Ryan’s plan also calls for an overhaul of the program, offering beneficiaries a set amount of money that they would use toward buying a private plan or traditional Medicare. Democrats have argued that such a fundamental change could undermine the traditional Medicare program, because private plans might tailor their coverage to attract healthier beneficiaries, leaving sicker beneficiaries in traditional Medicare. Critics of Ryan’s plan also predict it will force seniors to eventually pay more for their health care because the federal payments will be capped at the rate of gross domestic product plus half a percentage point, an amount that may not keep up with the increase in medical costs. Under Ryan’s plan, insurers would have to provide benefits that are at least equal the value of those offered in traditional Medicare.
Video: What Does Medicare Cost?
Medicare Part D Premiums Holding Steady
Thanks to the marvels of medical science, our parents are living longer than ever before. Adults over age 80 are the fastest growing segment of the population; most will spend years dependent on others for the most basic needs. That burden falls to their baby boomer children. In The New Old Age, Paula Span and other contributors explore this unprecedented intergenerational challenge. You can reach the editors at email@example.com.
How is Medicare Financed?
Note: For simplicity, I have focused on the annual flow of taxes and benefits. The same insight applies if you want to think of Social Security and Medicare as programs in which workers pay payroll taxes to earn future benefits. That’s approximately true for workers as a whole in Social Security (but with notable differences across individuals and age cohorts and uncertainty about what the future will bring). But it’s not true at all for Medicare.
Here’s Who Really Benefits When Republicans Change Medicare
The first major emergency endangering the continuance of Medicare occurred in 2008, when President Bush and the Republicans in Congress tried to block Democrats from halting a 10.6% cut, which Bush’s plan forced in the rate-schedule that traditional Medicare paid doctors for their services to their patients under Medicare. This pay-cut to doctors was expected to cause so many physicians to abandon traditional Medicare patients, that the traditional Medicare program would likely collapse. This pay-cut to doctors was scheduled to start on July 15th; but, just days earlier, on 9 July 2008, Bloomberg News bannered “Senate Votes Reversal of Cuts in Medicare Doctor Fees,” and reported that, “The Senate voted final passage of legislation that would halt a 10.6 percent cut in Medicare reimbursements to doctors.”
Cutting Through The Fog: Cost Containment: What Medicare Seniors Should Worry About
For years, the bureaucrats in Washington have been trying to control rising Medicare (and Medicaid) costs by underpaying doctors, diagnosticians, and hospitals for their services using some false assumption that those healthcare professionals will find a cheaper means to provide services. But the healthcare system can’t cheapen their services because, to do so, would open itself up to more and more costly malpractice suits. So, more often than not, this Medicare cost containment tactic is like squeezing a balloon. All that happens is that non-Medicare patients are billed at higher rates to compensate for the losses incurred in taking care of Medicare patients. But, at some point, those medical professionals will find that the other private insurers won’t pay more either. When that happens, they are likely to drop their Medicare patients to avoid going broke. For example, in 2010, the prestigious Mayo Clinic announced it was no longer taking Medicare patients at one of their hospitals because they had lost a total of $840 million in the previous year. Right now there are no comprehensive statistics as to how many doctors and hospitals are refusing to provide healthcare to Medicare seniors; but it is happening and gaining speed. However, what is really ridiculous is that the Democrats and Obama have decided to double-down on this cost containment tactic that is causing so many health care professionals to refuse Medicare patients. When they crafted ObamaCare they created something called the Independent Payment Advisory Board or IPAB. IPAB is basically a 15-member board of bureaucrats that will determine what Medicare will pay out for certain medical procedures and devices. By law, they must find ways to cut costs if those costs exceed actuarial estimates for any given year. In effect, IPAB has the authority to independently tell the health care industry which procedures will be covered by Medicare and for how much. Congress cannot block or overrule them unless they pass legislation that would meet or exceed the IPAB’s recommendations for any given year. The problem with all these cost containment gimmicks, like IPAB, is that they don’t address “why” costs are going up as fast as they are. You can’t mandate a bunch of free annual check ups and free diagnostics and expect Medicare costs to be lowered. Sure, early diagnosis might avoid some future expenses but, many experts have concluded that widespread recommended diagnostic routines are not cost effective and are not necessarily preventative. With mammograms, for example, the U.S. Preventive Services Task Force (USPSTF) set new recommendations in 2009 that effectively removed the testing regimen of having bi-annual mammograms for women over 40. Their new recommendation is for bi-annual mammograms for women over 50. In my opinion, the USPSTF is better able to make cost-lowering recommendations rather than IPAB. IPAB will only result in more seniors being dropped by doctors, hospitals, and diagnosticians. The result will be to force Medicare patients into “cattle-car” clinics with extremely long wait time and less qualified doctors. In fact, seniors will probably wind up seeing physician assistants rather doctors. This is what every senior should fear as a result of ObamaCare. One last thing. Healthcare costs are being driven by doctors practicing defensive medicine as a safeguard against being sued for malpractice. Unless there is tort reform, costs will continue to rise at rates faster than inflation. But, ObamaCare never included tort reform because the Democrats are in bed with the trial lawyers for campaign donations. For Further Reading: Mayo Clinic Bridles at Medicare Payments: http://www.cbsnews.com/8301-505123_162-43841043/mayo-clinic-bridles-at-medicare-payments/ Wikipedia On IPAB: http://en.wikipedia.org/wiki/Independent_Payment_Advisory_Board U.S. Preventive Services Task Force Website: http://www.ahrq.gov/clinic/uspstfix.htm
What’s Driving up the Cost of Medicare?
Recognizing the demographic facts doesn’t obviate Medicare’s need to spend federal health care dollars effectively and efficiently to slow the growth of health care costs while improving the quality of care for each and every beneficiary. But arguments that efficiency will come from morphing Medicare into a private insurance market—the conservative “solution” to rising health care costs—make no sense. There is simply no evidence that a private marketplace can match Medicare’s ability to slow spending growth. With Medicare’s per capita cost growth already lower than GDP and projected to diverge increasingly from private health care spending, vouchers for private insurance would actually increase per capita costs.
Too Much Focus on Medicare
There are important differences between Republicans’ and Democrats’ Medicare plans, especially on key technical issues like the speed of shifting the program away from fee-for-service payments. But as fact-checkers have descended on the campaigns — finding misstatements in Ryan’s charges and Sebelius’s counter-claims — they’ve also uncovered that the candidates’ Medicare proposals aren’t as wildly different as they appear on first blush. Neither plan involves rolling back benefits or coverage for current beneficiaries. And Romney’s proposed changes to the program, while largely unspecified, have dropped the dramatic overhauls once floated by his running mate Ryan.
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