The GOP Plan for Medicare Is Not Nice

The House Republican plan for balancing budgets includes deep cuts in federal health care spending. It is honest but not nice. It's not nice at all.

Give the blueprint's author, Rep. Paul Ryan of Wisconsin, credit for this: He bravely goes where the big money is — Medicare, the popular government health plan for the elderly and disabled.

His vision would ditch Medicare as we know it, whereby the government picks up the health care bills. Instead, each beneficiary would receive a voucher to spend on coverage with a private insurer.

Sending this medically vulnerable population into the not-so-tender arms of the insurance industry is the not-so-nice part.

It is significant that the proposal lets anyone 55 or older stay with today's Medicare setup. This is the group that's really paying attention.

At first, the vouchers would approximate what Medicare now spends. But over time, the payments would not keep up with the projected rise in medical expenses. Under the Republican plan, 65-year-olds will be paying an average 68 percent of their Medicare coverage costs by 2030, compared with 25 percent today, the Congressional Budget Office reports.

This is privatization. There's already a lot of privatization in Medicare, Ryan explains. “We're looking at the lessons that have worked,” he adds, pointing to the private Medicare Advantage Plans and the drug benefit.

Problem is, they don't work — at least, not for taxpayers or beneficiaries. Medicare Advantage Plans have cost government more than it would have spent had the subscribers been in traditional Medicare. The Medicare drug benefit shovels public money into insurance and drug company coffers. Had the government directly bought the drugs instead, the price tag would have been far lower and the benefits better.

Ryan insists that the new plan is sociologically fair because the rich would receive smaller Medicare vouchers (or whatever he chooses to call them). This is a devilish thing to do.

Medicare enjoys popular support because all Americans share in its benefits. The program already forces upper-income people to pay considerably higher premiums. Adding new means testing makes Medicare more of a welfare program for the poor. You know what happens to programs for the poor.

If the objective is to get rich people to do more for deficit reduction, why not be straightforward and simply raise their income tax rates? Because taking that approach does nothing for the other goal, which is to undermine Medicare.

There are kinder ways to deal with the soaring costs of Medicare. “Comparative-effectiveness research” are studies that can find effective treatments for a condition and compare their costs. This would give doctors guidelines for choosing care that produces the best outcome at less expense.

The Obama administration is also promoting Accountable Care Organizations — groups of doctors and hospitals that coordinate medical services. Those who do the job efficiently would share some of the savings.

Note that such incentives to curb waste reward the actual providers of medicine, and only if the patients are properly cared for.

Where do the incentives go in the Republicans' plan? To the corporate bureaucracies that profit by delivering less.

In 2009, the top executives of the five largest for-profit insurers raked in $200 million in compensation. That money came from somewhere.

Suppose you're an insurance exec looking for the big payday, and you're burdened with a bunch of 85-year-olds with several increasingly expensive ailments that are not going away. Your economic incentive is to have them die, isn't it? The private sector can be trusted to provide for the vast majority of our needs. Ensuring medical care for the frail elderly and disabled is not among them.