an individual policy no matter what regs are in place.
Can we just tell the baby boomers to go to hell when it comes to Social Security and save all the money for us?
They screwed over our future, the least we could do is return the favor.
Nah, old people are still exempt from this shit. Old people vote, he's not that stupid.
No, Paul Ryan hates young people.
Cancel Medicare coverage for Boomers, and you've fixed both problems at the same time. Pretty quickly, I'd wager.
And Ryan has given plenty of thought to this, which is why he exempts current and near-future retirees.
Wyden was mentioned, but in a "he's pretty smart, so this can't be that bad" sense.
I disagree, but didn't feel like engaging on it...regardless of Wyden's other policies, which I'm not familiar with, this position alone calls his judgement into question.
just looking at his wikipedia page now, he doesn't really seem like that much of a blue dog. He voted against the patriot act, and against DOMA.
he does seem to have a tendency to latch onto weird policy ideas simply because they're weird, though. He was also one of the guys pushing an alternative to the obama health care bill (which mostly got ignored.)
Pluto was a planet and I'll never forget
Bam, now it's welfare.
Wyden's basically a libertarian who still cares about the well-being of other people and isn't a total retard, so he's a member of the Democratic party but doesn't really follow mainstream Dem policy. His alternative to Obamacare, for example, would have ended all employer-supplied health coverage, people get paid the money that otherwise would have been spent by their employer on their health insurance, and put everyone on heavily regulated exchanges that might or might not have offered a public option, and they buy their own insurance and use the power of the market to choose the most efficient. It actually was a decent plan if there had been a public option included, but ending everyone's current employer-provided insurance policies and making them buy new ones was politically a non-starter ("You mean I'd have to get a new insurance company and maybe a new doctor?!?!" For PR reasons it was a priority for the administration that people who like what they have should get to keep it). He's sort of to the right of the party on the economy but actually way to the left of the party on privacy issues like the internet and wiretapping.
Please don't get me wrong, I wasn't saying chuck the whole thing. My grandma, until a couple days ago, survived only on her social security and stuff from my grandpa's Navy retirement. I just think that the (admittedly small) number of people who will be able to afford their own shit when they're old shouldn't be sucking money away from people who do need it.
I have absolutely no problem with a safety net.
I'm just saying that's what would happen with five years of means testing.
Sadly, you're probably right.